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LABOR LAW I: EXPANDED OUTLINE

PART I: INTODUCTORY MATERIALS Section 1. Labor Law in General


1.01 Labor Law Defined branch of private law that is designed to regulate the relationship between two factors of production: labor and capital. 1. Principal thrust: define the relations between labor and capital 2. The law governing the rights and duties of employers and employees with respect to: 1. Terms and conditions of employment; and 2. With respect to labor disputes arising from collective bargaining respecting such terms and conditions

1.02 Law Classification 1. Labor Standards are the minimum requirements prescribed by existing laws, rules and regulations relating to wages, hours of work, COLA, and other monetary and welfare benefits, including occupational, safety and health standards. Labor standards cases are governed by Article 128(b) of the Labor Code. (Batongbuhay Goldmines v. Dela Serna) o Minimum standards of employment below which it cannot be allowed to fall o Terms and conditions society deem necessary to maintain health, safety and decent living among workers. o Must be observed in its entirety 2. Labor Relations defines the status, rights and duties, as well as the institutional mechanisms, that govern the individual and collective interaction between employers, employees and their representatives o Unionization, negotiations, and dispute settlements fall in the arena of labor relations o Provide for the institutional relationship regulations o The objective is that no worker should become a burden to society 3. Welfare legislation designed to take care of contingencies which may affect the workers, e.g. when there is loss of income for reasons beyond the employees control (i.e. sickness, death, accident) o RA 8282 o RA8291 o RA 7875 o Employment Compensation and State Insurance Fund *However, in reality it is very difficult to draw the lines among these branches.

1.03 Basis for Enactment


Const. Art. II, Sec. 5. Art. II Sec. 5: The maintenance of peace and order, the protection of life, liberty, and property, and promotion of the general welfare are essential for the enjoyment by all the people of the blessings of democracy. Const. 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. XIII. Sec.1 The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good. To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments. 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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The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth.

Police power of the state power inherent in government to make laws, within constitutional limits, to promote the order, safety, health, morals and general welfare of society. CMS Estate v. SSS Compulsory coverage in the SSS is a legal imposition which implements the general welfare mandate of the Constitution and constitutes a legitimate exercise of the police power of the State. The Social Security Law was enacted pursuant to the policy of the government "to develop, establish gradually and perfect a social security system which shall be suitable to the needs of the people throughout the Philippines, and shall provide protection against the hazards of disability, sickness, old age and death". It is actually a legal imposition on said employers and employees, designed to provide social security to the workingmen. The principle of nonimpairment of the obligation of contract as provided in the Bill of Rights is not a proper defense, the enactment being a lawful exercise of the police power of the State. The said enactment implements the general welfare mandate of the Constitution and constitutes a legitimate exercise of the police power of the State.

1.04 Sources of Law 1. Labor Code and related special legislation

Mariveles Shipyard v. CA Labor standards are enacted by the legislature to alleviate the plight of workers whose wages barely meet the spiraling costs of basic needs. Labor laws are considered written in every contract. Stipulations in violation thereof are considered null. Similarly, legislated wage increases are deemed amendments to the contract. Thus, employers cannot hide behind their contracts in order to evade their liability for noncompliance with the statutory minimum wage. 2. Contract

CC, Art. 1305. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. CC, Art. 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

Kasapian v. CA The MOA, being a contract freely entered into by the parties, now constitutes the law between them, and the interpretation of its contents purely involves an evaluation of the law as applied to the facts herein. 3. Collective Bargaining Agreement refers to the contract between a legitimate labor union and the employer concerning wages, hours of work, and all other terms and conditions of employment in a bargaining unit

Sir Disini: Labor Code and Related Legislation (referring to Labor Code and the Civil Code, obviously) But how about contracts and CBAs? How are they different as a source of labor law? COLLECTIVE BARGAINING AGREEMENT: by definition they are both contracts; BUT in a contract, negotiations are usually done on a one-on-one basis while in a collective bargaining agreement, there is the INSTITUTION of the UNION negotiating for and in behalf of the collective laborers.

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DOLE Phils v. Pawis ng Makabayang Obrero The exercise of management prerogative is not unlimited. It is subject to the limitations provided by law. In this case, there was a CBA (meal allowance provision is found in their previous CBAs, the 1985-1988 CBA and the 1990-1995 CBA), and compliance therewith is mandated by the express policy of the law.

4.

Past Practices voluntary, unilateral act on the part of the employer, without compulsion of law, consistently given over a period of time, which leads to an expectation of benefit on the part of the employee. o Must be: Voluntary Not mandated by law Consistently given over a considerable period of time not defined by jurisprudence - not mandated by law, practice that the company voluntarily entered into, not just a single instance, no specific number of years as a measuring stick after which something can be said to have evolved into a practice

Requisites to be a source of rights and obligations: 1.) Freely, voluntarily and continuously given within a considerable length of time (Davao Fruits Corp v Associated Labor Union, 225 SCRA 562 (1993) 2.) Not just a single instance (not granted only once) Samahang Manggagawa etc. v. NLRC, 295 SCRA 171 (1998) 3.) Should have been done over a long period of time and must be shown to have been consistent and deliberate (American Wire and Cable Daily Rated Employees Union v. American Wire and Cable Co, Inc., 457 SCRA 684 (2005) 4.) Not be by reason of a strict legal or contractual obligation, but by reason of an act of liberality on the part of the employer (Pag-asa Steel Works, Inc. v. CA, 486 SCRA 475 (2006) Arco Metal Products Co. v. Samahan Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or eliminated by the employer. 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 Jurisprudence is replete with cases which recognize the right of employees to benefits which were voluntarily given by the employer and which ripened into company practice. If said benefit ripens into company practice, then it can no longer be reduced, diminished, discontinued or eliminated by the employer. True, there were only a total of seven employees who benefited from such a practice, but it was an established practice nonetheless. Jurisprudence has not laid down any rule specifying a minimum number of years within which a company practice must be exercised in order to constitute voluntary company practice. Thus, it can be six (6) years, three (3) years, or even as short as two (2) years. Petitioner cannot shirk away from its responsibility by merely claiming that it was a mistake or an error, supported only by an affidavit of its manufacturing group head. McLeod v. NLRC To be considered a regular practice, the giving of benefits should have been done over a long period, and must be shown to have been consistent and deliberate. Pag-asa Steelworks v. CA To ripen into a company practice that is demandable as a matter of right, the giving of the increase should not be by reason of a strict legal or contractual obligation, but by reason of an act of liberality on the part of the employer. The only instance when petitioner admittedly implemented a wage order despite the fact that the employees were not receiving salaries below the minimum wage was under Wage Order No. NCR-07. Petitioner, however, explains that it did so because it was agreed upon in the CBA that should a wage increase be ordered within six months from its signing, petitioner would give the increase to the employees in addition to the CBA-mandated increases. Respondents isolated act could hardly be classified as a "company practice" or company usage that may be considered an enforceable obligation.

5.

Company Policies

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Suico v. NLRC Company policies or practices are binding on the parties. Some can ripen into an obligation on the part of the employer, such as those which confer benefits on employees or regulate the procedures and requirements for their termination. China Banking Corp. v. Borromeo It is well recognized that company policies and regulations are, unless shown to be grossly oppressive or contrary to law, generally binding and valid on the parties and must be complied with until finally revised or amended unilaterally or preferably through negotiation or by competent authority. Maneja v. NLRC Company personnel policies are guiding principles stated in broad, long-range terms that express the philosophy or beliefs of an organizations top authority regarding personnel matters. They deal with matters affecting efficiency and wellbeing of employees and include, among others, the procedure in the administration of wages, benefits, promotions, transfer and other personnel movements, which are usually not spelled out in the collective agreement. The usual source of grievances, however, is the rules and regulations governing disciplinary actions.

1.05 Law and Worker VICENTE SINCO, Philippine Constitutional Law Protection to Labor The police power has on several occasions been employed to protect the interest of the labor class. (The rulings cited below are all US cases) Working Hours o It has been held that a statute does not violate any personal right when it forbids the employment of laborers for over 8 hours a day in dangerous occupations. In 1908, a court upheld the validity of a statute forbidding employment of any female for more than ten hours, on the ground that excessive hours were detrimental to their delicate physical structure. o Statutes fixing the number of working hours in employments or industries not particularly dangerous have been held as a valid exercise of the police power. Statutes fixing the minimum wages paid to women and minors have been judicially declared constitutional. o The employment of children in industry may be strictly regulated under police Workmens compensation laws are likewise held as a valid exercise of police power. o The validity of such laws protects employers from exorbitant compensation claims, the employee from expensive suits and the general public.

Collective Bargaining and Picketing Statutes recognizing the right of employees to organize themselves into labor unions and to have representatives of their own choosing for the purpose of collective bargaining are declared valid as being essential for the maintenance of industrial peace. US Supreme Court held that laws may prohibit an employer from discharging any of his employees on the ground that he is a member of a union. But they also held that the employer cannot be compelled to hire only members of a labor organization. Peaceful picketing or patrolling of a shop for publicity purposes about the dispute between an employer and labor organization is also valid. But reasonable restrictions may be validly imposed to prevent the abuse of this privilege of labor. US Supreme Court upheld the validity of an injunction against the labor union from picketing certain establishments by the use of force and violence, saying that peaceful picketing is constitutionally protected, but those which use the means of violence may be lawfully restrained.

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US Supreme Court has also pointed out that while picketing is an ingredient of communication, it cannot be dogmatically be equated with constitutionally protected freedom of speech. In the Philippine, the SC has consistently held that peaceful picketing is a part of the right of free speech guaranteed by the constitution.

Sunday Laws The police power has often been used in prohibiting the performance of certain acts on Sundays, but not to the extent of prohibiting the sale of food, and other things/activities absolutely essential even when done on Sundays.

BERNAS, 1987 Philippine Constitution: Commentaries Police power and contract The most significant decisions on the contract clause were those which emphasized the superiority of police power over the sanctity of contract. o In upholding a statute granting to workers rights which they did have under existing contracts, the Court said that the constitutional guaranty of non-impairment is limited by the exercise of the police power of the State, in the interest of public health, safety, morals and general welfare. o This doctrine had a huge impact on the field of agricultural tenancy contracts. With an obiter dictum in a 1941 case, The social principles of the Constitution were used to justify the tenancy contracts which could have resulted from Act No. 461 and Act no. 608. The statutes prohibited the dismissal of tenants except for enumerated causes. RA 34 changed the share-cropping system in existent agricultural tenancy contract from 50-50 to 50-45 in favor of tenants. The Court ruled that the contract clause did not preclude remedial legislation in the interest of the general welfare. o The role of police power in relation to labor contracts other than agricultural ones also received some attention. A Blue Sunday Law, which nullified existing contractual provisions stipulating that either work or play would be provided on Sunday was upheld as legitimate exercise of police power. The Court upheld a return to work order which in effect terminated the contract which had been entered into with the replacements for striking workers. Labor contracts, the Court said, must yield to the demands of the common goods.

Cebu Royal Plant v. Deputy Minister of Labor The SC reaffirms its concern for the lowly worker who, often at the mercy of his ER, must look up to the law for protection. Fittingly, the law regards him with tenderness and even favor and always with hope in his capacity to help in shaping the nations future. It is an error to take him for granted. 1.06 Labor Case Elements of a Labor Case: 1. An employer-employee relationship existing between the two parties 2. There is an issue which can be resolved by reference to the: a. Labor Code b. Other labor statutes c. CBA Sir: Does the Labor Code apply in all cases where theres employer-employee relationship? NO. Exceptions: 1. international agencies having diplomatic agency (redress in this case- ask the Philippine government to withdraw the grant of immunity) 2. government employees (covered by Civil Service Law, not Labor Code)

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Labor Code says the Labor Code applies unless it specifically says it does not. Pioneer Concrete Products v. Teodoro Where no employer-employee relationship exists between the parties and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes, or any CBA, it is the regular courts which have jurisdiction over the case. Villarama v. CA An employer-employee relationship is an indispensable juridical requisite for the exercise of jurisdiction of LA and NLRC. Not every dispute between and employer and employee involves matters that only the LA/NLRC can resolve. Actions where the employee-employer relationship is merely incidental is within the exclusive original jurisdiction of the regular courts. Lapanday Agricultural Development Corp. v. CA Not every relation between management and labor is a labor case. Definition is strict. It is only a labor case if it deals with the Labor Code, CBA, and its associated laws/legislation. In all cases falling under Art.217 of the Labor Code, and employer-employee relationship is an indispensable prerequisite. 1.07 Case Decision Anino v. NLRC A decision should faithfully comply with Sec. 14, Art. VIII of the Constitution. (No decision shall be rendered by any court [or quasi-judicial body] without expressing therein clearly and distinctly the facts of the case and the law on which it is based.)

1.08 Management Function - Management rights, like those of labor, deserve protection. Labor is a protected class, but it does not follow that every labor dispute would automatically be decided in its favor. 3. Management prerogative: our law recognizes certain rights, collectively called management prerogative, as inherent in the management of business enterprises. Management prerogative is the right of an employer to regulate, according to their discretion and best judgment, all aspects of employment. o Extent and scope: all that is necessary for the efficient functioning of the enterprise. o Rationale: the ownership rights of the employer allow them to have a certain say how best to run the enterprise. Recognition: SMC v. NLRC An employer has the prerogative to prescribe reasonable rules and regulations necessary for the proper conduct of its business, to provide certain disciplinary measures in order to implement said rules, and to assure that the same would be complied with. Appropriate disciplinary sanction is within the purview of management imposition. Norkis Trading v. Canilo The prerogative of the employer to transfer and reassign employees for valid reasons and according to the requirement of its business is recognized, provided such transfer is done without diminution of rank and benefits. Star Paper Corp. v. Simpol Company policy prohibiting marriage among co-employees, in the absence of a showing of reasonable business necessity for such policy, is an invalid exercise of management prerogative. Limitation: The exercise of management function is limited by: o The law and public policy on labor and social justice o Terms and conditions of CBA o Principles of fair play and justice

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Marival Trading Inc. v. NLRC A company's management prerogative to discipline an employee will be upheld as long as they are exercised in good faith, for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws and valid agreements. Such prerogative to dismiss or lay off an employee must be exercised without abuse of discretion. Tinio v. CA But, like other rights, there are limits thereto. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be confused with the manner in which the right is exercised. 1.09 Compromise and Waiver
Art. 227. Compromise agreements. Any compromise settlement, including those involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau or the regional office of the Department of Labor, shall be final and binding upon the parties. The National Labor Relations Commission or any court, shall not assume jurisdiction over issues involved therein except in case of non-compliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation, or coercion. Art. 2028, CC. A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced. Art. 2036, CC. A compromise comprises only those objects which are definitely stated therein, or which by necessary implication from its terms should be deemed to have been included in the same. A general renunciation of rights is understood to refer only to those that are connected with the dispute which was the subject of the compromise.

Universal Robina v. Caballeda Generally, the law looks with disfavor on quitclaims and releases by employees who have been inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities and frustrate just claims of employees. Exception: In exceptional cases, the Court has accepted the validity of quitclaims executed by employees if the employer is able to prove the following requisites The employee executes a deed of quitclaim voluntarily; There is no fraud or deceit on the part of any of the parties; The consideration of the quitclaim is credible and reasonable; and rd The contract is not contrary to law, morals, good customs, public order, public policy, or prejudicial to 3 persons with a right recognized by law Universal Staffing Services v. NLRC Generally, deeds of release, waivers, or quitclaims cannot bar employees from demanding benefits to which they are legally entitled or from contesting the legality of their dismissal, since quitclaims are looked upon with disfavor and are frowned upon as contrary to public policy. Where, however, the person making the waiver has done so voluntarily, with a full understanding thereof, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking. The burden of proving that the quitclaim or waiver was voluntarily entered into rests on the employer.

Section 2. Labor and the Constitution


1935
Art.XIV, Sec.6. The State shall afford protection to labor, especially to working women, and minors, and shall regulate the relations between the landowner and tenant, and between labor and capital in industry and in

1973
Art.II, Sec.9. The State shall afford protection to labor, promote full employment and equality in employment, ensure equal work opportunities regardless of sex, race, or creed, and regulate the relation between workers and

1987
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

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agriculture. The State may provide for compulsory arbitration.

employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work. The State may provide for compulsory arbitration.

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 decisionmaking processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth. Art.II, Sec.10 1987 CONSTITUTION ART II Sec 10 The State shall promote social justice in all phases of national development. Art.XIII, Sec.1. The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good. To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments. Art.XIII, Sec.2. The promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance.

Art.II, Sec.5. The promotion of social justice to insure the well-being and economic security of all the people should be the concern of the State.

Art.II, Sec.6. The State shall promote social justice to ensure the dignity, welfare, and security of all the people. Towards this end, the State shall regulate the acquisition, ownership, use, enjoyment, and disposition of private property, and equitably diffuse property ownership and profits.

2.01 Historical Background/Rationale Antamoc Goldfields Mining v. CIR Our Constitution was adopted in the midst of surging unrest and dissatisfaction resulting from economic and social distress which was threatening the stability of governments the world over. Embodying the spirit of the present epoch, general provisions were inserted in the Constitution which are intended to bring about the needed social and economic equilibrium between component elements of society through the application of what may be termed as the justitia communis, to be secured through the counterbalancing of economic and social forces and opportunities which should be regulated, if not controlled, by the State or placed, as it were, in custodia societatis. 2.02 Nature of Provision PAL v. Santos - Benevolent policy underlying our labor laws; labor is a protected class The sympathy of the Court is on the side of the laboring classes, not only because the Constitution imposes such sympathy, but because of the one-sided relation between labor and capital. The constitutional mandate for the promotion of labor is as explicit as it is demanding. The purpose is to place the workingman on an equal plane with management with all its power and influence in negotiating for the advancement of his interests and the defense of his rights. Under the policy of social justice, the law bends over backward to accommodate the interests of the working class on the humane justification that those with less privileges in life should have more privileges in law.

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2.03 1987 Constitution A. Labor sector characterized Art. II, Sec.18 labor as a primary social economic force. B. Protection of Labor Guarantees 1987 Constitution Added 'full' to the provision. The State shall afford full protection of labor. According to the SC, this word is important. Because now it includes, local and overseas, organized and unorganized workers. MORE EMPHATIC. Use 'full'. More enumeration of rights, more detailed. Bernas 1987 Constitution A. Labor Sector Characterized Art II, Sec 18 The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their social welfare. Bernas outlines the development of the provisions on labor in the 1935, 1973, and 1987 Philippine constitutions. 1935 Consti Provided the protection to labor, especially to the working women and minors. It regulated the relation between landowner and tenant, between labor and capital in industry and in agriculture. The State also provided for compulsory arbitration 1973 Consti Adopted the 1935 labor provisions, but added promotion of full employment and equality in employment. It provided for rights of workers to self-organization, collective bargaining, security of tenure, and just and humane working conditions. 1987 Consti Built on previous provisions and elaborates policy on labor in Art XIII, Sec 3. Art II, Sec 18 proclaims the primacy of human factor over the non-human factors of production. Art II, Sec 19 The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos. Art II, Sec 20 The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments. Secs 19 and 20 represent two pillars of the economic policy of the Constitution. Sec 19 commands the independent and nationalistic approach to economic development. Sec 20 affirms that the private sector is an integral part of development. Art II, Sec 21 The State shall promote comprehensive rural development and agrarian reform. Rural development is not just agricultural development but rather it encompasses a broad spectrum of social, economic, human, cultural, political, and even industrial development. Art II, Sec 22 The State recognizes and promotes rights of indigenous cultural communities within the framework of national unity and development. B. Protection of Labor Art XIII, Sec 3 Labor

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The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between the workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth. Rights of Labor This section specifies who are protected by the constitution, what rights are guaranteed, and what measures the State should take in order to enhance the welfare of labor. Labor and management are not completely free to decide between themselves how their relationship should go even in the matter so personal such as wages. 1 paragraph extends protection of the Consti to all of labor. However, even if all workers are protected, the rights guaranteed are not necessarily the same for all. Distinctions (valid ones) may arise either from the public or private character of employment or from the nature of the work that is performed. 2 paragraph enumerates the rights guaranteed 7 Cardinal Rights of Labor: Rights which are exercised and enjoyed by workers collectively 1. Right to self-organization: subject to jurisprudence on the right to form associations as developed under the Bill of Rights. 2. Right to bargain collectively: enjoyed by unionized workers 3. Right to negotiate collectively: enjoyed by non-unionized workers 4. Right to engage in peaceful concerted activities: includes everything short of strike 5. Right to strike: the law has traditionally denied the right to strike to certain sectors of the working force (such as the police, firemen) because of the nature of their jobs. The right to strike must be in accordance with law, as all labor rights should be. Lockouts, even if not mentioned, are not banned as well. 6. Right to security of tenure, human conditions of work, and a living wage 7. Right to participate in policy and decision-making processes affecting their rights and benefits: guarantees that labor will have participation in arriving at those decisions which affect their rights and benefits through grievance procedures, conciliation proceedings, voluntary modes of settling disputes, and collective bargaining and negotiations. The scope of what can be bargained for could be less for workers of the public sector than those of the private. 3 paragraph enumeration of elements of a healthy labor atmosphere which the state is commanded to promote. There is preferential bias for voluntary modes of settling disputes. The State is commanded by the Consti to promote full employment and equality of employment opportunities for all. 4 paragraph Regulates the relationship between the workers and the employers The State must seek a balance between the rights of labor and the rights of enterprises.
th rd nd st

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Protection of labor: Lopez v. MWSS The Court has invariably affirmed that it will not hesitate to tilt the scales of justice to the labor class for no less than the Constitution dictates that the State . . . shall protect the rights of workers and promote their welfare. It is committed to this policy and has always been quick to rise to defense in the rights of labor, as in this case.

C. Social Justice Definition: Enriquez v. BPI While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. PLDT v. Bolzo Upholding the employees interest in disregard of the employers right to dismiss and discipline does not serve the cause of social justice. Social justice ceases to be an effective instrument for the equalization of the social and economic forces by the State when it is used to shield wrongdoing. Calalang v. Williams Social justice is to be achieved not through a mistaken sympathy towards any given group. Social justice is neither communism nor despotism, nor atomism, nor anarchy, but the humanization of laws and the equalization of social and economic forces by the state so that justice in its rational and objectively secular section may at least be approximated. Limitations of use: Sir: Can a worker always invoke social justice? o NO. only to correct injustice. o You cannot invoke it in the abstract. It must be in a specific situation. Heirs of Jugalbot v. CA Laws which have for their object the preservation and maintenance of social justice are not only meant to favor the poor and underprivileged. They apply with equal force to those who, notwithstanding their more comfortable position in life, are equally deserving of protection from the courts. Social justice is not a license to trample on the rights of the rich in the guise of defending the poor, where no act of injustice or abuse is being committed against them. Agabon v. NLRC Social justice, as the term suggests, should be used only to correct an injustice. . .The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers. The commitment of the courts to the cause of labor does not prevent it from sustaining the employer when it is in the right. Social justice should be used only to correct an injustice. It must be founded on the recognition of the necessity of interdependence among diverse units of a society, and of the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life. As partners in nation-building, labor and management need each other to foster productivity and economic growth; hence, the need to weigh and balance the rights and welfare of both the employee and employer. PLDT v. NLRC Social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. Compassion for the poor is an imperative in every humane society, but only when the recipient is not a rascal claiming an undeserved privilege. Hence, it may only be invoked by those whose hands are clean and whose motives are blameless.

2.04 Constitutional Rights and Labor Law

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What is the basis for the doctrine of 'not all cases will be resolved in favor of labor'? o Because the constitution also recognizes certain rights of employer; because the law is not designed to oppress the employer. o Justice according to law. Justice according to the facts. BALANCING. 1. Management and the Constitution Sarocam v. Interorient Maritime Ent. The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers. The commitment of this Court to the cause of labor does not prevent us from sustaining the employer when it is in the right. Dayan v. BPI Dayan's job involves much exercise of independent judgment and discretion. A bank, being essentially imbued with public interest, cannot be compelled to continue in its employ a person whom it has lost trust and confidence The policy of preventively suspending an employee under investigation for charges involving dishonesty is an acceptable precautionary measure in order to preserve the integrity of vital papers and documents that may be material and relevant to the case and to which he, otherwise, would have access by virtue of his position. 2. Equal Work Opportunities Francisco v. NLRC In affording full protection to labor, this Court must ensure equal work opportunities regardless of sex, race or creed. Even as we, in every case, attempt to carefully balance the fragile relationship between employees and employers, we are mindful of the fact that the policy of the law is to apply the Labor Code to a greater number of employees. This would enable employees to avail of the benefits accorded to them by law, in line with the constitutional mandate giving maximum aid and protection to labor, promoting their welfare and reaffirming it as a primary social economic force in furtherance of social justice and national development. See Star Paper Corporation v. Simbol - BFOQ; J.Puno discussion

3. Labor as Property Executive Secretary v. CA A profession, trade or calling is a property right within the meaning of our constitutional guarantees. One cannot be deprived of the right to work and the right to make a living because these rights are property rights, the arbitrary and unwarranted deprivation of which normally constitutes an actionable wrong. Nevertheless, no right is absolute, and the proper regulation of a profession, calling, business or trade has always been upheld as a legitimate subject of a valid exercise of the police power by the state particularly when their conduct affects either the execution of legitimate governmental functions, the preservation of the State, the public health and welfare and public morals. According to the maxim, sic utere tuo ut alienum non laedas, it must of course be within the legitimate range of legislative action to define the mode and manner in which every one may so use his own property so as not to pose injury to himself or others. Asuncion v. NLRC A workers employment is property in the constitutional sense. He cannot be deprived of his work without due process. 4. Due Process Requirements Ang Tibay v. CIR Requirements: 1. Right to a hearing, includes the right of a party to present his own case and submit evidence in support thereof. 2. The tribunal must consider the evidence presented. 3. Decision must be supported by evidence. 4. Evidence must be substantialmore than a mere scintilla, such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds equally reasonable would opine otherwise. 5. Decision must be rendered on the evidence presented at the hearing or at least contained in the records and disclosed to the parties affected. Only by confining the administrative tribunal to the evidence disclosed to the parties, can the latter be protected in their right to know and meet the case against them.

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6. Independent consideration of judgemust not simply accept the views of a subordinate in arriving at a decision. 7. Decision rendered in such a manner as to let the parties know the various issues involved and the reasons for the decision rendered. Air Manila Inc. v. Balatbat Additional Requirement: A tribunal so constituted as to give him reasonable assurance of honesty and impartiality, and one of competent jurisdiction. Century Textile Mills v. NLRC The twin requirements of notice and hearing constitute essential elements of due process in cases of employee dismissal: the requirement of notice is intended to inform the employee concerned of the employer's intent to dismiss and the reason for the proposed dismissal; upon the other hand, the requirement of hearing affords the employee an opportunity to answer his employer's charges against him and accordingly to defend himself therefrom before dismissal is effected. Neither of these two requirements can be dispensed with without running afoul of the due process requirement of the 1987 Constitution. Agabon v. NLRC
For termination cases, twin notice ruleNotice to Explain and Notice of Termination.

5. Liberty of Contract Philippine Association of Service Exporters v. Drilon "Protection to labor" does not signify the promotion of employment alone. What concerns the Constitution more paramount is that such an employment be above all, decent, just, and humane. It is bad enough that the country has to send its sons and daughters to strange lands because it cannot satisfy their employment needs at home. Under these circumstances, the Government is duty-bound to insure that our toiling expatriates have adequate protection, personally and economically, while away from home. In this case, the Government has evidence, an evidence the petitioner cannot seriously dispute, of the lack or inadequacy of such protection, and as part of its duty, it has precisely ordered an indefinite ban on deployment. The Court finds furthermore that the Government has not indiscriminately made use of its authority. It is not contested that it has in fact removed the prohibition with respect to certain countries as manifested by the Solicitor General. The nonimpairment clause of the Constitution, invoked by the petitioner, must yield to the loftier purposes targeted by the Government. Freedom of contract and enterprise, like all other freedoms, is not free from restrictions, more so in this jurisdiction, where laissez faire has never been fully accepted as a controlling economic way of life. Leyte Land Transportation Co. v. Leyte Farmers and Workers Union The prohibition to impair the obligation of contracts is not absolute and unqualified. In spite of the constitutional prohibition and the fact that both parties are of full age and competent to contract, it does not necessarily deprive the State of the power to interfere where the parties do not stand upon an equality, or where the public health demands that one party to the contract shall be protected against himself. 6. Welfare State Alalayan v. Napocor The welfare state concept is found in the constitutional clause on the promotion of social justice to ensure the well being and economic security of all the people, and in the pledge of protection to labor with specific authority to regulate the relations between landowners and tenants and between labor and capital. 7. Participation in decision-making process o There must be a line drawn as to when labor has a right in participating in the decision-making process. According to the constitution: participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. THE RIGHT TO PARTICIPATE? To what extent? Dialogue enough? What if there is an impasse? Management Issue 1: those that affect business operations

o o o

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No need for consultation Issue 2: those that affect rights and welfare of employees There must be consultation Labor can go to government for redress

Philippine Airlines v. NLRC Verily, a line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of the employees. In treating the latter, management should see to it that its employees are at least properly informed of its decisions or modes action. Indeed, industrial peace cannot be achieved if the employees are denied their just participation in the discussion of matters affecting their rights. PASEI v. Drilon The petitioners's reliance on the Constitutional guaranty of worker participation "in policy and decision-making processes affecting their rights and benefits" is not well-taken. The right granted by this provision, again, must submit to the demands and necessities of the State's power of regulation. The Constitution declares that: 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. "Protection to labor" does not signify the promotion of employment alone. What concerns the Constitution more paramount is that such an employment be above all, decent, just, and humane. It is bad enough that the country has to send its sons and daughters to strange lands because it cannot satisfy their employment needs at home. Under these circumstances, the Government is duty-bound to insure that our toiling expatriates have adequate protection, personally and economically, while away from home. In this case, the Government has evidence, an evidence the petitioner cannot seriously dispute, of the lack or inadequacy of such protection, and as part of its duty, it has precisely ordered an indefinite ban on deployment. The Court finds furthermore that the Government has not indiscriminately made use of its authority. It is not contested that it has in fact removed the prohibition with respect to certain countries as manifested by the Solicitor General. The non-impairment clause of the Constitution, invoked by the petitioner, must yield to the loftier purposes targeted by the Government. Freedom of contract and enterprise, like all other freedoms, is not free from restrictions, more so in this jurisdiction, where laissez faire has never been fully accepted as a controlling economic way of life. This Court understands the grave implications the questioned Order has on the business of recruitment. The concern of the Government, however, is not necessarily to maintain profits of business firms. In the ordinary sequence of events, it is profits that suffer as a result of Government regulation. The interest of the State is to provide a decent living to its citizens. The Government has convinced the Court in this case that this is its intent. We do not find the impugned Order to be tainted with a grave abuse of discretion to warrant the extraordinary relief prayed for.

Section 3. Labor and the Civil Code


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

Labor Contracts Philippine Telephone and Telegraph v. NLRC While it is true that the parties to a contract may establish any agreements, terms, and conditions that they may deem convenient, the same should not be contrary to law, morals, good customs, public order, or public policy. Carried to its logical consequences, it may even be said that petitioners policy against legitimate marital bonds would encourage illicit or common-law relations and subvert the sacrament of marriage. Parenthetically, the Civil Code provisions on the contract of labor state that the relations between the parties, that is, of capital and labor, are not merely contractual, impressed as they are with so much public interest that the same should yield to the common good. It goes on to intone that neither capital nor labor should visit acts of oppression against the other, nor impair the interest or convenience of the public. In the final reckoning, the danger of just such a policy against marriage followed by petitioner PT&T is that it strikes at the very essence, ideals and purpose of marriage as an

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inviolable social institution and, ultimately, of the family as the foundation of the nation. That it must be effectively interdicted here in all its indirect, disguised or dissembled forms as discriminatory conduct derogatory of the laws of the land is not only in order but imperatively required. Brew Master International v. NAFLU While the employer is not precluded from prescribing rules and regulations to govern the conduct of his employees, these rules and their implementation must be fair, just and reasonable. It must be underscored that no less than our Constitution looks with compassion on the workingman and protects his rights not only under a general statement of a state policy, but under the Article on Social Justice and Human Rights, thus placing labor contracts on a higher plane and with greater safeguards. Verily, relations between capital and labor are not merely contractual. They are impressed with public interest and labor contracts must, perforce, yield to the common good. 3.02 Employer-Employee Standard of Conduct
Art. 1701. Neither capital nor labor shall act oppressively against the other, or impair the interest or convenience of the public.

Fair Treatment Uypitching v. Quiambao The basic principle of human relations, embodied in Article 19 of the Civil Code, provides: Art. 19. Every person must in the exercise of his rights and in the performance of his duties, act with justice, give every one his due, and observe honesty and good faith. Article 19, also known as the principle of abuse of right, prescribes that a person should not use his right unjustly or contrary to honesty and good faith, otherwise he opens himself to liability. It seeks to preclude the use of, or the tendency to use, a legal right (or duty) as a means to unjust ends. There is an abuse of right when it is exercised solely to prejudice or injure another. The exercise of a right must be in accordance with the purpose for which it was established and must not be excessive or unduly harsh; there must be no intention to harm another. Otherwise, liability for damages to the injured party will attach. Law Compliance Sarmiento v. Tuico it is also important to emphasize that the return-to-work order not so much confers a right as it imposes a duty; and while as a right it may be waived, it must be discharged as a duty even against the worker's will. Returning to work in this situation is not a matter of option or voluntariness but of obligation. Employee Obedience and Compliance with Employer Orders Gustilo v. Wyeth Philippines It is the employer's prerogative to prescribe reasonable rules and regulations necessary or proper for the conduct of its business or concern, to provide certain disciplinary measures to implement said rules and to assure that the same be complied with. At the same time, it is one of the fundamental duties of the employee to yield obedience to all reasonable rules, orders, and instructions of the employer, and willful or intentional disobedience thereof, as a general rule, justifies rescission of the contract of service and the preemptory dismissal of the employee. GTE Directories v. Sanchez To sanction disregard or disobedience by employees of a rule or order laid down by management, on the pleaded theory that the rule or order is unreasonable, illegal, or otherwise irregular for one reason or another, would be disastrous to the discipline and order that it is in the interest of both the employer and his employees to preserve and maintain in the working establishment and without which no meaningful operation and progress is possible. Deliberate disregard or disobedience of rules, defiance of management authority cannot be countenanced. This is not to say that the employees have no remedy against rules or orders they regard as unjust or illegal. They may object thereto, ask to negotiate thereon, bring proceedings for redress against the employer before the Ministry of Labor. But until and unless the rules or orders are declared to be illegal or improper by competent authority, the employees ignore or disobey them at their peril. It is impermissible to reverse the process: suspend enforcement of the orders or rules until their legality or propriety shall have been subject of negotiation, conciliation, or arbitration.

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PCIB v. Jacinto The lack of a written or formal designation should not be an excuse to disclaim any responsibility for any damage suffered by the employer due to his negligence. The measure of the responsibility of an employee is that if he performed his assigned task efficiently and according to the usual standards, then he may not be held personally liable for any damage arising there from. Failing in this, the employee must suffer the consequences of his negligence if not lack of due care in the performance of his duties.

Section 4. Labor and International Covenants


4.01 Universal Declaration of Human Rights
Art.3. Everyone has the right to life, liberty and security of person. Art.7. All are equal before the law and are entitled without any discrimination to equal protection of the law. All are entitled to equal protection against any discrimination in violation of this Declaration and against any incitement to such discrimination. Art.17. (1) Everyone has the right to own property alone as well as in association with others. (2) No one shall be arbitrarily deprived of his property. Art.22. Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international co-operation and in accordance with the organization and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality. Art.23. (1) Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment. (2) Everyone, without any discrimination, has the right to equal pay for equal work. (3) Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection. (4) Everyone has the right to form and to join trade unions for the protection of his interests. Art.24. Everyone has the right to rest and leisure, including reasonable limitation of working hours and periodic holidays with pay. Art.25. (1) Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control. (2) Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection.

4.02 International Covenant on Economic, Social and Cultural Rights


PART III Art 6 1. The States Parties to the present Covenant recognize the right to work, which includes the right of everyone to the opportunity to gain his living by work which he freely chooses or accepts, and will take appropriate steps to safeguard this right. 2. The steps to be taken by a State Party to the present Covenant to achieve the full realization of this right shall include technical and vocational guidance and training programmes, policies and techniques to achieve steady economic, social and cultural development and full and productive employment under conditions safeguarding fundamental political and economic freedoms to the individual. PART III Art 7 The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just and favourable conditions of work which ensure, in particular: (a) Remuneration which provides all workers, as a minimum, with: (i) Fair wages and equal remuneration for work of equal value without distinction of any kind, in particular women being guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work; (ii) A decent living for themselves and their families in accordance with the provisions of the present Covenant; (b) Safe and healthy working conditions; (c) Equal opportunity for everyone to be promoted in his employment to an appropriate higher level, subject to no considerations other than those of seniority and competence; (d) Rest, leisure and reasonable limitation of working hours and periodic holidays with pay, as well as remuneration for public holidays PART III Art 9 The States Parties to the present Covenant recognize the right of everyone to social security, including social

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insurance. PART III Art 11 1. The States Parties to the present Covenant recognize the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing and housing, and to the continuous improvement of living conditions. The States Parties will take appropriate steps to ensure the realization of this right, recognizing to this effect the essential importance of international co-operation based on free consent. 2. The States Parties to the present Covenant, recognizing the fundamental right of everyone to be free from hunger, shall take, individually and through international co-operation, the measures, including specific programmes, which are needed: (a) To improve methods of production, conservation and distribution of food by making full use of technical and scientific knowledge, by disseminating knowledge of the principles of nutrition and by developing or reforming agrarian systems in such a way as to achieve the most efficient development and utilization of natural resources; (b) Taking into account the problems of both food-importing and food-exporting countries, to ensure an equitable distribution of world food supplies in relation to need.

4.03 International Covenant on Civil and Political Rights


PART III Art 8 1. No one shall be held in slavery; slavery and the slave-trade in all their forms shall be prohibited. 2. No one shall be held in servitude. 3. (a) No one shall be required to perform forced or compulsory labour (b) Paragraph 3 (a) shall not be held to preclude, in countries where imprisonment with hard labour may be imposed as a punishment for a crime, the performance of hard labour in pursuance of a sentence to such punishment by a competent court. (c) For the purpose of this paragraph the term "forced or compulsory labour" shall not include: (i) Any work or service, not referred to in sub-paragraph (b), normally required of a person who is under detention in consequence of a lawful order of a court, or of a person during conditional release from such detention; (ii) Any service of a military character and, in countries where, conscientious objection is recognized, any national service required by law of conscientious objectors; (iii) Any service exacted in cases of emergency or calamity threatening the life or well-being of the community; (iv) Any work or service which forms part of normal civil obligations.

4.04 Conventions and Recommendations of the ILO International Conventions International School Alliance of Educators v. Quisumbing The Constitution, Labor Code and the International Covenant on Economic, Social, and Cultural Rights impregnably institutionalize in this jurisdiction the long honored legal truism of "equal pay for equal work." Persons who work with substantially equal qualifications, skill, effort and responsibility, under similar conditions, should be paid similar salaries. This rule applies to the School, its "international character" notwithstanding. The International Covenant on Economic, Social, and Cultural Rights in Art.7 provides that: The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just and favorable conditions of work, which ensure, in particular, fair wages and equal remuneration for work of equal value without distinction of any kind, in particular women being guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work. The Philippines, through its Constitution, has incorporated this principle as part of its national laws. The Constitution specifically provides that labor is entitled to "humane conditions of work." The Constitution also directs the State to promote "equality of employment opportunities for all." Similarly, the Labor Code provides that the State shall "ensure equal work opportunities regardless of sex, race or creed. Discrimination, particularly in terms of wages, is frowned upon by the Labor Code (Art.135) The dislocation factor and limited tenure affecting foreign-hires are adequately compensated by certain benefits accorded them which are not enjoyed by local-hires, such as housing, transportation, shipping costs, taxes and home leave travel allowances. Hence, the "dislocation factor" and the foreign-hires' limited tenure also cannot serve as valid bases for the distinction in salary rates.

Section 5. Labor Code of the Philippines


5.01 Decree Title Art.1. This decree shall be known as the Labor Code of the Philippines. 5.02 Effectivity November 1, 1974 5.03 Policy Declaration

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

See also: CONST. Art. XIII, Sec.3

5.04 Rationale, Spirit, Intent Magallanes v. Sun Yat Sen Elementary School The Labor Code was promulgated to promote the welfare and well-being of the working man. Its spirit and intent mandate the speedy administration of justice, with least attention to technicalities but without sacrificing the fundamental requisites of due process. 5.05 Applicability
Art 6 LC Applicability. All rights and benefits granted to workers under this Code shall, except as may otherwise be provided herein, apply alike to all workers, whether agricultural or nonagricultural. (As amended by Presidential Decree No. 570-A, November 1, 1974) Art 276 LC Government employees. The terms and conditions of employment of all government employees, including employees of government-owned and controlled corporations, shall be governed by the Civil Service Law, rules and regulations. Their salaries shall be standardized by the National Assembly as provided for in the New Constitution. However, there shall be no reduction of existing wages, benefits and other terms and conditions of employment being enjoyed by them at the time of the adoption of this Code. 1987 CONSTITUTION ART IXb Sec 2(1) The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters.

Applicability Not of universal application. only applies to: All workers agricultural and non-agricultural GOCCs organized under general laws e.g. Corporation Code All branches of government, and GOCCs, profit or non profit organizations ONLY with regard to wages All private and government employees ONLY with regard to Employees Compensation and State Insurance Fund Not Applicable to the ff.: Government employees should be Civil Service Law and EO 180 GOCC with original charter Art. 9 B, Sec. 2(1) of the Constitution International Agencies and specialized agencies or UN treaty or international conventions o grant of immunity from suit (ex. IRRI, ICMC) o by specific treaty grant of immunity, but such treaty must include provisions for resolution of disputes o if injustice is created due to exemption from suit the REMEDY is to ask the Philippine Government to withdraw the grant of immunity from suit Requisite Relationship Uy v. Bueno Employer-Employee Relationship is importantit is jurisdictional for provisions of the Labor Code on post-employment to apply. Test- GOCC Light Railway Transit Authority v. Venus Under the present state of the law, the test in determining whether a government-owned or controlled corporation is subject to the Civil Service Law is the manner of its creation such that government corporations created by special charter are subject to its provisions while those incorporated under the general Corporation Law are not within its coverage. International Agencies Ebro III v. NLRC

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In order to assure independence, they are immune from suit, thus, Phil. Laws do not apply to them. ... The grant of immunity is by virtue of the Convention on the Privileges and Immunities of Specialized Agencies of the U.N., which has become part of the law of the land under the Constitution. Private School Teachers Chiang Kai Shek College v. Court of Appeals Public School Teachers are governed by the Civil Service Law. Private School Teachers, on the issue of security of tenure (permanent status determination), are governed by the Manual for Private School issued by the DECS and not the Labor Codeonly suppletory. Religious Corporations When the controversy is secular in nature (whether termination was in accordance with law), NLRC has jurisdiction. Austria v. NLRC The Labor Code does not cover ecclesiastical affairs, defined as one which involves the relationship between the church and its members and relate to matters of faith, religious doctrines, worship and governance of the congregation. However, the Labor Code is comprehensive enough to include religious corporations on its secular affairs, as provided by Article 278 of the Labor Code which states that the provisions of this Title shall apply to all establishments or undertakings, whether for profit or not. Obviously, the cited article does not make any exception in favor of a religious corporation. Managerial Employees Penaranda v. Baganga Plywood Petitioner was not a managerial employee. However, he was a member of the managerial staff, which also takes him out of the coverage of labor standards. Like managerial employees, officers and members of the managerial staff are not entitled to the provisions of law on labor standards. 5.06 Rule Making Power - Authority of the Secretary of Labor to promulgate rules for the administration and enforcement of the Code. o But not to amend or repeal laws. Limitation Rule Making Power Policy Instructions Sonza v. ABS-CBN Broadcasting Corp. SONZA argues that Policy Instruction No. 40 issued by then Minister of Labor Blas Ople on 8 January 1979 finally settled the status of workers in the broadcast industry. Under this policy, the types of employees in the broadcast industry are the station and program employees. Policy Instruction No. 40 is a mere executive issuance which does not have the force and effect of law. There is no legal presumption that Policy Instruction No. 40 determines SONZAs status. A mere executive issuance cannot exclude independent contractors from the class of service providers to the broadcast industry. The classification of workers in the broadcast industry into only two groups under Policy Instruction No. 40 is not binding on this Court, especially when the classification has no basis either in law or in fact. Rizal Empire Insurance v. NLRC Petitioners claim, among other things, that respondent Commission committed a grave abuse of discretion amounting to lack of jurisdiction in arbitrarily dismissing petitioners' appeal on a technicality. It invokes the Rules of Court provision on liberal construction of the Rules in the interest of substantial justice. It will be noted however, that the foregoing provision refers to the Rules of Court. On the other hand, the Revised Rules of the National Labor Relations Commission are clear and explicit and leave no room for interpretation. Moreover, it is an elementary rule in administrative law that administrative regulations and policies enacted by administrative bodies to interpret the law which they are entrusted to enforce, have the force of law, and are entitled to great respect. Under the above-quoted provisions of the Revised NLRC Rules, the decision appealed from in this case has become final and executory and can no longer be subject to appeal. Even on the merits, the ruling of the Labor Arbiter appears to be correct; the consistent promotions in rank and salary of the private respondent indicate he must have been a highly

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efficient worker, who should be retained despite occasional lapses in punctuality and attendance. Perfection cannot after all be demanded.

CBTC Employees Union v. Clave In excluding the union members of herein petitioner from the benefits of the holiday pay law, public respondent predicated his ruling on Section 2, Rule IV, Book III of the Rules to implement Article 94 of the labor Code promulgated by the then Secretary of labor and Policy Instructions No. 9. The questioned Section 2, Rule IV, Book III of the Integrated Rules and the Secretary's Policy Instruction No. 9 add another excluded group, namely, 'employees who are uniformly paid by the month'. While the additional exclusion is only in the form of a presumption that all monthly paid employees have already been paid holiday pay, it constitutes a taking away or a deprivation which must be in the law if it is to be valid. An administrative interpretation which diminishes the benefits of labor more than what the statute delimits or withholds is obviously ultra vires. 5.07 Law Interpretation 1. If theres NO doubt, and the language of the law is clear and unambiguous, theres no room for interpretation 2. If theres DOUBT, then resolve in favor of labor (liberal construction). Theres doubt when the law is susceptible to 2 or more interpretation, both or all of which are correct.
Art.4 Construction in favor of labor All doubts in the implementation and interpretation of the provisions of this Code, including its IRR, shall be resolved in favor of labor. CC, Art. 1702 - In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer.

8.

Tolentino: Public good requires this. The safety and decent living of the toiling classes do not affect them alone but are matters of deep and immediate concern to the entire nation. When in any nation, a large section of the inhabitants are not afforded a safe and decent life, the economic progress of the country is impeded, and the level of general well-being is pulled down.

Liberal Construction Manaya v. Alabang Country Club Facts: Manaya was terminated by Alabang Country Club. He filed a case in the LA and won. Respondent appealed to the NLRC who dismissed the petition because it was filed beyond the statutory period of appeals. It ruled that the decision of the LA had become final and executory in the meantime. CA reversed, ordering NLRC to entertain the appeal. Respondent invoked liberal interpretation of procedural rules. Manaya went to SC to question CA. Held: Petition granted. It is a basic and irrefragable rule that in carrying out and in interpreting the provisions of the Labor Code and its implementing regulations, the workingmans welfare should be the primordial and paramount consideration. [This ruling] gives meaning and substance to the liberal and compassionate spirit of the law enunciated in Article 4 of the Labor CodeIndeed, there is no room for liberality *in favor of respondent+ as it would render futile the very purpose for which the principle of liberality is adopted. This Court has repeatedly ruled that delay in the settlement of labor cases cannot be countenanced. Not only does it involve the survival of an employee and his loved ones who are dependent on him for food, shelter, clothing, medicine and education; it also wears down the meager resources of the workers to the point that, not infrequently, they either give up or compromise for less than what is due them. Duncan Association v. Glaxo Wellcome Facts: Company policy requiring employees to disclose relationship with employees of competing drug companies, and resign should said relationship pose conflict of interest, upheld as valid, as against employee claim that it is violation of equal protection of law clause. Held: Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from competitors. The prohibition is reasonable under the circumstances because relationships of that nature might compromise the interests of the company That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments and to expansion and growth. Indeed,

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while our laws endeavor to give life to the constitutional policy on social justice and the protection of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest of fair play.

Salinas v. NLRC Facts: Petitioners were dismissed by AG&P. The issue of whether they were project employees or regular employees was raised. LA and NLRC ruled that they were project employees. SC reversed. Held: Petitioners are regular employees. Art. 281 of the Labor Code is applicable. It is basic and irrefragable rule that in carrying out and interpreting the provisions of the Labor Code and its implementing regulations, the workingman's welfare should be the primordial and paramount consideration. The interpretation herein made gives meaning and substance to the liberal and compassionate spirit of the law enunciated in Article 4 of Labor Code that "all doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing rules and regulations shall be resolved in favor of labor". Here, it is beyond cavil that petitioners had been providing the respondent corporation with continuous and uninterrupted services, except for a day or so gap in their successive employment contracts. They should be treated as regular employees In favor of Labor Rationale Acuna v. CA - It is a time-honored rule that in controversies between a worker and his employer, doubts reasonably arising from the evidence, or in the interpretation of agreements and writing should be resolved in the worker's favor. The policy is to extend the applicability of the decree to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection to labor. Abella v. NLRC Facts: Leaseholder of hacienda made to pay separation pay to her workers. Are the farmworkers entitled to separation pay or not? Is there a duty on the part of the leaseholder to do so? Held: Abella has to pay separation pay to her workers. Art. 284 applicable. In making it applicable, Court adverted to the rule that interpretation should favor labor. It is well-settled that in the implementation and interpretation of the provisions of the Labor Code and its implementing regulations, the workingman's welfare should be the primordial and paramount consideration The policy is to extend the applicability of the decree to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection to labor. Doubt Clemente v. GSIS Facts: Clementes husband was janitor in a DOH skin clinic. He died of nephritis and Hansens disease. GSIS refused Clementes claim for compensation on the ground that such diseases are not occupational ailments. P on the other hand claims that the disease was contracted because of Clementes exposure to different carriers of skin disease while working in a skin clinic. Held: Clemente entitled to compensation. In compensation claims what is required is merely substantial evidence; reasonable work-connection and not direct causal relation. Doubts should be resolved in favor of the claimantemployee. GSISs conservative stand is not consistent with the liberal interpretation of the Labor Code and the social justice guarantee embodied in the Constitution in favor of workers. No Doubt if there is no doubt, there is no room for interpretation Bonifacio v. GSIS - While the court does not dispute petitioner's contention that under the law, in case of doubt in the implementation and interpretation of the provisions of the Labor Code, including its implementing rules and regulations, the doubt shall be resolved in favor of the laborer, the court finds that the same has no application in this case since the pertinent provisions of the Labor Code leave no room for doubt either in their interpretation or application. Sweeping interpretation Bravo v. Employees Compensation Commission Facts: Widow claiming compensation for husband who contracted colon cancer, allegedly due to exposure to chemicals as litho-photo engraving supervisor. Court denied the claim.

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Held: A claimant who depends on the theory of increased risk must present substantial proof to show that his ailment was contracted during his employment. He or she must also submit proof that the risk of contracting the ailment was increased by the particular working conditions. In the present case, the petitioner only enumerated the chemicals to which Bravo was allegedly exposed as a litho-photo engraving supervisor and rely on the "probability" that those chemicals caused his cancer of the colon We are aware of the mandate that social legislation should be applied in consonance with the principles of social justice and protection to labor. However, [the present scheme and theory of employees' compensation under the Labor Code requires a clear medical basis for a claim for benefits to succeed.] [W]e cannot adopt a sweeping interpretation of the law in favor of labor lest we engage in judicial legislation. Factual considerations and rationality Philippine Airlines v. NLRC - That there should be care and solicitude in the protection and vindication of the rights of workingmen cannot be gainsaid; but that care and solicitude cannot justify disregard of relevant facts or eschewal of rationality in the construction of the text of applicable rules in order to arrive at a disposition in favor of an employee who is perceived as otherwise deserving of sympathy and commiseration. Equity and moral consideration Manning International Corp. v. NLRC - Considerations of equity and social justice cannot prevail over against the expressed provision of the labor laws allowing dismissal of employees for cause and without any provision for separation pay.

Fairness Reliance Surety and Insurance v. NLRC - The sympathy of the Court is on the side of the laboring classes, not only because the Constitution imposes sympathy but because of the one-sided relation between labor and capital. The Court must take care, however, that in the contest between labor and capital, the results achieved are fair and in conformity with the rules. Balancing conflicting claims PAL v. NLRC That there should be care and solitude in the protection and vindication of the rights of workingmen cannot be gainsaid; but that care and solicitude cannot justify disregard of relevant facts or eschewal of rationality in the construction of the text of applicable rules in order to arrive at a disposition in favor of an employee who is perceived as otherwise deserving of sympathy and commiseration. Duncan Association v Glaxo Wellcome The sympathy of the Court is on the side of the laboring classes, not only because the Constitution imposes sympathy but because of the one-sided relation between labor and capital. The Court must take care, however, that in the contest between labor and capital, the results achieved are fair and in conformity with the rules. No less than the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments and to expansion and growth. Indeed, while our laws endeavor to give life to the constitutional policy on social justice and the protection of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest.

Section 6. Work Relationship


6.01 Work Relationship
Art 97 LC a. "Person" means an individual, partnership, association, corporation, business trust, legal representatives, or any organized group of persons. b. "Employer" includes any person acting directly or indirectly in the interest of an employer in relation to an employee and shall include the government and all its branches, subdivisions and instrumentalities, all government-owned or controlled corporations and institutions, as well as non-profit private institutions, or organizations. c. "Employee" includes any individual employed by an employer. Art 167 LC f. "Employer" means any person, natural or juridical, employing the services of the employee. g. "Employee" means any person compulsorily covered by the GSIS under Commonwealth Act Numbered One hundred eighty-

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six, as amended, including the members of the Armed Forces of the Philippines, and any person employed as casual, emergency, temporary, substitute or contractual, or any person compulsorily covered by the SSS under Republic Act Numbered Eleven hundred sixty-one, as amended. Art 212 LC e. "Employer" includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer. f. "Employee" includes any person in the employ of an employer. The term shall not be limited to the employees of a particular employer, unless the Code so explicitly states. It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment. Policy Instruction No. 40 (1979) Employment in Broadcast Industry Program employees are those whose skills, talents or services are engaged by the station for a particular or specific program or undertaking and who are not required to observe normal working hours such that on some days they work for less than eight (8) hours and on other days beyond the normal work hours observed by station employees and are allowed to enter into employment contracts with other persons, stations, advertising agencies or sponsoring companies. The engagement of program employees, including those hired by advertising or sponsoring companies, shall be under a written contract specifying, among other things, the nature of the work to be performed, rates of pay, and the programs in which they will work. The contract shall be duly registered by the station with the Broadcast Media Council within three days from its consummation.

A. Definitions
Wages (Art 97) Employer -includes any person acting directly or indirectly in the interest of an employer in relation to an employee and shall include the government and all its branches, subdivisions and instrumentalities, all government-owned or controlled corporations and institutions, as well as non-profit private institutions, or organizations. any person, natural or juridical, employing the services of the employee. Employee any individual employed by an employer.

ERs Compensation and State Insurance Fund (Art167)

Labor Relations (Art212)

any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer.

any person compulsorily covered by the GSIS under Commonwealth Act Numbered One hundred eighty-six, as amended, including the members of the Armed Forces of the Philippines, and any person employed as casual, emergency, temporary, substitute or contractual, or any person compulsorily covered by the SSS under Republic Act Numbered Eleven hundred sixty-one, as amended. any person in the employ of an employer. The term shall not be limited to the employees of a particular employer, unless the Code so explicitly states. It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment.

Employee Uy v. Villanueva In order to sustain a finding of illegal dismissal, we must first determine the relationship between the petitioners and private respondent. Illegal dismissal presupposes that there was an employer-employee relationship between the dismissed employee and the persons complained of. To determine whether there was an employer-employee relationship between petitioners and private respondent, the Court has consistently used the four-fold test. The test calls for the determination of (1) whether the alleged employer has the power of selection and engagement of an employee; (2) whether he has control of the employee with respect to the means and methods by which work is to be accomplished; (3) whether he has the power to dismiss; and (4) whether the employee was paid wages. Of the four, the control test is the most important element. In the instant case, all these elements are attributable to the bank itself and not to petitioners. There is no question that private respondent was an employee of the bank. The same cannot be said of petitioners. Petitioners assumed only limited administrative control of the bank as part of the Committee of Depositors. However, there is no showing that they took over the management and control of the bank. Given that there is in fact no employer-employee relationship between petitioners and private respondents, the Labor Arbiter, and consequently, the NLRC, is without jurisdiction to adjudicate the dispute between them. The cases a Labor Arbiter can hear and decide are employment-related.

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United Pepsi Cola Supervisory Union v. Laguesma Management employees Manager generally refers to anyone who is responsible for subordinates and other organization resources. As a class, managers constitute three levels of a pyramid. What distinguishes them from the rank-and file employees is that they act in the interest of the employer in supervising such rank-and-file employees. [Regardless, however, of their category] managers, vis--vis employers, are, likewise, employees. 4. Types of Managerial Employees: o FIRST-LINE MANAGERS The lowest level in an organization at which individuals are responsible for the work of others is called first-line or first-level management. First-line managers direct operating employees only; they do not supervise other managers. Example of first-line managers are the foreman or production supervisor in a manufacturing plant, the technical supervisor in a research department, and the clerical supervisor in a large office. First-level managers are often called supervisors. o MIDDLE MANAGERS The term middle management can refer to more than one level in an organization. Middle managers direct the activities of other managers and sometimes also those of operating employees. Middle managers principal responsibilities are to direct the activities that implement their organizations policies and to balance the demands of their superiors with the capacities of their subordinates. A plant manager in an electronics firm is an example of a middle manager. o TOP MANAGERS Composed of a comparatively small group of executives, top management is responsible for the overall management of the organization. It establishes operating policies and guides the organizations interactions with its environment. Typical titles of top managers are chief executive officer, president, and senior vice-president. Actual titles vary from one organization to another and are not always a reliable guide to membership in the highest management classification. B. Employer-employee relationship Factual test Television and Production Exponents Inc. v. Servana Four Fold Test: 1. Whether or not employer conducted the selection and engagement of the employee. 2. Whether or not there is payment of wages to the employee by the employer. 3. Whether or not employer has the power to dismiss employee. 4. Whether or not the employer has the power of control over the employee. Jurisprudence is abound with cases that recite the factors to be considered in determining the existence of employeremployee relationship, namely: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to the means and method by which the work is to be accomplished. The most important factor involves the control test. Under the control test, there is an employer-employee relationship when the person for whom the services are performed reserves the right to control not only the end achieved but also the manner and means used to achieve that end. Remington Industrial Sales Corp v. Castaneda The existence of the employer-employee relationship is defined by law according to the facts of each case, regardless of the nature of the activities involved. In this case, the mere fact that the househelper or domestic servant is working within the premises of the business, as in staffhouses for its guest or even for its officers and employees, warrants the conclusion that such househelper is and should be considered as a regular employee of the employer. That she works within company premises and that she does not cater exclusively to the personal comfort of Mr. Tan and his family reflects the existence of Remington's right of control over her functions, which is the primary indicator of the existence of an employer-employee relationship. Established Miguel v. JCT Group, Inc. Employer-employee relationship test: 1) power to select employees 2) who pays for their wages 3) who has the power to dismiss them, and

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4) who exercises control in the methods and the results by which the work is accomplished *** The last factor, the control test, is the most important. Wack-Wack Golf and Country Club v. NLRC An independent contractor is one who undertakes job contracting, i.e., a person who: (a) carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (b) has substantial capital or investment in the form of tools, equipments, machineries, work premises and other materials which are necessary in the conduct of the business. Jurisprudential holdings are to the effect that in determining the existence of an independent contractor relationship, several factors may be considered, such as, but not necessarily confined to, whether or not the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of specified pieces of work; the control and supervision of the work to another; the employers power with respect to the hiring, firing, and payment of the contractors workers; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode, manner and terms of payment. There is indubitable evidence showing that BSMI is an independent contractor, engaged in the management of projects, business operations, functions, jobs and other kinds of business ventures, and has sufficient capital and resources to undertake its principal business. It had provided management services to various industrial and commercial business establishments. Its Articles of Incorporation proves its sufficient capitalization... As a legitimate job contractor, there can be no doubt as to the existence of an employer-employee relationship between the contractor and the workers. BSMI admitted that it employed the respondents, giving the said retired employees some degree of priority merely because of their work experience with the petitioner, and in order to have a smooth transition of operations... Unfortunately, after a study and evaluation of its personnel organization, BSMI was impelled to terminate the services of the respondents on the ground of redundancy. This right to hire and fire is another element of the employer-employee relationship which actually existed between the respondents and BSMI, and not with Wack Wack. There being no employer-employee relationship between the petitioner and respondents Cagasan and Dominguez, the latter have no cause of action for illegal dismissal and damages against the petitioner. Consequently, the petitioner cannot be validly ordered to reinstate the respondents and pay them their claims for backwages. Factors Pacific Consultants International Asia, Inc. v. Schonfeld Jurisprudence is firmly settled that whenever the existence of an employment relationship is in dispute, four elements constitute the reliable yardstick: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct. It is the so-called "control test" which constitutes the most important index of the existence of the employer-employee relationshipthat 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 is to be accomplished. Stated otherwise, an employeremployee relationship exists where the person for whom the services are performed reserves the right to control not only the end to be achieved but also the means to be used in reaching such end. An employer-employee relationship may indeed exist even in the absence of a written contract, so long as the four elements are all present. Gabriel v. Bilon The fact that the drivers do not receive fixed wages but get only that in excess of the so-called boundary *that+ they pay to the owner/operator is not sufficient to withdraw the relationship between them from that of employer and employee. Control test Lopez v. Metropolitan Waterworks and Sewerage System For purposes of determining the existence of employer-employee relationship, the Court has consistently adhered to the four-fold test, namely: (1) whether the alleged employer has the power of selection and engagement of an employee; (2) whether he has control of the employee with respect to the means and methods by which work is to be accomplished; (3) whether he has the power to dismiss; and (4) whether the employee was paid wages. Of the four, the

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control test is the most important element. The control test merely calls for the existence of the right to control, and not the exercise thereof. It is not essential for the employer to actually supervise the performance of duties of the employee, it is enough that the former has a right to wield the power. It is axiomatic that the existence of an employer-employee relationship cannot be negated by expressly repudiating it in an agreement and providing therein that the employee is not an MWSS employee when the terms of the agreement and the surrounding circumstances show otherwise. The employment status of a person is defined and prescribed by law and not by what the parties say it should be. UERMMMC v. Laguesma in Felix v. Buenaseda Residency Residency A residency or resident physician position in a medical specialty is never a permanent one. Residency connotes training and temporary status. It is the step taken by a physician right after post-graduate internship (and after hurdling the Medical Licensure Examinations) prior to his recognition as a specialist or sub-specialist in a given field The nature of the contracts of resident physicians meets traditional tests for determining employer employee relationships, but because the focus of residency is training, they are neither here nor there. Insular Life v. NLRC The critical feature distinguishing the status of an employee from that of an independent contractor is control, that is, whether or not the party who engages the services of another has the power to control the latter's conduct in rendering such services (control test). Although the control test is controlling, it should, however, be obvious that not every form of control that the hiring party reserves to himself over the conduct of the party hired in relation to the services rendered may be accorded the effect of establishing an employer-employee relationship between them. Not every contract that establishes some form of control automatically creates employee-employer relationship. The line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result and the means used to achieve it. Economic test Sevilla v. CA In this jurisdiction, there has been no uniform test to determine the evidence of an employer-employee relation. In general, we have relied on the so-called right of control test, "where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end." Subsequently, however, we have considered, in addition to the standard of right-of control, the existing economic conditions prevailing between the parties, like the inclusion of the employee in the payrolls, in determining the existence of an employer-employee relationship. Francisco v. NLRC In certain cases the control test is not sufficient to give a complete picture of the relationship between the parties, owing to the complexity of such a relationship where several positions have been held by the worker. The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers power to control the employee with respect to the means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the activity or relationship. Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as: 1. the extent to which the services performed are an integral part of the employers business; 2. the extent of the workers investment in equipment and facilities; 3. the nature and degree of control exercised by the employer; 4. the workers opportunity for profit and loss; 5. the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; 6. the permanency and duration of the relationship between the worker and the employer; and

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7.

the degree of dependency of the worker upon the employer for his continued employment in that line of business.

Agreement - employer-employee relationship determined by law, agreement of both parties to the contrary notwithstanding (See Lopez v. MWSS) San Miguel Corp. v. Aballa Employer-employee relationship exists between the principal of a labor-only contractor and the employee Employer-employee relationship in labor-only and job-contracting: Labor-only contracting is prohibited by law because it is a circumvention of the provisions of the Labor Code. Hence, in labor-only contracts, the law creates an employee-employer relationship between the principal and the workers so that the former shall be liable to the latter as if the latter were directly employed by him. In contrast, in legitimate labor contracting, the law creates an employeremployee relationship for a limited purpose, i.e., to ensure that the employees are paid their wages. The principal employer becomes jointly and severally liable with the job contractor, only for the payment of the employees wages whenever the contractor fails to pay the same. Other than that, the principal employer is not responsible for any claim made by the employees. Sonza v. ABS-CBN Broadcasting Corp. There is no employer-employee relationship between Sonza and ABS-CBN. The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. Applying the control test, SONZA is not an employee but an independent contractor. The clear implication is that SONZA had a free hand on what to say or discuss in his shows provided he did not attack ABS-CBN or its interests. ABS-CBNs control was limited only to the result of SONZAs work, whether to broadcast the final product or not. The records do not show that ABS-CBN exercised any supervision and control over how SONZA utilized his skills and talent in his shows. Even an independent contractor can validly provide his services exclusively to the hiring party. In the broadcast industry, exclusivity is not necessarily the same as control. Insular Life v. NLRC It is axiomatic that the existence of an employer-employee relationship cannot be negated by expressly repudiating it in the management contract and providing therein that the "employee" is an independent contractor when the terms of the agreement clearly show otherwise. For, the employment status of a person is defined and prescribed by law and not by what the parties say it should be. In determining the status of the management contract, the "four-fold test" on employment earlier mentioned has to be applied Tabas v. California Marketing The existence of an employer-employees relation is a question of law and being such, it cannot be made the subject of agreement. The determination of whether or not there is an employer-employee relation depends upon four standards: (1) the manner of selection and engagement of the putative employee; (2) the mode of payment of wages; (3) the presence or absence of a power of dismissal; and (4) the presence or absence of a power to control the putative employee's conduct. Of the four, the right-of-control test has been held to be the decisive factor. When an employer-employee relationship is created by fiction of law, as in a labor-only contract in this case, the Court need not consider whether it is the labor-only contractor (Livi) or principal (California) which exercises control over the petitioner vis-a-vis the four barometers reffered to above, since by fiction of law, either or both shoulder responsibility. Broadcast talents performers Peoples Broadcasting Corp v. Sec. of DOLE TAPE v. Servana TAPE relies on Policy Instruction No. 40, issued by the Department of Labor, in classifying respondent as a program employee and equating him to be an independent contractor. However, TAPE failed to adduce any evidence to prove that it complied with the requirements laid down in the policy instruction. It did not even present its contract with respondent. Neither did it comply with the contract-registration requirement. Even granting arguendo that respondent is a program employee, stills, classifying him as an independent contractor is misplaced. The theory of TAPE that

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petitioner is an independent contractor runs counter to their very own allegation that petitioner is a talent or a program employee. An independent contractor is not an employee of the employer, while a talent or program employee is an employee. The only difference between a talent or program employee and a regular employee is the fact that a regular employee is entitled to all the benefits that are being prayed for Respondent had been continuously under the employ of TAPE from 1995 until his termination in March 2000, or for a span of 5 years. Regardless of whether or not respondent had been performing work that is necessary or nd desirable to the usual business of TAPE, respondent is still considered a regular employee under 2 sentence of Article 280 of the Labor Code. As a regular employee, he can only be terminated for a just or valid cause. Dumpit-Murillo v. CA The elements to determine the existence of an employer employee relationship are: (a) the selection and engagement of the employee (b) the payment of wages, (c) the power of dismissal, (d) the employers power to control. The duties of the Petitioner as enumerated in her employment contract indicate that ABC had control over the work of the Petitioner. Aside from control, ABC also dictated the work assignments and payment of Petitioners wages. ABC also had the power to dismiss her. All these being present, clearly there existed an employer-employee relationship between Petitioner and ABC. ABS-CBN v. Nazareno In the case at bar, however, the employer-employee relationship between petitioner and respondents has been proven. First. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity status was required from them because they were merely hired through petitioners personnel department just like any ordinary employee. Second. The so-called talent fees of respondents correspond to wages given as a result of an employeremployee relationship. Respondents did not have the power to bargain for huge talent fees, a circumstance negating independent contractual relationship. Third. Petitioner could always discharge respondents should it find their work unsatisfactory, and respondents are highly dependent on the petitioner for continued work. Fourth. The degree of control and supervision exercised by petitioner over respondents through its supervisors negates the allegation that respondents are independent contractors. The presumption is that when the work done is an integral part of the regular business of the employer and when the worker, relative to the employer, does not furnish an independent business or professional service, such work is a regular employment of such employee and not an independent contractor. The Court will peruse beyond any such agreement to examine the facts that typify the parties actual relationship. Method wage payment Almirez v. Infinite Loop Technology The use of the word salary is not determinative of an ER-EE relationship. Salary is defined as remuneration for services given. The action here is one for breach of contract for professional services, not an action arising out of employer-employee relationship as there was none between Infinite Loop Technology. (The latter did not exercise control over the former). Lazaro v. SSS Issue here is whether respondent Laudato is an employee who should be covered by SSS. Court held that for the purposes of coverage under the Social Security Act, the determination of employer-employee relationship warrants the application of the "control test," that is, whether the employer controls or has reserved the right to control the employee, not only as to the result of the work done, but also as to the means and methods by which the same is accomplished. The fact that Laudato was paid by way of commission does not preclude the establishment of an employer-employee relationship. Hours of work Lazaro v. SSS Neither does it follow that a person who does not observe normal hours of work cannot be deemed an employee. In Cosmopolitan Funeral Homes, Inc. v. Maalat, the Supreme Court declared that there was an employer-employee relationship, noting that "[the] supervisor, although compensated on commission basis, [is] exempt from the observance of normal hours of work for his compensation is measured by the number of sales he makes. The

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determination of an employer-employee relationship depends heavily on the particular factual circumstances attending the professional interaction of the parties. Hours of work is not conclusively determinative of such status or relationship. Proof TAPE v. Servana bundy card and ID were used to prove control and existence of EE-ER relationship The bundy cards representing the time petitioner had reported for work are evident proofs of private respondents control over petitioner more particularly with the time he is required to report for work during the noontime program of "Eat Bulaga!" If it were not so, petitioner would be free to report for work anytime even not during the noontime program of "Eat Bulaga!" from 11:30 a.m. to 1:00 p.m. and still gets his compensation for being a "talent." Precisely, he is being paid for being the security of "Eat Bulaga!" during the above-mentioned period. The daily time cards of petitioner are not just for mere record purposes as claimed by private respondents. It is a form of control by the management of private respondent TAPE. Respondent presented his identification card to prove that he is indeed an employee of TAPE. It has been in held that in a business establishment, an identification card is usually provided not just as a security measure but to mainly identify the holder thereof as a bona fide employee of the firm who issues it. Lopez v. Bodega City The issue of whether or not an employer-employee relationship exists in a given case is essentially a question of fact. It is a basic rule of evidence that each party must prove his affirmative allegation. If he claims a right granted by law, he must prove his claim by competent evidence, relying on the strength of his own evidence and not upon the weakness of that of his opponent. The test for determining on whom the burden of proof lies is found in the result of an inquiry as to which party would be successful if no evidence of such matters were given. In an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of an employee was for a valid cause. However, before a case for illegal dismissal can prosper, an employer-employee relationship must first be established. In this case, complainant failed to discharge the burden of proof incumbent upon her. To prove the element of payment of wages, petitioner presented a petty cash voucher showing that she received an allowance for five (5) days. The CA did not err when it held that a solitary petty cash voucher did not prove that petitioner had been receiving salary from respondents or that she had been respondents' employee for 10 years. Indeed, if petitioner was really an employee of respondents for that length of time, she should have been able to present salary vouchers or pay slips and not just a single petty cash voucher. The Court agrees with respondents that petitioner could have easily shown other pieces of evidence such as a contract of employment, SSS or Medicare forms, or certificates of withholding tax on compensation income; or she could have presented witnesses to prove her contention that she was an employee of respondents. Petitioner failed to do so. McLeod v. NLRC McLeod could have presented evidence to support his allegation of employer-employee relationship between him and any of Filsyn, SRTI, and FETMI, but he did not. Appointment letters or employment contracts, payrolls, organization charts, SSS registration, personnel list, as well as testimony of co-employees, may serve as evidence of employee status. It is a basic rule in evidence that parties must prove their affirmative allegations. While technical rules are not strictly followed in the NLRC, this does not mean that the rules on proving allegations are entirely ignored. Bare allegations are not enough. They must be supported by substantial evidence at the very least. Domasig v NLRC It has long been established that in administrative and quasi-judicial proceedings, substantial evidence is sufficient as a basis for judgment on the existence of employer-employee relationship. No particular form of evidence is required is required to prove the existence of such employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted. Substantial evidence has been defined to be such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, and its absence is not shown by stressing that there is contrary evidence on record, direct or circumstantial, for the appellate court cannot substitute its own judgment or criterion for that of the trial court in determining wherein lies the weight of evidence or what evidence is entitled to belief. Absence of relationship Lopez v. Bodega City

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Not every form of control that the hiring party reserves to himself over the conduct of the party hired in relation to the services rendered may be accorded the effect of establishing an employer-employee relationship between them in the legal or technical sense of the term. A line must be drawn somewhere, if the recognized distinction between an employee and an individual contractor is not to vanish altogether. Realistically, it would be a rare contract of service that gives untrammeled freedom to the party hired and eschews any intervention whatsoever in his performance of the engagement. Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result and the means used to achieve it. Abante v. Lamadrid To ascertain the existence of an employer-employee relationship, jurisprudence has invariably applied the four-fold test, namely: (1) the manner of selection and engagement; (2) the payment of wages; (3) the presence or absence of the power of dismissal; and (4) the presence or absence of the power of control. Of these four, the last one is the most important. Under the control test, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved, but also the manner and means to be used in reaching that end. Where a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated according to the result of his efforts and not the amount thereof, no relationship of employer-employee exists. Denial negative pregnant rule R Transport Corp v. Ejandra A negative pregnant is a form of negative expression which carries with it an affirmation or at least an implication of some kind favorable to the adverse party. It is a denial pregnant with an admission of the substantial facts alleged in the pleading. Where a fact is alleged with qualifying or modifying language and the words of the allegation as so qualified or modified are literally denied, has been held that the qualifying circumstances alone are denied while the fact itself is admitted. Petitioners claim that private respondent was legally dismissed for abandonment was in fact a negative pregnant: an acknowledgement that there was no mutual termination of the alleged contract of lease and that private respondent was its employee. The fact that petitioner paid private respondent on commission basis did not rule out the presence of an employee-employer relationship. Article 97(f) of the Labor Code clearly provides that an employees wages can be in the form of commissions. 6.02 Independent Contractor and Labor-only Contractor
Independent Contractors 1. has sufficient substantial capital/investment in machinery, tools or equipment directly or intended to be related to the job contracted 2. carries an independent business different from the employers 3. undertakes to perform the job under its own account and responsibility 4. not under control and supervision of the employer No EER except when the contractor or the subcontractor fails to pay the wages of the EEs (Art. 106(2)) LIMITED LIABILITY (principal solidarily liable with contractor or subcontractor only when the latter fails to comply with the requirements as to unpaid wages and other labor standards violations Permissible Labor-Only Contractors 1. no substantial capital/investment in the form of machinery, tools or equipment 2. no independent business 3. performs activities directly related to the main business of the principal 4. under control and supervision of the ER

Principal treated as direct employer of the person recruited in all instances (Art106(4)) Liable FULLY as an ER

Prohibited

Art 106 LC Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the

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provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. Art 107 LC Indirect employer. The provisions of the immediately preceding article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. Art 109 LC Solidary liability. The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers. DOLE Order No. 18-02 Series of 2002 : RULES IMPLEMENTING ARTICLES 106 TO 109 OF THE LABOR CODE, AS AMENDED By virtue of the power vested in the Secretary of Labor and Employment under Articles 5 (Rulemaking) and 106 (Contractor or Subcontractor) of the Labor Code of the Philippines, as amended, the following regulations governing contracting and subcontracting arrangements are hereby issued: Section 1. Guiding principles. - Contracting and subcontracting arrangements are expressly allowed by law and are subject to regulation for the promotion of employment and the observance of the rights of workers to just and humane conditions of work, security of tenure, selforganization, and collective bargaining. Labor-only contracting as defined herein shall be prohibited. Section 2 . Coverage. - These Rules shall apply to all parties of contracting and subcontracting arrangements where employeremployee relationship exists. Placement activities through private recruitment and placement agencies as governed by Articles 25 to 39 of the Labor Code are not covered by these Rules. Section 3. Trilateral Relationship in Contracting Arrangements. In legitimate contracting, there exists a trilateral relationship under which there is a contract for a specific job, work or service between the principal and the contractor or subcontractor, and a contract of employment between the contractor or subcontractor and its workers. Hence, there are three parties involved in these arrangements, the principal which decides to farm out a job or service to a contractor or subcontractor, the contractor or subcontractor which has the capacity to independently undertake the performance of the job, work or service, and the contractual workers engaged by the contractor or subcontractor to accomplish the job work or service. Section 4. Definition of Basic Terms. - The following terms as used in these Rules, shall mean: (a) "Contracting" or "subcontracting" refers to an arrangement whereby a principal agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. (b) "Contractor or subcontractor" refers to any person or entity engaged in a legitimate contracting or subcontracting arrangement. (c) "Contractual employee" includes one employed by a contractor or subcontractor to perform or complete a job, work or service pursuant to an arrangement between the latter and a principal. (d) "Principal" refers to any employer who puts out or farms out a job, service or work to a contractor or subcontractor. Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this purpose, laboronly contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are present: i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or ii) the contractor does not exercise the right to control over the performance of the work of the contractual employee. The foregoing

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provisions shall be without prejudice to the application of Article 248 (C ) of the Labor Code, as amended. "Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service contracted out. The "right to control" shall refer to the right reserved to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end. Section 6. Prohibitions. Notwithstanding Section 5 of these Rules, the following are hereby declared prohibited for being contrary to law or public policy: (a) Contracting out of a job, work or service when not done in good faith and not justified by the exigencies of the business and the same results in the termination of regular employees and reduction of work hours or reduction or splitting of the bargaining unit; (b) Contracting out of work with a "cabo" as defined in Section 1 (ii), Rule I, Book V of these Rules. "Cabo" refers to a person or group of persons or to a labor group which, in the guise of a labor organization, supplies workers to an employer, with or without any monetary or other consideration whether in the capacity of an agent of the employer or as an ostensible independent contractor; (c) Taking undue advantage of the economic situation or lack of bargaining strength of the contractual employee, or undermining his security of tenure or basic rights, or circumventing the provisions of regular employment, in any of the following instances: i) In addition to his assigned functions, requiring the contractual employee to perform functions which are currently being performed by the regular employees of the principal or of the contractor or subcontractor; ii) Requiring him to sign, as a precondition to employment or continued employment, an antedated resignation letter; a blank payroll; a waiver of labor standards including minimum wages and social or welfare benefits; or a quitclaim releasing the principal, contractor or subcontractor from any liability as to payment of future claims; and iii) Requiring him to sign a contract fixing the period of employment to a term shorter than the term of the contract between the principal and the contractor or subcontractor, unless the latter contract is divisible into phases for which substantially different skills are required and this is made known to the employee at the time of engagement; (e) Contracting out of a job, work or service through an in-house agency which refers to a contractor or subcontractor engaged in the supply of labor which is owned, managed or controlled by the principal and which operates solely for the principal; (f) Contracting out of a job, work or service directly related to the business or operation of the principal by reason of a strike or lockout whether actual or imminent; (g) Contracting out of a job, work or service being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to self organization as provided in Art. 248 (c) of the Labor Code, as amended. Section 7. Existence of an employer-employee relationship. The contractor or subcontractor shall be considered the employer of the contractual employee for purposes of enforcing the provisions of the Labor Code and other social legislation. The principal, however, shall be solidarily liable with the contractor in the event of any violation of any provision of the Labor Code, including the failure to pay wages. The principal shall be deemed the employer of the contractual employee in any of the following cases, as declared by a competent authority: (a) where there is labor-only contracting; or (b) where the contracting arrangement falls within the prohibitions provided in Section 6 (Prohibitions) hereof. Section 8. Rights of Contractual Employees. Consistent with Section 7 of these Rules, the Contractual employee shall be entitled to all the rights and privileges due a regular employee as provided for in the Labor Code, as amended, to include the following: (a) Safe and healthful working conditions; (b) Labor standards such as service incentive leave, rest days, overtime pay, holiday pay, 13th month pay and separation pay; (c) Social security and welfare benefits; (d) Self-organization, collective bargaining and peaceful concerted action; and (e) Security of tenure. Section 9. Contract between contractor or subcontractor and contractual employee. Notwithstanding oral or written stipulations to the contrary, the contract between the contractor or subcontractor and the contractual employee, which shall be in writing, shall include the following terms and conditions: (a) The specific description of the job, work or service to be performed by the contractual employee; (b) The place of work and terms and conditions of employment, including a statement of the wage rate applicable to the individual contractual employee; and (c) The term or duration of employment, which shall be coextensive with the contract of the principal and subcontractor, or with the specific phase for which the contractual employee is engaged, as the case may be. The contractor or subcontractor shall inform the contractual employee of the foregoing terms and conditions on or before the first day of his employment. Section 10. Effect of Termination of Contractual Employment. In cases of termination of employment prior to the expiration of the contract between the principal and the contractor or subcontractor, the right of the contractual employee to separation pay or other related benefits shall be governed by the applicable laws and jurisprudence on termination of employment. Where the termination

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results from the expiration of the contract between the principal and the contractor or subcontractor, or from the completion of the phase of the job, work or service for which the contractual employee is engaged, the latter shall not be entitled to separation pay. However, this shall be without prejudice to completion bonuses or other emoluments, including retirement pay as may be provided by law or in the contract between the principal and the contractor or subcontractor. Section 11. Registration of Contractors or Subcontractors. Consistent with the authority of the Secretary of Labor and Employment to restrict or prohibit the contracting out of labor through appropriate regulations, a registration system to govern contracting arrangements and to be implemented by the Regional Offices is hereby established. The registration of contractors and subcontractors shall be necessary for purposes of establishing an effective labor market information and monitoring. Failure to register shall give rise to the presumption that the contractor is engaged in labor-only contracting. Section 12. Requirements for registration. A contractor or subcontractor shall be listed in the registry of contractors and subcontractors upon completion of an application form to be provided by the DOLE. The applicant contractor or subcontractor shall provide in the application form the following information: (a) he name and business address of the applicant and the area or areas where it seeks to operate; (b) he names and addresses of officers, if the applicant is a corporation, partnership, cooperative or union; (c) The nature of the applicant's business and the industry or industries where the applicant seeks to operate; (d) The number of regular workers; the list of clients, if any; the number of personnel assigned to each client, if any and the services provided to the client; (e) The description of the phases of the contract and the number of employees covered in each phase, where appropriate; and (f) A copy of audited financial statements if the applicant is a corporation, partnership, cooperative or a union, or copy of the latest ITR if the applicant is a sole proprietorship. The application shall be supported by: (a) A certified copy of a certificate of registration of firm or business name from the Securities and Exchange Commission (SEC), Department of Trade and Industry (DTI), Cooperative Development Authority (CDA), or from the DOLE if the applicant is a union; and (b) A certified copy of the license or business permit issued by the local government unit or units where the contractor or subcontractor operates. The application shall be verified and shall include an undertaking that the contractor or subcontractor shall abide by all applicable labor laws and regulations. Section 13. Filing and processing of applications. The application and its supporting documents shall be filed in triplicate in the Regional Offices where the applicant principally operates. No application for registration shall be accepted unless all the foregoing requirements are complied with. The contractor or subcontractor shall be deemed registered upon payment of a registration fee of P100.00 to the Regional Office. Where all the supporting documents have been submitted, the Regional Office shall deny or approve the application within seven (7) working days after its filing. Upon registration, the Regional Office shall return one set of the dulystamped application documents to the applicant, retain one set for its file, and transmit the remaining set to the Bureau of Local Employment. The Bureau shall devise the necessary forms for the expeditious processing of all applications for registration. Section 14. Duty to produce copy of contract between the principal and the contractor or subcontractor. The principal or the contractor or subcontractor shall be under an obligation to produce a copy of the contract between the principal and the contractor in the ordinary course of inspection. The contractor shall likewise be under an obligation to produce a copy of the contract of employment of the contractual worker when directed to do so by the Regional Director or his authorized representative. A copy of the contract between the contractual employee and the contractor or subcontractor shall be furnished the certified bargaining agent, if there is any. Section 15. Annual Reporting of Registered Contractors. The contractor or subcontractor shall submit in triplicate its annual report using a prescribed form to the appropriate Regional Office not later than the 15th of January of the following year. The report shall include: (a) A list of contracts entered with the principal during the subject reporting period; (b) The number of workers covered by each contract with the principal; (c) A sworn undertaking that the benefits from the Social Security System (SSS), the Home Development Mutual Fund (HDMF), PhilHealth, Employees Compensation Commission (ECC), and remittances to the Bureau of Internal Revenue (BIR) due its contractual employees have been made during the subject reporting period. The Regional Office shall return one set of the duly-stamped report to the contractor or subcontractor, retain one set for its file, and transmit the remaining set to the Bureau of Local Employment within five (5) days from receipt thereof. Section 16. Delisting of contractors or subcontractors. Subject to due process, the Regional Director shall cancel the registration of contractors or subcontractors based on any of the following grounds: (a) Non-submission of contracts between the principal and the contractor or subcontractor when required to do so; (b) Non-submission of annual report; (c) Findings through arbitration that the contractor or subcontractor has engaged

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in labor-only contracting and the prohibited activities as provided in Section 6 (Prohibitions) hereof; and (d) Non-compliance with labor standards and working conditions. Section 17. Renewal of registration of contractors or subcontractors. All registered contractors or subcontractors may apply for renewal of registration every three years. For this purpose, the Tripartite Industrial Peace Council (TIPC) as created under Executive Order No. 49, shall serve as the oversight committee to verify and monitor the following: (a) Engaging in allowable contracting activities; and (b) Compliance with administrative reporting requirements. Section 18. Enforcement of Labor Standards and Working Conditions. Consistent with Article 128 (Visitorial and Enforcement Power) of the Labor Code, as amended, the Regional Director through his duly authorized representatives, including labor regulation officers shall have the authority to conduct routine inspection of establishments engaged in contracting or subcontracting and shall have access to employer's records and premises at any time of the day or night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of the Labor Code and of any labor law, wage order, or rules and regulations issued pursuant thereto. The findings of the duly authorized representative shall be referred to the Regional Director for appropriate action as provided for in Article 128, and shall be furnished the collective bargaining agent, if any. Based on the visitorial and enforcement power of the Secretary of Labor and Employment in Article 128 (a), (b), (c) and (d), the Regional Director shall issue compliance orders to give effect to the labor standards provisions of the Labor Code, other labor legislation and these guidelines. Section 19. Solidary liability. The principal shall be deemed as the direct employer of the contractual employees and therefore, solidarily liable with the contractor or subcontractor for whatever monetary claims the contractual employees may have against the former in the case of violations as provided for in Sections 5 (Labor-Only contracting), 6 (Prohibitions), 8 (Rights of Contractual Employees) and 16 (Delisting) of these Rules. In addition, the principal shall also be solidarily liable in case the contract between the principal and contractor or subcontractor is preterminated for reasons not attributable to the fault of the contractor or subcontractor. Section 20. Supersession. All rules and regulations issued by the Secretary of Labor and Employment inconsistent with the provisions of this Rule are hereby superseded. Contracting or subcontracting arrangements in the construction industry, under the licensing coverage of the PCAB and shall not include shipbuilding and ship repairing works, however, shall continue to be governed by Department Order No. 19, series of 1993. Section 21. Effectivity. This Order shall be effective fifteen (15) days after completion of its publication in two (2) newspapers of general circulation. Manila, Philippines, 21 February 2002.

Under the LC, there are two types of work contracting: labor-only and legitimate job-contracting. In legitimate job-contracting, there exists a trilateral relationship under which there is a contract for a specific job, work or service between the principal and the contractor or subcontractor, and a contract of employment between the contractor or subcontractor and its workers. Hence, there are three parties involved in these arrangements: the principal which decides to farm out a job or service, the contractor or subcontractor which has the capacity to independently undertake the performance of the job, work or service, and the contractual workers engaged by the contractor or subcontractor to accomplish such job, work or service. Labor-only contracting refers to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are present: o The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal, or o The contractor does not exercise the right to control over the performance of the work of the contractual employee. Employer-employee relationship in labor-only and job-contracting: Labor-only contracting is prohibited by law because it is a circumvention of the provisions of the Labor Code. Hence, in labor-only contracts, the law creates an employee-employer relationship between the principal and the workers so that the former shall be liable to the latter as if the latter were directly employed by him. Contra: In legitimate labor contracting, the

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law creates an employer-employee relationship for a limited purpose, i.e., to ensure that the employees are paid their wages. The principal employer becomes jointly and severally liable with the job contractor, only for the payment of the employees wages whenever the contractor fails to pay the same. Other than that, the principal employer is not responsible for any claim made by the employees. It follows that there are two types of contractors: labor-only contractors and legitimate independent contractors. The test to determine the existence of independent contractorship is whether one claiming to be an independent contractor has contracted to do the work according to his own methods and without being subject to the control of the employer, except only as to the results of the work.

A. Independent Contractor Management Function determination needed Manila Electric Co. v. Quisumbing Contracting out is not unlimited; rather, it is a prerogative that management enjoys subject to well-defined legal limitations. [T]he company can determine in its best business judgment whether it should contract out the performance of some of its work for as long as the employer is motivated by good faith, and the contracting out must not have been resorted to circumvent the law or must not have been the result of malicious or arbitrary action. The Labor Code and its implementing rules also contain specific rules governing contracting out (Department or Labor Order No. 10, May 30, 1997, Sections 1-25). Trilateral Relationship PAL v. Ligan In legitimate contracting, there exists a trilateral relationship under which there is a contract for a specific job, work or service between the principal and the contractor or subcontractor, and a contract of employment between the contractor or subcontractor and its workers. Hence, there are three parties involved in these arrangements, the principal which decides to farm out a job or service to a contractor or subcontractor, the contractor or subcontractor which has the capacity to independently undertake the performance of the job, work or service, and the contractual workers engaged by the contractor or subcontractor to accomplish the job, work or service. Requirements Independent Contractor Iligan Cement v. Fliasor PAL v. Ligon One who claims to be an independent contractor has to prove that he contracted to do the work according to his own methods and without being subject to the employer's control except only as to the results. Lakas v. Burlingame Corp. Manila Electric Co. v. Benamira Job (independent) contracting is present if the following conditions are met: (a) the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except to the result thereof; and (b) the contractor has substantial capital or investments in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of his business. Given the above distinction and the provisions of the security service agreements entered into by petitioner with ASDAI and AFSISI, we are convinced that ASDAI and AFSISI were engaged in [legitimate] job contracting. Desirable Unnecessary Manila Electric Co. v. Benamira The individual respondents can not be considered as regular employees of the MERALCO for, although security services are necessary and desirable to the business of MERALCO, it is not directly related to its principal business and may even be considered unnecessary in the conduct of MERALCOs principal business, which is the distribution of electricity. NB: the text of Art. 280 actually says necessary or desirable

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Proof Oregas v. NLRC

Employer-Employee Relationship Mercury Drug v. Libunao Respondent Libunao here (victim of harassment by the security guard of MD) has no cause of action for quasi-delict against MD. Art.2180 of the Civil Code does not apply, because MD is not the employer of Sido, but Black Shield Services Agency. Court: Where the security agency recruits, hires and assigns the works of its watchmen or security guards to a client, the employer of such guards or watchmen is such agency, and not the client, since the latter has no hand in selecting the security guards. Thus, the duty to observe the diligence of a good father of a family cannot be demanded from the said client. MD had assigned Sido to help the management open and close the door of the drug store; inspect the bags of customers as they enter the store; and, check the receipts issued by the cashier to said customers for their purchases. Such circumstances do not automatically make the security guard the employee of the petitioner, and, as such, liable for the guard's tortious acts. The fact that a client company may give instructions or directions to the security guards assigned to it, does not, by itself, render the client responsible as an employer of the security guards concerned and liable for their wrongful acts or omissions. PAL v. NLRC (1998) The effect of labor-only contracting is that the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him (Art. 106, Labor Code). In other words, the principal is considered as the employer, the labor-only contractor being treated as merely an agent of the former. In this case, PAL and G.C. Services Enterprises are jointly and severally liable to the private respondents for the latters monetary claims. The reason is that G.C. Services Enterprises, being a labor only contractor, is merely an agent of the petitioner (the employer); the resultant liability must be shouldered by either one or shared by both. Hence, petitioner cannot avoid liability by invoking its Service Agreement with G.C. Services Enterprises considering that here the liability is imposed by law. Liability See Art.106 Jaguar v. Sales Under Articles 106, 107 and 109 of the Labor Code, the joint and several liability of the contractor and the principal is mandated to assure compliance of the provisions therein including the statutory minimum wage. The contractor, petitioner in this case, is made liable by virtue of his status as direct employer. On the other hand, Delta Milling, as principal, is made the indirect employer of the contractor's employees for purposes of paying the employees their wages should the contractor be unable to pay them. This joint and several liability facilitates, if not guarantees, payment of the workers' performance of any work, task, job or project, thus giving the workers ample protection as mandated by the 1987 Constitution. Meralco v. NLRC Taken together, an indirect employer (as defined by Article 107) can only be held solidarily liable with the independent contractor or subcontractor (as provided under Article 109) in the event that the latter fails to pay the wages of its employees (as described in Article 106). The joint and several liability of the principal with the contractor and subcontractor were enacted to ensure compliance with the provisions of the Labor Code, principally those on statutory minimum wage. This liability facilitates, if not guarantees, payment of the workers compensation, thus, giving the workers ample protection as mandated by the 1987 Constitution. Meralco v. Benamira The fact that there is no actual and direct employer-employee relationship between MERALCO and the individual respondents does not exonerate MERALCO from liability as to the monetary claims of the individual respondents.

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When MERALCO contracted for security services with ASDAI as the security agency that hired individual respondents to work as guards for it, MERALCO became an indirect employer of individual respondents pursuant to Article 107 of the Labor Code (See Art.107) When ASDAI as contractor failed to pay the individual respondents, MERALCO as principal becomes jointly and severally liable for the individual respondents wages, under Articles 106 and 109 of the Labor Code. B. Labor-only Contractor General Principle: Labor-only contracting prohibited by law as against public policy. Effect: Requisites and Prohibition Mandaue v. Andales There is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. Based on Article 106 of the Labor Code and Sections 5 and 7 of the Implementing Rules, "labor-only" contracting exists when the following criteria are present: (1) where the contractor or subcontractor supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among other things; and the workers recruited and placed by the contractor or subcontractor are performing activities which are directly related to the principal business of such employer; or (2) where the contractor does not exercise the right to control the performance of the work of the contractual employee. Aboitiz Haulers Inc v. Dimapatol The first two paragraphs of Art. 106 set the general rule that a principal is permitted by law to engage the services of a contractor for the performance of a particular job, but the principal, nevertheless, becomes solidarily liable with the contractor for the wages of the contractors employees. The third paragraph of Art. 106, however, empowers the Secretary of Labor to make distinctions between permissible job contracting and "labor-only" contracting, which is a prohibited act further defined under the last paragraph. In determining whether or not a "labor-only" contracting exists, Art. 106 of the Labor Code and Section 5 of the Rules Implementing Articles 106 to 109 of the Labor Code, as amended, provides the following criteria: (1) where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among other things; (2) the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer; and (3) the contractor does not exercise the right to control the performance of the work of the contractual employee. In order that one is considered by law as a "labor-only" contractor, all three aforementioned criteria need not be present. If the contractor enters into an arrangement characterized by any one of the criteria provided, this would be a clear case of "labor-only contracting." The clear phrasing of Section 5 of the Rules Implementing Articles 106 to 109 of the Labor Code, as amended, support this interpretation. In prohibiting "labor-only" contracting and creating an employer-employee relationship between the principal and the supposed contractors employees, the law intends to prevent employers from circumventing labor laws intended to protect employees. C. Effect of Finding Mandaue v. Andales/ Aboitiz Haulers: A finding that a contractor is a labor-only contractor is equivalent to declaring that (1) there is an employer-employee relationship between the principal and the employees of the supposed contractor, and (2) the labor-only contractor is considered as a mere agent of the principal, the real employer.

Section 7. Employee Classification


Art 280 LC Regular and casual employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform

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activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. Art 281 LC Probationary employment. Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee. Book VI Rule 1 Sec 5 Omnibus Rule (a) Regular employment - The provisions of written agreements to the contrary notwithstanding and regardless of the oral agreements of the parties, employment shall be considered to be regular employment for purposes of Book VI of the Labor Code where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the job, work or service to be performed is seasonal in nature and the employment is for the duration of the season. (b) Casual Employment - There is casual employment where an employee is engaged to perform a job, work or service which is merely incidental to the business of the employer, and such job, work or service is for a definite period made known to the employee at the time of the engagement; provided, that any employee who has rendered at least one year of service, whether such service is continuous or not, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. Notwithstanding the foregoing distinctions, every employee shall be entitled to the rights and privileges, and shall be subject to the duties and obligations, as may be granted by law to regular employees during the period of their actual employment.

7.01 Employee Classification Glory Philippines Inc. v. Vergara Article 280 of the Labor Code provides for three kinds of employees: 1. regular employees or those who have been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; 2. project employees or those whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season; and 3. casual employees or those who are neither regular nor project employees x x x. Pangilinan v. General Milling Corp. Article 280 of the Labor Code comprehends three kinds of employees: (a) regular employees or those whose work is necessary or desirable to the usual business of the employer; (b) project employees or those whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season; and, (c) casual employees or those who are neither regular nor project employees. A regular employee is one who is engaged to perform activities which are necessary and desirable in the usual business or trade of the employer as against those which are undertaken for a specific project or are seasonal. There are two separate instances whereby it can be determined that an employment is regular: (1) if the particular activity performed by the employee is necessary or desirable in the usual business or trade of the employer; and, (2) if the employee has been performing the job for at least a year. However, not because the employee is doing work which is necessary and desirable in the usual business or trade of the employer, means that entering into a fixed term employment contract is proscribed (See Brent School case). Fixed term employment is allowed in the LC, provided it is not entered into to defeat laws on security of tenure. (See cases on 7.05 Contract Fixed Period)

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In the case of St. Theresa's School of Novaliches Foundation vs. NLRC, we held that Article 280 of the Labor Code does not proscribe or prohibit an employment contract with a fixed period. We furthered held that it does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities. There is thus nothing essentially contradictory between a definite period of employment and the nature of the employee's duties. In the case of Brent School Inc. v. Zamora, the SC laid down the guideline before a contract of employment may be held as valid, to wit: Stipulations in employment contracts providing for term employment or fixed period employment are valid when: o the period were agreed upon knowingly and voluntarily by the parties without force, duress or improper pressure, being brought to bear upon the employee and absent any other circumstances vitiating his consent, and o Where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Fixed period employment contracts governed by CC.

Nature of Issue Universal Robina v. Caballeda The question of whether an employee is regular, project/seasonal or casual is a question of fact. Employer Determination effect - It is not the will and word of the employer that determines whether a certain employment is regular or casual San Miguel Corporation v NLRC [1998] But considered not regular under said Article 280 are (1) the so-called "project employment" the termination of which is more or less determinable at the time of employment, such as those connected, which by its nature is only for one season of the year and the employment is limited for the duration of that season, such as the Christmas holiday season. Nevertheless, an exception to this exception is made: any employee who has rendered at least 1 year of service, whether continuous or intermitent, with respect to the activity he performed and while such activity actually exists, must be deemed regular. Following Article 280, whether one is employed as a project employee or not would depend on whether he was hired to carry out a "specific project or undertaking", the duration and scope of which were specified at the time his services were engaged for that particular project. Another factor that may be undertaken by the employee in relation to the usual trade or business of the employer, if without specifying the duration and scope, the work to be undertaken is usually necessary or desirable in the usual business or trade of the employer, then it is regular employment and not just "project" must less "casual" employment. Thus, the nature of one's employment does not depend on the will or word of the employer. Nor on the procedure of hiring and the manner of designating the employee, but on the nature of the activities to be performed by the employee, considering the employer's nature of business and the duration and scope of the work to be done. Tabas v California Manufacturing v NLRC [1989] The existence of an employer-employee relationship is a question of law and being such, it cannot be made the subject of agreement. Temporary or casual employees become regular after service of one year, unless they had been contracted for a specific project. Merchandising is not specific, it is an activity related to the day-to-day operations of California Manufacturing.

7.02 Regular Employees


Art 280 LC Regular and casual employment. an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a

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regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. Art. 281. Probationary employment. An employee who is allowed to work after a probationary period shall be considered a regular employee. (last sentence) Art. 75. Learnership agreement. Any employer desiring to employ learners shall enter into a learnership agreement with them, which agreement shall include: (d) A commitment to employ the learners if they so desire, as regular employees upon completion of the learnership. All learners who have been allowed or suffered to work during the first two (2) months shall be deemed regular employees if training is terminated by the employer before the end of the stipulated period through no fault of the learners.

Types Regular Employees Philips Semiconductors v. Fadriquela According to Article 280 of the Labor Code, there are 2 kinds of regular employees: (1) those engaged to perform activities which are necessary or desirable in the usual business or trade of the employer; and (2) those casual employees who have rendered at least one year of service, whether continuous or broken, with respect to the activities in which they are employed. The respondent obviously falls under the first type of regular employee. She had been working continuously for the petitioner for over a year, evidencing the necessity and indispensability of her services to the petitioners business. By operation of law, respondent had attained regular status and was thus entitled to security of tenure as provided in Art. 279 of the code. The said article requires a just cause before termination, and entitles the employee to reinstatement and other privileges in absence of one. But it does not follow that term employment is illegal outright. In Romares v NLRC it was said that term employment does not circumvent the law when the fixed period was knowingly and voluntarily agreed upon by both parties and that such agreement was made with no party holding moral dominance over the other. However, none of these requisites are present in the instant case. Nature of Work The standard in determining whether an employment should be considered regular or non-regular, is whether the work undertaken is necessary or desirable in the usual business or trade of the employer, a fact that can be assessed by looking into the nature of the services rendered and its relation to the general scheme under which the business or trade is pursued in the usual course. Magsalin v. National Organization Issue here is: WON the nature of work of respondents in the company is of such nature as to be deemed necessary and desirable in the usual business or trade of petitioner that could qualify them to be regular employees Court held: YES. The pertinent provision in this case is Art 280 of LC In determining whether an employment should be considered regular or non-regular, the applicable test is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer The standard, supplied by the law itself, is whether the work undertaken is necessary or desirable in the usual business or trade of the employer, a fact that can be assessed by looking into the nature of the services rendered and its relation to the general scheme under which the business or trade is pursued in the usual course. It is distinguished from a specific undertaking that is divorced from the normal activities required in carrying on the particular business or trade. Although the work to be performed is only for a specific project or seasonal, where a person thus engaged has been performing the job for at least one year, even if the performance is not continuous or is merely intermittent, the law deems the repeated and continuing need for its performance as being sufficient to indicate the necessity or desirability of that activity to the business or trade of the employer. The employment of such person is also then deemed to be regular with respect to such activity and while such activity exists Hacienda Fatima v. NFSWFGT re: seasonal employment; when excluded from regular employee classification The fact that respondents do not work continuously for one whole year but only for the duration of the season does not detract from considering them in regular employment since in a litany of cases this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off

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during off-season are not separated from service in said period, but merely considered on leave until reemployed. For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature. They must have also been employed only for the duration of one season. The evidence proves the existence of the first, but not of the second, condition. The fact that respondents repeatedly worked as sugarcane workers for petitioners for several years is not denied by the latter. Evidently, petitioners employed respondents for more than one season. Therefore, the general rule of regular employment is applicable.

PNOC Energy Devt Corp v. NLRC Employees seemed to be project employees at first with a fixed term employment. But their contracts were repeatedly renewed for up to 3 years. Then they were dismissed. Court held: While length of time may not be the controlling test for project employment, it is vital in determining if the employee was hired for a specific undertaking or tasked to perform functions vital, necessary and indispensable to the usual business or trade of the employer. Here, respondents had been project employees several times over. Their employment ceased to be coterminous with specific projects when they were repeatedly re-hired by petitioner. Where the employment of project employees is extended long after the supposed project has been finished, the employees are removed from the scope of project employees and are considered regular employees. Santiago v. CF Sharp Crew Management A distinction must be made between the perfection of the employment contract and the commencement of the employer-employee relationship. The perfection of contract occurred when Santiago and CF Sharp agreed on the object, cause, terms, and conditions. The commencement of the employer-employee relationship would have taken place had Santiago been actually deployed from the point of hire. However, even before the employer-employee relationship commenced, the perfection of contract already gave rise to certain rights and obligations, the breach of which will give rise to a cause of action against the erring party. In this case, CF Sharp breached its contract when it prevented Santiago from departing the port and boarding the ship. NB: Seafarers are considered contractual employees and cannot be considered as regular employees under the labor code. Their employment is governed by the contracts they sign every time they are rehired and their employment is terminated when the contract expires. The exigencies of their work necessitates that they be employed on a contractual basis. Hiring Extend Period Hanjin v. Ibanez - The rehiring of construction workers on a project to project basis does not confer upon them regular employment status, since their re-hiring is only a natural consequence of the fact that experienced construction workers are preferred. Employees who are hired for carrying out a separate job, distinct from the other undertakings of the company, the scope and duration of which has been determined and made known to the employees at the time of the employment, are properly treated as project employees and their services may be lawfully terminated upon the completion of a project San Miguel v. NLRC Maliksi was juggled from one employment contract to another in a continuous bid to circumvent labor laws. The act of hiring and re-hiring workers over a period of time without considering them as regular employees evidences bad faith on the part of the employer. Where, from the circumstances, it is apparent that periods have been imposed to preclude the acquisition of tenurial security by the employee, the policy, agreement or practice should be struck down as contrary to public policy, morals, good customs or public order. Raycor Aircon System v. San Pedro Other than the 1995 employment contract it issued to respondent, which contract we have held to be insufficient evidence of project employment, petitioner utterly failed to adduce additional evidence which would have convinced us that: 1) each time it hired and rehired respondent, it intended for him to accomplish specific tasks in the particular project to which he was assigned; 2) it intended for respondent to carry out these specific tasks in accordance with the project plan it had drawn out and within the limited time it had to complete the same; and 3) it made such restrictions on each engagement known to respondent, and the same were freely accepted by him.

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Contract to Contract Beta Electric v. NLRC Petitioner cannot rightfully say that since the private respondent's employment hinged from contract to contract, it was ergo, "temporary", depending on the term of each agreement. Under the Labor Code, an employment may only be said to be "temporary" "where [it] has been fixed for a specific undertaking the completion of or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season." Quite to the contrary, the private respondent's work, that of "typist-clerk" is far from being "specific" or "seasonal", but rather, one, according to the Code, "where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business." And under the Code, where one performs such activities, he is a regular employee, "[t]he provisions of written agreement to the contrary notwithstanding. Universal Robina v. Catapang The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer (See Magsalin case above). Also, if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists. It is obvious that the said five-month contract of employment was used by petitioners as a convenient subterfuge to prevent private respondents from becoming regular employees. Such contractual arrangement should be struck down or disregarded as contrary to public policy or morals. To uphold the same would, in effect, permit petitioners to avoid hiring permanent or regular employees by simply hiring them on a temporary or casual basis, thereby violating the employees security of tenure in their jobs. Length of Time Maraguinot v. NLRC A project employee or a member of a work pool may acquire the status of a regular employee when: a. there is a continuous rehiring of project employees even after a cessation of project b. the tasks performed by the alleged project employee are vital and necessary to the business of employer Abesco Construction v. Ramirez Employee who work under different project employment contracts for several years do not automatically become regular employees; they can remain as project employees regardless of the number of years they work. Length of service is not a controlling factor in determining the nature of ones employment. The principal test for determining whether employees are project employees or regular employees is whether they are assigned to carry out a specific project or undertaking, the duration and scope of which are specified at the time they are engaged for that project. Such duration, as well as the particular work/service to be performed is defined in an employment agreement and is made clear to the employees at the time of hiring. Seafarers Dela Cruz v. Maersk Seafarers are not covered by the term regular employment, as defined under Article 280 of the Labor Code. They are considered contractual employees whose rights and obligations are governed primarily by the POEA Standard Employment Contract for Filipino Seamen (POEA Standard Employment Contract), the Rules and Regulations Governing Overseas Employment, and, more importantly, by Republic Act No. 8042, otherwise known as The Migrant Workers and Overseas Filipinos Act of 1995.21 Even the POEA Standard Employment Contract itself mandates that in no case shall a contract of employment concerning seamen exceed 12 months.

7.03 Project Employees

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Art. 280. where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season.

Project employees are those workers hired (1) for a specific project or undertaking, and (2) the completion or termination of such project or undertaking has been determined at the time of the engagement of the employee. Defined ALU TUCP v. NLRC In business and industry, project could refer to one or the other of at least two distinguishable types of activities. Firstly, a project could refer to a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. Secondly, the term project could also refer to a particular job or undertaking that is not within the regular business of the corporation. Such job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times. Whichever type of project employment is found in a particular case, a common basic requisite is that the designation of named employees as project employees and their assignment to a specific project, are effected and implemented in good faith, and not merely as a means of evading otherwise applicable requirements of labor laws. As evident in Article 280 of the Labor Code, the principal test for determining whether particular employees are properly characterized as project employees as distinguished from regular employees is whether or not the project employees were assigned to carry out a specific project or undertaking, the duration (and scope) of which were specified at the time the employees were engaged for that project. The length of service of a project employee is not the controlling test of employment tenure but whether or not the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee. The simple fact that the employment of petitioners as project employees had gone beyond one year does not detract from, or legally dissolve, their status as project employees. Kiamco v. NLRC The principal test for determining whether particular employees are properly characterized as "project employees," as distinguished from "regular employees," is whether or not the "project employees" were assigned to carry out a "specific project or undertaking," the duration (and scope) of which were specified at the time the employees were engaged for that project. As defined, project employees are those workers hired (1) for a specific project or undertaking, and (2) the completion or termination of such project or undertaking has been determined at the time of engagement of the employee. Under Policy Instruction No. 20 of the Secretary of Labor, project employees are those employed in connection with a particular project. Non-project or regular employees are those employed without reference to any particular project. The three Contracts of Employment entered into by Kiamco clearly established that he was a project employee because (a) he was specifically assigned to work for a particular project, which was the Geothermal Agro-Industrial Demonstration Plant Project of private respondents, and (b) the termination and the completion of the project or undertaking was determined and stipulated in the contract at the time of his employment. NB: Project employee that is illegally dismissed is still entitled to reinstatement and payment of backwages. Rule: The normal consequences of an illegal dismissal are the reinstatement of the aggrieved employee and the grant of back wages. These rights of an employee do not depend on the status of his employment prior to his dismissal but rather to the legality and validity of his termination. The fact that an employee is not a regular employee does not mean that he can be dismissed any time, even illegally, by his employer. Project Employees Phil. Jai-Alai and Amusement Corp. v. Clave Private respondents were hired for a specific project - to renovate the main budding, where major repairs such as painting the main building, repair of the roof, cleaning of clogged water pipes and drains, and other necessary repairs were required. It was made known, and so understood at the start of the hiring, that their services would last until the

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completion of the renovation. They rendered service from February 2 to December 11, 1976, almost 11 months, but less than a year. The casual or limited character of private respondents' employment, therefore, is evident. They were engaged for a specific project or undertaking and fall within the exception provided for in Article 281 of the Labor Code, supra. Not being regular employees, it cannot be justifiably said that petitioner had dismissed them without just cause. They are not entitled to reinstatement with full backwages. Note: contrast with Kiamco case

Sandoval Shipyards v. NLRC In this case, the respondents were project employees. In other cases involving same issues raised here, it was held that: *Sandoval Shipyard+ does not construct vessels for sale or otherwise which will demand continuous productions of ships and will need permanent or regular workers The cases support the conclusion that workers of the petitioner were project employees whose employment was terminated upon the completion of the project. Policy Instructions No. 20 of the Secretary of Labor, which was issued to stabilize employer-employee relations in the construction industry, provides:
Project employees are those employed in connection with a particular construction project. Non-project (regular) employees are those employed by a construction company without reference to any particular project. Project employees are not entitled to termination pay if they are terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the number of projects in which they have been employed by a particular construction company. Moreover, the company is not required to obtain clearance from the Secretary of Labor in connection with such termination.

Imbuido v. NLRC The principal test for determining whether an employee is a project employee or a regular employee is whether the project employee was assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time the employee was engaged for that project. A project employee is one whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. In the instant case, petitioner was a project employee. Petitioner was engaged to perform activities which were usually necessary or desirable in the usual business or trade of the employer, as admittedly, petitioner worked as a data encoder for private respondent, a corporation engaged in the business of data encoding and keypunching, and her employment was fixed for a specific project or undertaking the completion or termination of which had been determined at the time of her engagement, as may be observed from the series of employment contracts 32 between petitioner and private respondent, all of which contained a designation of the specific job contract and a specific period of employment. However, even as when petitioner is a project employee, according to jurisprudence "[a] project employee or a member of a work pool may acquire the status of a regular employee when the following concur: 1. There is a continuous rehiring of project employees even after the cessation of a project; and 2. The tasks performed by the alleged "project employee" are vital, necessary and indispensable to the usual business or trade of the employer. The evidence on record reveals that petitioner was employed by private respondent as a data encoder, performing activities which are usually necessary or desirable in the usual business or trade of her employer, continuously for a period of more than three (3) years and contracted for a total of thirteen (13) successive projects. Based on the foregoing, we conclude that petitioner has attained the status of a regular employee of private respondent. Chua v. CA In Violeta v. NLRC, this Court ruled that to be exempted from the presumption of regularity of employment, the agreement between a project employee and his employer must strictly conform to the requirements and conditions under Article 280 of the Labor Code. It is not enough that an employee is hired for a specific project or phase of work. There must also be a determination of, or a clear agreement on, the completion or termination of the project at the time the employee was engaged if the objectives of Article 280 are to be achieved. This second requirement was not met in this case. Rationale

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De Ocampo v. NLRC The Court stresses the rule that contract workers are not considered regular employees, their services being needed only when there are projects to be undertaken. 'The rationale of this rule is that if a project has already been completed, it would be unjust to require the employer to maintain them in the payroll while they are doing absolutely nothing except waiting until another project is begun, if at all. In effect, these stand-by workers would be enjoying the status of privileged retainers, collecting payment for work not done, to be disbursed by the employer from profits not earned. This is not fair by any standard and can only lead to a coddling of labor at the expense of management. However, this rule is not applicable to the case at bar. The contract of the workers had indeed expired, but the project itself was still on going and still required the workers services for its completion. There is no showing that such services were unsatisfactory to justify their termination. It is obvious that the real reason for the termination of their services-which, to repeat, were still needed-was the complaint the project workers had filed. Hence, an exception is created entitling the workers to separation pay. Court: Noteworthy in this connection is Policy Instruction No. 20 of the Department of Labor, providing that "project employees are not entitled to separation pay if they are terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the projects in which they had been employed by a particular construction company." Affirmatively put, and interpreting it in the most liberal way to favor the working class, the rule would entitle project employees to separation pay if the projects they are working on have not yet been completed when their services are terminated. And this should be true even if their contracts have expired, on the theory that such contracts would have been renewed anyway because their services were still needed. Employer Obligation inform the worker of the nature and duration of the project Hanjin v. Ibanez Hanjin calls attention to the fact that they complied with two of the indicators of project employment, as prescribed under Section 2.2[Indicators of project employment]: (e) and (f) of Department Order No. 19, Series of 1993, entitled Guidelines Governing the Employment of Workers in the Construction Industry, issued by the DOLE: reporting the termination to the DOLE within 30 days and undertaking in the employment contract the payment of a completion bonus to the project employee. However, due to petitioners' failure to adduce any evidence showing that petitioners were informed of the duration and scope of their employment, they were unable to discharge the burden of proof required to establish that respondents' dismissal was legal and valid. It is a well-settled doctrine that if doubts exist between the evidence presented by the employer and that by the employee, the scales of justice must be tilted in favor of the latter. For these reasons, respondents are to be considered regular employees of HANJIN. A.M. Oreta v. NLRC (NB: this refers to probationary employment and not to project employment, although the worker here was held to be regular employee, even if the employment period is only 12 months, as the contract is renewable subject to further agreements) Court: The law is clear to the effect that in all cases involving employees engaged on probationary' basis, the employer shall make known to the employee at the time he is hired, the standards by which he will qualify as a regular employee. Nowhere in the employment contract executed between petitioner company and respondent Grulla is there a stipulation that the latter shall undergo a probationary period for three months before he can quality as a regular employee. There is also no evidence on record showing that the Grulla had been apprised of his probationary status and the requirements which he should comply in order to be a regular employee. In the absence of these requisites, there is justification in concluding that respondent Grulla was a regular employee at the time he was dismissed by petitioner. Specific Period Glory Philippines Inc. v. Vergara As defined, project employees are those workers hired (1) for a specific project or undertaking, and (2) the completion or termination of such project or undertaking has been determined at the time of engagement of the employee. In the instant case, respondents employment contracts failed to state the specific project or undertaking for which they were allegedly engaged. While petitioner claims that respondents were hired for the transaction with

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Glory Japan, the same was not indicated in the contracts. As correctly observed by the Court of Appeals, nothing therein suggested or even hinted that their employment was dependent on the continuous patronage of Glory Japan. Further, the employment contracts did not indicate the duration and scope of the project or undertaking as required by law. It is not enough that an employee is hired for a specific project or phase of work to qualify as a project employee. There must also be a determination of, or a clear agreement on, the completion or termination of the project at the time the employee was engaged, which is absent in this case.

Continuous Rehiring Purefoods Corp. v. NLRC Contrary to petitioner's submission, the private respondents could not be regarded as having been hired for a specific project or undertaking. The term "specific project or undertaking" under Article 280 of the Labor Code contemplates an activity which is not commonly or habitually performed or such type of work which is not done on a daily basis but only for a specific duration of time or until completion; the services employed are then necessary and desirable in the employer's usual business only for the period of time it takes to complete the project. The fact that the petitioner repeatedly and continuously hired workers to do the same kind of work as that performed by those whose contracts had expired negates petitioner's contention that those workers were hired for a specific project or undertaking only. Chua v. CA While it may be true that private respondents were initially hired for specific projects or undertakings, the repeated rehiring and continuing need for their services over a long span of timethe shortest being two years and the longest being eighthave undeniably made them regular employees. This Court has held that an employment ceases to be coterminous with specific projects when the employee is continuously rehired due to the demands of the employers business and re-engaged for many more projects without interruption. The Court likewise takes note of the fact that, as cited by the SSC, even the National Labor Relations Commission in a labor case involving the same parties, found that private respondents were regular employees of the petitioner. C.E. Constuction v. Cioco We again hold that the fact that the WORKERS have been employed with the COMPANY for several years on various projects, the longest being nine (9) years, did not automatically make them regular employees considering that the definition of regular employment in Article 280 of the Labor Code, makes specific exception with respect to project employment. The re-hiring of petitioners on a project-to-project basis did not confer upon them regular employment status. The practice was dictated by the practical consideration that experienced construction workers are more preferred. It did not change their status as project employees. Workpool Employees can be either project EE or regular EE. To determine whether EE is a project employee, use the standard test above. If not a project employee, and the conditions in Maraguinot are met, then considered regular employee. Maraguinot v. NLRC A work pool may exist although the workers in the pool do not receive salaries and are free to seek other employment during temporary breaks in the business, provided that the worker shall be available when called to report for a project. Although primarily applicable to regular seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the employer and employee for it prevents the unjust situation of "coddling labor at the expense of capital" and at the same time enables the workers to attain the status of regular employees. A project employee or a member of a work pool may acquire the status of a regular employee when the following concur: 1) There is a continuous rehiring of project employees even after cessation of a project; and 2) The tasks performed by the alleged project employee are vital, necessary and indispensable to the usual business or trade of the employer. However, the length of time during which the employee was continuously re-hired is not controlling, but merely serves as a badge of regular employment.

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In this case, while petitioners were initially hired possibly as project employees, they had attained the status of regular employees in view of VIVAs conduct. Petitioner Enero was employed for a total of two (2) years and engaged in at least eighteen (18) projects, while petitioner Maraguinot was employed for some three (3) years and worked on at least twenty-three (23) projects. Moreover, as petitioners tasks involved, among other chores, the loading, unloading and arranging of movie equipment in the shooting area as instructed by the cameramen, returning the equipment to the Viva Films warehouse, and assisting in the fixing of the lighting system, it may not be gainsaid that these tasks were vital, necessary and indispensable to the usual business or trade of the employer. Lest it be misunderstood, this ruling does not mean that simply because an employee is a project or work pool employee even outside the construction industry, he is deemed, ipso jure, a regular employee. All that we hold today is that once a project or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the employer, then the employee must be deemed a regular employee, pursuant to Article 280 of the Labor Code and jurisprudence. Aguilar v. NLRC Respondent here is considered a regular employee for failure of employer to indicate the duration and scope of the undertaking at the time Acedillo's services were contracted. Because he is not a project employee, he was deemed a regular employee on the basis of his coming from a workpool Court: Members of a work pool from which a construction company draws its project employees, if considered employees of the construction company while in the work pool, are non-project employees or employees for an indefinite period. If they are employed in a particular project, the completion of the project or any phase thereof will not mean severance of (the) employer-employee relationship. Abesco v. Ramirez Employees who work under different project employment contracts for several years do not automatically become regular employees; they can remain as project employees regardless of the number of years they work. Length of time is not a controlling factor in determining the nature of ones employment. Moreover, employees who are members of a work pool from which a company (like petitioner corp.) draws workers for deployment to its different projects do not become regular employees by reason of that fact alone. The Court has enunciated in the cases of Raycor Aircontrol Systems, Inc. v. NLRC, and ALU-TUCP v. NLRC, that members of a work pool can either be project employees or regular employees. The principal test for determining whether employees are project employees or regular employees is whether they are assigned to carry out a specific project or undertaking, the duration and scope of which are specified at the time they are engaged for that project. In this case, employees were held to be regular employees not because they are members of a work pool, but because the corporation failed to prove that respondents were project employees according to the principal test enunciated above. Length of Service Filipinas Pre-Fabricated Building Systems v. Puente It is a settled rule that the length of service of a project employee is not the controlling test of employment tenure but whether or not the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee. That Puente was employed with Filsystems for 10 yrs. in various projects did not ipso facto make him a regular employee. The mere rehiring of respondent on a project-to-project basis did not confer upon him regular employment status. The practice was dictated by the practical consideration that experienced construction workers are more preferred. It did not change his status as a project employee. PNOC Energy Devt v. NLRC In Filipinas Pre-Fabricated Building Systems (Filsystems), Inc. v. Puente, the Court ruled that "the length of service of a project employee is not the controlling test of employment tenure but whether or not the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee." However, while length of time may not be the controlling test for project employment, it is vital in determining if the employee was hired for a specific undertaking, or tasked to perform functions vital, necessary and indispensable to the usual business or trade of the employer. Here, respondents had been project employees several times over. Their employment ceased to be coterminous with specific projects when they were repeatedly re-hired by petitioner. Where the employment of project employees is extended long after the supposed

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project has been finished, the employees are removed from the scope of project employees and are considered regular employees. 7.04 Casual Employees
Art. 280. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.

Nature of Work A.M. Oreta v. NLRC What determines regularity or casualness is not the employment contract, written or otherwise, but the nature of the job. If the job is usually necessary or desirable to the main business of the employer, then employment is regular. One Year Service Kimberly v. Drilon The question is raised whether the 64 employees here, who are employees provided by a labor-only contractor, are regular employees of the principal company. Held: A280LC provides for two kinds of regular employees: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. The individual petitioners herein who have been adjudged to be regular employees (by law) fall under the second category. Owing to their length of service with the company, these workers became regular employees, by operation of law, one year after they were employed by KIMBERLY through RANK. While the actual regularization of these employees entails the mechanical act of issuing regular appointment papers and compliance with such other operating procedures as may be adopted by the employer, it is more in keeping with the intent and spirit of the law to rule that the status of regular employment attaches to the casual worker on the day immediately after the end of his first year of service The law is explicit. As long as the employee has rendered at least one year of service, he becomes a regular employee with respect to the activity in which he is employed. San Miguel v. Aballa Under the law, there are two kinds of regular employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. The respondents who were engaged in shrimp processing tasks should be deemed regular employees of SMC from the start and as such are entitled to all the benefits and rights appurtenant to regular employment. On the other hand, respondents engaged in janitorial and messengerial duties should be deemed to have acquired regular status only after rendering one-year service, pursuant to Art.280, LC. They are entitled to differential pay only from the day immediately following their first year of service. Janitorial and messengerial services, although considered directly related to SMCs aquaculture business, is deemed unnecessary in the conduct of its principal business; hence, the distinction into two groups among the respondents Kay Products v. CA Respondents have been working for more than a year with KPI before they were told they were no longer employees on Sept. 2000. Hence, they are regular employees falling under the second category provided in Art.280. While the actual regularization of these employees entails the mechanical act of issuing regular appointment papers and compliance with such other operating procedures as may be adopted by the employer, it is more in keeping with the intent and spirit of the law to rule that the status of regular employment attaches to the casual worker on the day immediately after the end of his first year of service. To rule otherwise, and to instead make their regularization dependent on the happening of some contingency or the fulfillment of certain requirements, is to impose a burden on the employee which is not sanctioned by law.

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7.05 Contract Fixed Period Tests - Validity Brent School v. Zamora The language of Art. 280 notwithstanding, fixed term employment is not prohibited under the Labor Code. Since the entire purpose behind Art. 280 is to prevent circumvention of the employees right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer only to agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Hence, the Court here established the twofold criteria for fixed term employment to be valid: 1. No vitiation of consent: The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or 2. Equal footing: It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter. Labayog v. M.Y. San Biscuits FTE here upheld Same doctrine: Fixed employment contracts valid as long as it was not entered into to circumvent security of tenure Cielo v. NLRC example of a case where FTE contract was struck down. Criteria under which fixed-term employment could not be said to be in circumvention of the law on security of tenure, thus: 1. The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or 2. It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter. The agreement was a clear attempt to exploit the unwitting employee and deprive him of the protection of the Labor Code by making it appear that the stipulations of the parties were governed by the Civil Code as in ordinary private transactions. They were not, to be sure. The agreement was in reality a contract of employment into which were read the provisions of the Labor Code and the social justice policy mandated by the Constitution. Caparoso v. CA Same doctrine as above: twofold criteria for determining validity of FTE contract Fabela v. San Miguel Corp. Project employment is distinct from casual employment referred to in the second paragraph of Article 280 for, as clarified in Mercado, Sr. v. NLRC, the proviso that "any employee who has rendered at least one year of service ... shall be considered a regular employee" does not apply to project employees, but only to casual employees. Although Article 280 does not expressly recognize employment for a fixed period, which is distinct from employment which has been fixed for a specific project or undertaking, Brent School, Inc. v. Zamora has clarified that employment for a fixed period is not in itself illegal, viz:
There can of course be no quarrel with the proposition that where from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy, morals, etc. But where no such intent to circumvent the law is shown, or stated otherwise, where the reason for the law does not exist, e.g., where it is indeed the employee himself who insists upon a period or where the nature of the engagement is such that, without being seasonal or for a specific project, a definite date of termination is a sine qua non, would an agreement fixing a period essentially evil or illicit, therefore anathema? The answer is no.

PNOC v. NLRC

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It must be stressed that a contract that misuses a purported fixed-term employment to block the acquisition of tenure by employees deserves to be struck down for being contrary to law, morals, good customs, public order and public policy. San Miguel Corp. v. Teodisio Seasonal Employees Magcalas v. NLRC Regular employees cannot at the same time be project employees. Article 280 of the Labor Code states that regular employees are those whose work is necessary or desirable to the usual business of the employer. The two exceptions following the general description of regular employees refer to either project or seasonal employees. Regular employees are legally entitled to remain in the service of their employer until that service is terminated by one or another of the recognized modes of termination of service under the Labor Code. The services of project employees, on the other hand, are co-terminous with the project and may be terminated upon the end or completion of the project for which they were hired. The employment of seasonal employees legally ends upon completion of the project or the season. Philippine Tobacco v. NLRC Doctrine: Seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in said period, but are merely considered on leave until reemployed. Court: Petitioner relies upon our ruling in Mercado v. NLRC that the employment [of seasonal employees] legally ends upon completion of the x x x season, a statement which was subsequently reiterated in Magcalas v. NLRC. Thus, petitioner argues that it was not obliged to rehire the members of the Lubat group for the 1994 season, because their employment had been terminated at the end of the 1993 season. Since they were not employed for the 1994 season when the Balintawak plant was closed, it follows that petitioner has no obligation to award them separation pay due to the said closure. We are not persuaded. From the facts, we are convinced that petitioner illegally dismissed the members of the Lubat group when it refused to allow them to work during the 1994 season. Seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in said period, but are merely considered on leave until reemployed. San Miguel Corp v. NLRC Under Article 280 of the Labor Code, an employment is deemed regular when the activities performed by the employee are usually necessary or desirable in the usual business or trade of the employer even if the parties enter into an agreement stating otherwise. But considered not regular under said Article are (1) the so-called project employment the termination of which is more or less determinable at the time of employment, such as those connected with a particular construction project; and (2) seasonal employment, which by its nature is only for one season of the year and the employment is limited for the duration of that season, such as the Christmas holiday season. Nevertheless, an exception to this exception is made: any employee who has rendered at least one (1) year of service, whether continuous or intermittent, with respect to the activity he performed and while such activity actually exists, must be deemed regular. Manila Hotel v. CIR Again, seasonal employees called to work from time to time and temporarily laid off from during off season are REGULARS but are on LOA w/o pay. In this case, it appears that the questioned employees were never separated from the service. Their status is that of regular seasonal employees who are called to work from time to time, mostly during summer season. The nature of their relationship with the hotel is such that during off season they are temporarily laid off but during summer season they are re-employed, or when their services may be needed. They are not strictly speaking separated from the service but are merely considered as on leave of absence without pay until they are reemployed. Their employment relationship is never severed but only suspended. As such, these employees can be considered as in the regular employment of the hotel. Hacienda Bino v. Cuenca

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The respondents here are regular employees. Starkes (owner) reliance on Mercado is misplaced because in that case, the workers were classified as seasonal employees because they were employed for a definite period of time since the hacienda was much smaller, and they offered their services to and worked at the neighboring haciendas. The primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. There is no doubt that the respondents were performing work necessary and desirable in the usual trade or business of an employer. Hence, they can properly be classified as regular employees. For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature. They must have been employed only for the duration of one season. While the records sufficiently show that the respondents' work in the hacienda was seasonal in nature, there was, however, no proof that they were hired for the duration of one season only. In fact, the payrolls, submitted in evidence by the petitioners, show that they availed the services of the respondents since 1991. Absent any proof to the contrary, the general rule of regular employment should, therefore, stand. It bears stressing that the employer has the burden of proving the lawfulness of his employee's dismissal. Poseidon Fishing v. NLRC The activity of catching fish is a continuous process and could hardly be considered as seasonal in nature. In Philex Mining Corp. v. NLRC, project employees were defined as those workers hired (1) for a specific project or undertaking, and (2) the completion or termination of such project has been determined at the time of the engagement of the employee. The principal test for determining whether particular employees are "project employees" as distinguished from "regular employees," is whether or not the "project employees" were assigned to carry out a "specific project or undertaking," the duration and scope of which were specified at the time the employees were engaged for that project. In this case, petitioners have not shown that private respondent was informed that he will be assigned to a "specific project or undertaking." Neither has it been established that he was informed of the duration and scope of such project or undertaking at the time of their engagement. Brent not applicable because in the Brent case, the period of the contract was fixed and clearly stated, the terms of employment of private respondent as provided in the Kasunduan was not only vague, it also failed to provide an actual or specific date or period for the contract. Poseidon's intent to evade the application of Article 280 of the Labor Code is unmistakable. In a span of 12 years, Estoquia worked for petitioner company first as a Chief Mate, then Boat Captain, and later as Radio Operator. His job was directly related to the deep-sea fishing business of petitioner Poseidon. His work was, therefore, necessary and important to the business of his employer. Such being the scenario involved, private respondent is considered a regular employee of petitioner under Article 280 of the Labor Code.

Section 8. Probationary Employees


Art. 281. Probationary employment. Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee. Art. 61. Contents of apprenticeship agreements. Apprenticeship agreements, including the wage rates of apprentices, shall conform to the rules issued by the Secretary of Labor and Employment. The period of apprenticeship shall not exceed six months. Apprenticeship agreements providing for wage rates below the legal minimum wage, which in no case shall start below 75 percent of the applicable minimum wage, may be entered into only in accordance with apprenticeship programs duly approved by the Secretary of Labor and Employment. The Department shall develop standard model programs of apprenticeship. (As amended by Section 1, Executive Order No. 111, December 24, 1986) Book VI, Rule I, Sec 6 Omnibus Rules SECTION 6. Probationary employment. There is probationary employment where the employee, upon his engagement, is made to undergo a trial period during which the employer determines his fitness to qualify for regular employment, based on reasonable standards made known to him at the time of engagement. Probationary employment shall be governed by the following rules: (a) Where the work for which an employee has been engaged is learnable or apprenticeable in accordance with the standards

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prescribed by the Department of Labor, the probationary employment period of the employee shall be limited to the authorized learnership or apprenticeship period, whichever is applicable. (b) Where the work is neither learnable nor apprenticeable, the probationary employment period shall not exceed six (6) months reckoned from the date the employee actually started working. (c) The services of an employee who has been engaged on probationary basis may be terminated only for a just cause or when authorized by existing laws, or when he fails to qualify as a regular employee in accordance with reasonable standards prescribed by the employer. (d) In all cases involving employees engaged on probationary basis, the employer shall make known to the employee the standards under which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at that time, he shall be deemed a regular employee. (DO No. 10 Series of 1997, Effective June 22, 1997)

8.01 Probationary Employees Definition International Catholic Migration Commission v. NLRC A probationary employee, as understood under Article 282 (now Article 281) of the Labor Code, is one who is on trial by an employer during which the employer determines whether or not he is qualified for permanent employment. A probationary appointment is made to afford the employer an opportunity to observe the fitness of a probationer while at work, and to ascertain whether he will become a proper and efficient employee. The word "probationary", as used to describe the period of employment, implies the purpose of the term or period, but not its length. Being in the nature of a "trial period" the essence of a probationary period of employment fundamentally lies in the purpose or objective sought to be attained by both the employer and the employee during said period. The length of time is immaterial in determining the correlative rights of both in dealing with each other during said period There is nothing under Article 281 of the Labor Code that would preclude the employer from extending a regular or a permanent appointment to an employee once the employer finds that the employee is qualified for regular employment even before the expiration of the probationary period. Conversely, Article 281 of the Labor Code does not likewise preclude the employer from terminating the probationary employment on justifiable causes as in the instant case Philippine Federation of Credit Cooperatives v. NLRC Article 281 of the Labor Code, as amended, allows the employer to secure the services of an employee on a probationary basis which allows him to terminate the latter for just cause or upon failure to qualify in accordance with reasonable standards set forth by the employer at the time of his engagement. A probationary employee is one who is on trial by an employer during which the employer determines whether or not he is qualified for permanent employment. A probationary employment is made to afford the employer an opportunity to observe the fitness of a probationer while at work, and to ascertain whether he will become a proper and efficient employee. Probationary employees, notwithstanding their limited tenure, are also entitled to security of tenure. Thus, except for just cause as provided by law, or under the employment contract, a probationary employee cannot be terminated. It is an elementary rule in the law on labor relations that a probationary employee who is engaged to work beyond the probationary period of six months, as provided under Art. 281 of the Labor Code, as amended, or for any length of time set forth by the employer, shall be considered a regular employee. Here, regardless of the designation petitioner may have conferred upon respondent's employment status, it is, however, uncontroverted that the latter, having completed the probationary period and allowed to work thereafter, became a regular employee who may be dismissed only for just or authorized causes under Articles 282, 283 and 284 of the Labor Code, as amended

Employer Obligation to make known the standards by which an employee hired on probationary basis will qualify as a regular employee A.M. Oreta v. NLRC The law is clear to the effect that in all cases involving employees engaged on probationary' basis, the employer shall make known to the employee at the time he is hired, the standards by which he will qualify as a regular employee. Nowhere in the employment contract executed between petitioner company and respondent Grulla is there a stipulation that the latter shall undergo a probationary period for three months before he can quality as a regular

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employee. There is also no evidence on record showing that the Grulla had been apprised of his probationary status and the requirements which he should comply in order to be a regular employee. In the absence of these requisites, there is justification in concluding that respondent Grulla was a regular employee at the time he was dismissed by petitioner. Purpose Espina v. CA As probationary employees, they enjoyed only temporary employment status. In general terms [only], this meant that they were terminable anytime, permanent employment not having been attained in the meantime. The employer could well decide if he no longer needed the probationarys service or his performance fell short of expectations, as a probationary employee is one who, for a given period of time, is under observation and evaluation to determine whether or not he is qualified for permanent employment. During the probationary period, the employer is given the opportunity to observe the skill, competence and attitude of the employee to determine if he has the qualification to meet the reasonable standards for permanent employment. The length of time is immaterial in determining the correlative rights of both the employer and the employee in dealing with each other during said period. Thus, as long as the termination was made before the expiration of the six-month probationary period, the employer was well within his rights to sever the employer-employee relationship. A contrary interpretation would defeat the clear meaning of the term "probationary." Escorpizo v. University of Baguio A probationary employee is one who, for a given period of time, is being observed and evaluated to determine whether or not he is qualified for permanent employment. A probationary appointment affords the employer an opportunity to observe the skill, competence and attitude of a probationer. The word probationary, as used to describe the period of employment, implies the purpose of the term or period. While the employer observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the probationer at the same time, seeks to prove to the employer that he has the qualifications to meet the reasonable standards for permanent employment. Employer Right to Set Period Grand Motors Corp. v. MOLE The employer has the right or is at liberty to choose as to who will be hired and who will be declined. It is within the exercise of this right to select his employees that the employer may set or fix a probationary period within which the latter may test and observe the conduct of the former before hiring him permanently. "The right of a laborer to sell his labor to such persons as he may choose is, in its essence, the same as the right of an employer to purchase labor from any person whom it chooses. The employer and the employee have thus an equality of right guaranteed by the Constitution. 'If the employer can compel the employee to work against the latter's will, this is servitude. If the employee can compel the employer to give him work against the employer's will, this is oppression.' In the last and ultimate analysis, the prerogative and judgment to hire employees under terms and conditions designed to achieve success in its business activities belongs to management which may not be unduly impaired, limited or restricted. Mitsubishi Motors Corp. v. Chrysler Philippines Labor Union Indeed, an employer, in the exercise of its management prerogative, may hire an employee on a probationary basis in order to determine his fitness to perform work. Under Article 281 of the Labor Code, the employer must inform the employee of the standards for which his employment may be considered for regularization. Such probationary period, unless covered by an apprenticeship agreement, shall not exceed six (6) months from the date the employee started working. Here, the six month period was construed to mean 180 days maximum, following Article 13 of the Civil Code. Alcira v. NLRC (Different rule than Mistubishi Motors case) Computation of the 6-month probationary period is reckoned from the date of appointment up to the same calendar date of the 6th month following, thus dismissal on November 20, 1996 was well within the probationary period (citing CALS Poultry v. Roco).

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Duration/Exception Buiser v. Leogardo Generally, the probationary period of employment is limited to six (6) months. The exception to this general rule is when the parties to an employment contract may agree otherwise, such as when the same is established by company policy or when the same is required by the nature of work to be performed by the employee. In the latter case, there is recognition of the exercise of managerial prerogatives in requiring a longer period of probationary employment, such as in the present case where the probationary period was set for eighteen (18) months, i.e. from May, 1980 to October, 1981 inclusive, especially where the employee must learn a particular kind of work such as selling, or when the job requires certain qualifications, skills, experience or training. In the case at bar, it is shown that private respondent Company needs at least eighteen (18) months to determine the character and selling capabilities of the petitioners as sales representatives Publication of solicited ads are only made a year after the sale has been made and only then will the company be able to evaluate the efficiency, conduct, and selling ability of its sales representatives. Moreover, an eighteen month probationary period is recognized by the Labor Union in the private respondent company, which is Article V of the Collective Bargaining Agreement. International Catholic Migration Commission v. NLRC A281 LC gives ample authority to the employer to terminate a probationary employee for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. There is nothing under Article 281 of the Labor Code that would preclude the employer from extending a regular or a permanent appointment to an employee once the employer finds that the employee is qualified for regular employment even before the expiration of the probationary period. Conversely, Article 281 of the Labor Code does not likewise preclude the employer from terminating the probationary employment on justifiable causes as in the instant case. Holiday Inn Manila v. NLRC Probation is the period during which employer may determine if the employee is qualified for the possible inclusion in the regular force. In this case, the period was for 3 weeks during the employees on-the-job training. When her services were continued after the training, employer in effect recognized that she passed probation, presumably because they were acceptable. Even if it be supposed that the probation did not end with the 3-wk OJT, there is no reason why that period should not be included in the stipulated 6-month period of probation. Bernardo v. NLRC As held by the Court, "Articles 280 and 281 of the Labor Code put an end to the pernicious practice of making permanent casuals of our lowly employees by the simple expedient of extending to them probationary appointments, ad infinitum." The contract signed by petitioners is akin to a probationary employment, during which the bank determined the employees' fitness for the job. When the bank renewed the contract after the lapse of the six month probationary period, the employees thereby became regular employees. No employer is allowed to determine indefinitely the fitness of its employees. Mitsubishi Motors v. Chrysler Under Article 281 of the Labor Code, the employer must inform the employee of the standards for which his employment may be considered for regularization. Such probationary period, unless covered by an apprenticeship agreement, shall not exceed six (6) months from the date the employee started working. The employees services may be terminated for just cause or for his failure to qualify as a regular employee based on reasonable standards made known to him. Criteria Regularization Alcira v. NLRC In all cases of probationary employment, the employer shall make known to the employee the standards under which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at that time, he shall be deemed a regular employee.

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Conversely, an employer is deemed to substantially comply with the rule on notification of standards if he apprises the employee that he will be subjected to a performance evaluation on a particular date after his hiring. Extension of Contract Mariwasa Manufacturing Inc v. Leogardo By voluntarily agreeing to an extension of the probationary period, Dequila in effect waived any benefit attaching to the completion of said period if he still failed to make the grade during the period of extension. The Court finds nothing in the law which by any fair interpretation prohibits such a waiver. And no public policy protecting the employee and the security of his tenure is served by prescribing voluntary agreements which, by reasonably extending the period of probation, actually improve and further a probationary employee's prospects of demonstrating his fitness for regular employment. Absorbed Employees Cebu Stevedoring Co. Inc. v. Regional Director It is to be noted that the complainants were employed by the Cebu Customs Arrastre Service long time ago whose functions were carried over when they were absorbed by the herein respondent. In other words, there is no need to employ them as probationary considering that they are already well trained in their respective functions. They were not absorbed for a definite period but instead for an indefinite period Remember the purpose of probation: A probationary period of employment means that an employee is hired for training for a certain period in order to determine whether they qualify (sic) for the position or not. Double Probation no double probation in law A Prime Security Services v. NLRC There is no basis for subjecting private respondent to a new probationary or temporary employment on January 30, 1988, considering that he was already a regular employee when he was absorbed by A' Prime from Sugarland, its sister company. Termination and Salary International Catholic Migration Commission Article 281 of the Labor Code gives ample authority to the employer to terminate a probationary employee for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. There is nothing under Article 281 of the Labor Code that would preclude the employer from extending a regular or a permanent appointment to an employee once the employer finds that the employee is qualified for regular employment even before the expiration of the probationary period. Conversely, if the purpose sought by the employer is neither attained nor attainable within the said period, Article 281 of the Labor Code does not likewise preclude the employer from terminating the probationary employment on justifiable causes as in the instant case. Orient Express Placement Philippines v. NLRC Under Art. 281 of the Labor Code, the services of an employee hired on a probationary basis may be terminated when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. However, the Court cannot sustain his dismissal on this ground because petitioner failed to specify the reasonable standards by which private respondent's alleged poor performance was evaluated, much less to prove that such standards were made known to him at the time of his recruitment in Manila. Dela Cruz v. NLRC There is no dispute that petitioner, as a probationary employee, enjoyed only temporary employment status. In general terms, this meant that he was terminable anytime, permanent employment not having been attained in the meantime. The employer could well decide he no longer needed the probationary employee's services or his performance fell short of expectations, etc. As long as the termination was made before the expiration of the six-month probationary

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period, the employer was well within his rights to sever the employer-employee relationship. A contrary interpretation would defect the clear meaning of the term "probationary." Rule on Private School Teachers Chiang Kai Shek College v. Court of Appeals Under the Manual of Regulations for Private Schools, for a private school teacher to acquire a permanent status of employment and, therefore, be entitled to a security of tenure, the following requisites must concur: 1. the teacher is a full-time teacher; 2. the teacher must have rendered three consecutive years of service; and 3. such service must have been satisfactory.

PART II: LABOR STANDARDS LAW PURPOSE


Mariveles Shipyard Corp. v. CA Labor standards are enacted by the legislature to alleviate the plight of workers whose wages barely meet the spiraling costs of their basic needs.

Section 1. Employment Policy


1.01 Pre-employment Policy Statement of Objectives
Art. 12. Statement of Objectives - It is the policy of the State: a. To promote and maintain a state of full employment through improved manpower training, allocation and utilization; b. To protect every citizen desiring to work locally or overseas by securing for him the best possible terms and conditions of employment; c. To facilitate a free choice of available employment by persons seeking work in conformity with the national interest; d. To facilitate and regulate the movement of workers in conformity with the national interest; e. To regulate the employment of aliens, including the establishment of a registration and/or work permit system; f. To strengthen the network of public employment offices and rationalize the participation of the private sector in the recruitment and placement of workers, locally and overseas, to serve national development objectives; g. To insure careful selection of Filipino workers for overseas employment in order to protect the good name of the Philippines abroad.

Section 2: Recruitment and Placement of Workers


STATUTORY REFERENCE: (specific provisions given below) Labor Code: Art. 13-29 Omnibus Rules Book I, Rules III-VIII Migrant Workers and Overseas Filipino Act of 1995 (RA 8042), as amended by R.A. 9422 and RA 10022
RA 857 : PUBLIC EMPLOYMENT SERVICE OFFICE ACT OF 1999 Sec. 2. Declaration of Policy. - It is a declared policy of the State to promote full employment and equality of employment opportunities for all, and for this purpose, to strengthen and expand the existing employment facilitation service machinery of the government particularly at the local level Sec 3. Establishment of the Public Employment Service Office To carry out the above-declared policy, there shall be established in all capital towns of provinces, key cities and other strategic areas a Public Employment Service Office, hereinafter referred to as "PESO," which shall be community-based and maintained largely by local government units (LGUs) and a number of nongovernmental organizations (NGOs) or community-based organizations (CBOs) and state universities and colleges (SUCs). The PESOs shall be linked to the regional offices of the Department of Labor and Employment (DOLE) for coordination and technical supervision, and to the DOLE central office, to constitute the national employment service network. EO No. 857 Governing the Remittance to the Philippines of Foreign Exchange Earnings of Filipino Workers Abroad and for Other Purposes 1984

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Sec. 1. It shall be mandatory for every Filipino contract worker abroad to remit regularly a portion of his foreign exchange earnings to his beneficiary in the Philippines through the Philippine banking system. Licensed agencies and other entities authorized by the Ministry of Labor and Employment to recruit Filipino workers for overseas employment are similarly required to remit their workers' earnings as provided for in this Order. Sec. 2. All contracts of employment and agency or service agreements submitted to the Ministry of Labor and Employment shall contain a proviso that shall make it mandatory for workers to remit to the Philippines in foreign exchange at least the following portions of their earnings; a) Seamen or mariners: Seventy (70) percent of basic salary; b) Workers of Filipino contractors and construction companies: Seventy (70) percent of basic salary; c) Doctors, engineers, teachers, nurses and other professional workers whose contract provide for free board and lodging: Seventy (70) percent of basic salary; d) All other professional workers whose employment contracts do not provide for free board and lodging facilities: Fifty (50) percent of basic salary; e) Domestic and other service workers: Fifty (50) percent of basic salary; f) All other workers not falling under the aforementioned categories: Fifty (50) percent of basic salary. lawphi1.net Sec. 3. Passports issued to Filipino contract workers shall have an initial period of validity of one year provided that the Ministry of Foreign Affairs may adjust, as circumstances may require, the initial passport validity period. The passport shall be renewable every year upon submission of usual requirements and presentation of documentary proof of compliance to the remittance requirement in the percentages provided for in this Order. The Ministry of Foreign Affairs shall not extend or renew the passport of any contract worker unless proof of his compliance with the mandatory remittance requirement is submitted. Sec. 4. The Ministry of Labor and Employment shall not approve the renewal of employment contracts and agency or service agreements unless proof of remittance of foreign exchange earnings is submitted. Sec. 5. For purposes of this Order, proof of compliance with the mandatory remittance requirement as mentioned in Section 1 hereof, may consist of any of the following documents or such alternative as may be approved by the Central Bank of the Philippines showing that the contract worker had in fact effected aforesaid remittance and had caused the surrender of the same for pesos through the Philippine banking system: a) b) c) d) Confirmed bank (foreign) remittance form; Certification from employer, duly authenticated, that remittance has been effected; Certification as to the surrender for pesos to the Philippine banking system; and Receipt of International Postal Money Order.

Sec. 6. Remittances of foreign exchange earnings may be undertaken individually by the contract worker or collectively through the employer under a payroll deduction scheme, in accordance with Central Bank regulations and applicable guidelines. Sec. 7. As a prerequisite for accreditation by the Ministry of Labor and Employment, an employer shall commit to provide facilities to effect the remittances and monitoring of foreign exchange earnings of Filipino workers in his employ. lawphi1.net Sec. 8. The Central Bank of the Philippines shall cause necessary arrangements to be made with the appropriate financing institutions to handle the remittances called for in this Order. In the absence of appropriate banking facilities, the Embassy or Consulate nearest to the job site, in accordance with local laws and regulations, may act in the interim as the channel for remittance of foreign exchange earnings. The Ministry of Foreign Affairs shall immediately inform the Central Bank of the Philippines these arrangements and shall remit all funds thereto. Sec. 9. Contract workers who fail to comply with the requirements of this Order shall be suspended or excluded from the list of eligible workers for overseas employment. In cases of subsequent violations, he shall be repatriated from the job site at the expense of the employer or at his expense, as the case may be. Filipino or foreign employers and/or their representatives who fail to comply with the requirements under this Order shall be excluded from the overseas employment program. In the case of local private employment agencies and entities, failure to comply with the provisions hereof shall be a ground for cancellation of their license or authority to recruit workers for overseas employment, without prejudice to their liabilities under existing laws and regulations. Sec. 10. The Ministries of Labor and Employment and Foreign Affairs and the Central Bank of the Philippines shall draw up the necessary rules and procedures for the proper implementation of this Order within ten (10) days from the signing hereof.

2.01 Recruitment and Placement of Workers

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Art. 13. Definitions a) "Worker" means any member of the labor force, whether employed or unemployed. b) "Recruitment and placement" refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not: Provided, That any person or entity which, in any manner, offers or promises for a fee, employment to two or more persons shall be deemed engaged in recruitment and placement.

Definition Law Structure People v. Domingo From the foregoing provisions (13b and 38), it is clear that any recruitment activities to be undertaken by nonlicensee or non-holder of authority shall be deemed illegal and punishable under Article 39 of the Labor Code of the Philippines. Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group. To prove illegal recruitment in large scale, the prosecution must prove three essential elements, to wit: (1) the person charged undertook a recruitment activity under Article 13(b) or any prohibited practice under Article 34 of the Labor Code; (2) he/she did not have the license or the authority to lawfully engage in the recruitment and placement of workers; and (3) he/she committed the prohibited practice against three or more persons individually or as a group People v. Panis The proviso in 13 (b) was intended neither to impose a condition on the basic rule nor to provide an exception thereto but merely to create a presumption. The presumption is that the individual or entity is engaged in recruitment and placement whenever he or it is dealing with two or more persons to whom, in consideration of a fee, an offer or promise of employment is made in the course of the canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers. Any of the acts mentioned in the basic rule in Article 13 (b) will constitute recruitment and placement even if only one prospective worker is involved. People v. Sualo After a careful and circumspect review of the records, the Court finds thatthe trial court was justified in holding that accused-appellant was engaged in unlawful recruitment and placement activities. The prosecution clearly established that accused-appellant promised the three complainants Benny Maligaya, Angeles Javier and Leodigario Maullon employment in Taiwan as factory workers and that he asked them for money in order to process their papers and procure their passports. Relying completely upon such representations, complainants entrusted their hard-earned money to accused-appellant in exchange for what they would later discover to be a vain hope of obtaining employment abroad. It is not disputed that accused appellant is not authorized nor licensed by the Department of Labor and Employment to engage in recruitment and placement activities. The absence of the necessary license or renders all of accused appellants recruitment activities criminal authority.

2.02 Employment Agency


Art. 13. Definitions c) Private fee-charging employment agency" means any person or entity engaged in recruitment and placement of workers for a fee which is charged, directly or indirectly, from the workers or employers or both. d) License" means a document issued by the Department of Labor authorizing a person or entity to operate a private employment agency. e) Private recruitment entity" means any person or association engaged in the recruitment and placement of workers, locally or overseas, without charging, directly or indirectly, any fee from the workers or employers. f) Authority" means a document issued by the Department of Labor authorizing a person or association to engage in recruitment and placement activities as a private recruitment entity.

2.03 Allowed Entities

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A. General Rule
Art. 16. Private recruitment - Except as provided in Chapter II of this Title, no person or entity other than the public employment offices, shall engage in the recruitment and placement of workers. Art. 18. Ban on direct-hiring - No employer may hire a Filipino worker for overseas employment except through the Boards and entities authorized by the Secretary of Labor. Direct-hiring by members of the diplomatic corps, international organizations and such other employers as may be allowed by the Secretary of Labor is exempted from this provision. Art. 25. Art. 25. Private sector participation in the recruitment and placement of workers - Pursuant to national development objectives and in order to harness and maximize the use of private sector resources and initiative in the development and implementation of a comprehensive employment program, the private employment sector shall participate in the recruitment and placement of workers, locally and overseas, under such guidelines, rules and regulations as may be issued by the Secretary of Labor. Art. 12 (f). To strengthen the network of public employment offices and rationalize the participation of the private sector in the recruitment and placement of workers, locally and overseas, to serve national development objectives;

B.

Allowed Entities a. Private i. Private recruitment agency Art. 13 (c) ii. Private employment agency Art. 13 (e) b. Public i. Public employment offices

2.04 Deployment of Migrant Workers 2.05 Prohibited Entity Art. 16. Private recruitment. Except as provided in Chapter II of this Title, no person or entity other than the public employment offices, shall engage in the recruitment and placement of workers. Art. 18. Ban on direct-hiring. No employer may hire a Filipino worker for overseas employment except through the Boards and entities authorized by the Secretary of Labor. Direct-hiring by members of the diplomatic corps, international organizations and such other employers as may be allowed by the Secretary of Labor is exempted from this provision. Art. 26. Travel agencies prohibited to recruit. Travel agencies and sales agencies of airline companies are prohibited from engaging in the business of recruitment and placement of workers for overseas employment whether for profit or not.

2.06 Techniques of Regulation See Art.24-39


Art. 25. Private sector participation in the recruitment and placement of workers. Pursuant to national development objectives and in order to harness and maximize the use of private sector resources and initiative in the development and implementation of a comprehensive employment program, the private employment sector shall participate in the recruitment and placement of workers, locally and overseas, under such guidelines, rules and regulations as may be issued by the Secretary of Labor. Art. 26. Travel agencies prohibited to recruit. Travel agencies and sales agencies of airline companies are prohibited from engaging in the business of recruitment and placement of workers for overseas employment whether for profit or not. Art. 27. Citizenship requirement. Only Filipino citizens or corporations, partnerships or entities at least seventy-five percent (75%) of the authorized and voting capital stock of which is owned and controlled by Filipino citizens shall be permitted to participate in the recruitment and placement of workers, locally or overseas.

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Art. 28. Capitalization. All applicants for authority to hire or renewal of license to recruit are required to have such substantial capitalization as determined by the Secretary of Labor. Art. 29. Non-transferability of license or authority. No license or authority shall be used directly or indirectly by any person other than the one in whose favor it was issued or at any place other than that stated in the license or authority be transferred, conveyed or assigned to any other person or entity. Any transfer of business address, appointment or designation of any agent or representative including the establishment of additional offices anywhere shall be subject to the prior approval of the Department of Labor. Art. 30. Registration fees. The Secretary of Labor shall promulgate a schedule of fees for the registration of all applicants for license or authority. Art. 31. Bonds. All applicants for license or authority shall post such cash and surety bonds as determined by the Secretary of Labor to guarantee compliance with prescribed recruitment procedures, rules and regulations, and terms and conditions of employment as may be appropriate. Art. 32. Fees to be paid by workers. Any person applying with a private fee-charging employment agency for employment assistance shall not be charged any fee until he has obtained employment through its efforts or has actually commenced employment. Such fee shall be always covered with the appropriate receipt clearly showing the amount paid. The Secretary of Labor shall promulgate a schedule of allowable fees. Art. 33. Reports on employment status. Whenever the public interest requires, the Secretary of Labor may direct all persons or entities within the coverage of this Title to submit a report on the status of employment, including job vacancies, details of job requisitions, separation from jobs, wages, other terms and conditions and other employment data. Art. 34. Prohibited practices. Art. 35. Suspension and/or cancellation of license or authority. The Minister of Labor shall have the power to suspend or cancel any license or authority to recruit employees for overseas employment for violation of rules and regulations issued by the Ministry of Labor, the Overseas Employment Development Board, or for violation of the provisions of this and other applicable laws, General Orders and Letters of Instructions. Art. 36. Regulatory power. The Secretary of Labor shall have the power to restrict and regulate the recruitment and placement activities of all agencies within the coverage of this Title and is hereby authorized to issue orders and promulgate rules and regulations to carry out the objectives and implement the provisions of this Title. Art. 37. Visitorial Power. The Secretary of Labor or his duly authorized representatives may, at any time, inspect the premises, books of accounts and records of any person or entity covered by this Title, require it to submit reports regularly on prescribed forms, and act on violation of any provisions of this Title. Art. 38. Illegal recruitment. definition Art. 39. Penalties. for illegal recruitment

License People v. Buli-e License territorial: could only undertake recruitment and placement activities in the region where the license was granted 2.07 Illegal Recruitment
Art. 38. Illegal Recruitment a) Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-holders of authority, shall be deemed illegal and punishable under Article 39 of this Code. The Department of Labor and Employment or any law enforcement officer may initiate complaints under this Article. b) Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage and shall be penalized in accordance with Article 39 hereof. Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under the first paragraph hereof. Illegal

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c)

recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group. The Secretary of Labor and Employment or his duly authorized representatives shall have the power to cause the arrest and detention of such non-licensee or non-holder of authority if after investigation it is determined that his activities constitute a danger to national security and public order or will lead to further exploitation of job-seekers. The Secretary shall order the search of the office or premises and seizure of documents, paraphernalia, properties and other implements used in illegal recruitment activities and the closure of companies, establishments and entities found to be engaged in the recruitment of workers for overseas employment, without having been licensed or authorized to do so.

Art. 34. Prohibited practices. It shall be unlawful for any individual, entity, licensee, or holder of authority: a) To charge or accept, directly or indirectly, any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor, or to make a worker pay any amount greater than that actually received by him as a loan or advance; b) To furnish or publish any false notice or information or document in relation to recruitment or employment; c) To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under this Code. d) To induce or attempt to induce a worker already employed to quit his employment in order to offer him to another unless the transfer is designed to liberate the worker from oppressive terms and conditions of employment; e) To influence or to attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency; f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the Philippines; g) To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly authorized representatives; h) To fail to file reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the Secretary of Labor. i) To substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor; j) To become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of a travel agency; and k) To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations other than those authorized under this Code and its implementing rules and regulations. RA 8042: Sec. 6. Definitions. - For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, procuring workers and includes referring, contact services, promising or advertising for employment abroad, whether for profit or not, when undertaken by a non-license or non-holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines. Provided, that such non-license or non-holder, who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed so engaged. It shall likewise include the following acts, whether committed by any persons, whether a non-licensee, non-holder, licensee or holder of authority. a) To charge or accept directly or indirectly any amount greater than the specified in the schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make a worker pay any amount greater than that actually received by him as a loan or advance; b) To furnish or publish any false notice or information or document in relation to recruitment or employment; c) To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under the Labor Code; d) To induce or attempt to induce a worker already employed to quit his employment in order to offer him another unless the transfer is designed to liberate a worker from oppressive terms and conditions of employment; e) To influence or attempt to influence any persons or entity not to employ any worker who has not applied for employment through his agency; f) To engage in the recruitment of placement of workers in jobs harmful to public health or morality or to dignity of the Republic of the Philippines; g) To obstruct or attempt to obstruct inspection by the Secretary of Labor and Employment or by his duly authorized representative; h) To fail to submit reports on the status of employment, placement vacancies, remittances of foreign exchange earnings, separations from jobs, departures and such other matters or information as may be required by the Secretary of Labor and Employment; i) To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the Department of Labor and Employment; j) For an officer or agent of a recruitment or placement agency to become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly on indirectly in the management of a travel agency;

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To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations other than those authorized under the Labor Code and its implementing rules and regulations; l) Failure to actually deploy without valid reasons as determined by the Department of Labor and Employment; and m) Failure to reimburse expenses incurred by the workers in connection with his documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker's fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered as offense involving economic sabotage. Illegal recruitment is deemed committed by a syndicate carried out by a group of three (3) or more persons conspiring or confederating with one another. It is deemed committed in large scale if committed against three (3) or more persons individually or as a group. The persons criminally liable for the above offenses are the principals, accomplices and accessories. In case of juridical persons, the officers having control, management or direction of their business shall be liable. RA 10022, Sec.2. Section 3, paragraph (a) of Republic Act No. 8042, as amended, is hereby amended to read as follows: (a) "Overseas Filipino worker" refers to a person who is to be engaged, is engaged or has been engaged in a remunerated activity in a state of which he or she is not a citizen or on board a vessel navigating the foreign seas other than a government ship used for miliatry or non-commercial purposes or on an installation located offshore or on the high seas; to be used interchangeably with migrant worker. RA 10022, Sec.5. Section 6 of Republic Act No. 8042, as amended, is hereby amended to read as follows: "SEC. 6. Definition. - For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether for profit or not, when undertaken by non-licensee or non-holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines: Provided, That any such nonlicensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed so engaged. It shall likewise include the following acts, whether committed by any person, whether a non-licensee, nonholder, licensee or holder of authority: a) To charge or accept directly or indirectly any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make a worker pay or acknowledge any amount greater than that actually received by him as a loan or advance; b) To furnish or publish any false notice or information or document in relation to recruitment or employment; c) To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under the Labor Code, or for the purpose of documenting hired workers with the POEA, which include the act of reprocessing workers through a job order that pertains to nonexistent work, work different from the actual overseas work, or work with a different employer whether registered or not with the POEA; d) To include or attempt to induce a worker already employed to quit his employment in order to offer him another unless the transfer is designed to liberate a worker from oppressive terms and conditions of employment; e) To influence or attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency or who has formed, joined or supported, or has contacted or is supported by any union or workers' organization; f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the Philippines; g) [To obstruct or attempt to obstruct inspection by the Secretary of Labor and Employment or by his duly authorized representative;] h) To fail to submit reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the Secretary of Labor and Employment; i) To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the Department of Labor and Employment; j) For an officer or agent of a recruitment or placement agency to become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of travel agency; k) To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations, or for any other reasons, other than those authorized under the Labor Code and its implementing rules and regulations; l) Failure to actually deploy a contracted worker without valid reason as determined by the Department of Labor and Employment; m) Failure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker's fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage; and n) To allow a non-Filipino citizen to head or manage a licensed recruitment/manning agency. Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring or confederating with one another. It is deemed committed in large scale if committed against three (3) or more persons individually or

k)

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as a group. In addition to the acts enumerated above, it shall also be unlawful for any person or entity to commit the following prohibited acts: 1) Grant a loan to an overseas Filipino worker with interest exceeding eight percent (8%) per annum, which will be used for payment of legal and allowable placement fees and make the migrant worker issue, either personally or through a guarantor or accommodation party, postdated checks in relation to the said loan; 2) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to avail of a loan only from specifically designated institutions, entities or persons; 3) Refuse to condone or renegotiate a loan incurred by an overseas Filipino worker after the latter's employment contract has been prematurely terminated through no fault of his or her own; 4) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to undergo health examinations only from specifically designated medical clinics, institutions, entities or persons, except in the case of a seafarer whose medical examination cost is shouldered by the principal/shipowner; 5) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to undergo training, seminar, instruction or schooling of any kind only from specifically designated institutions, entities or persons, except fpr recommendatory trainings mandated by principals/shipowners where the latter shoulder the cost of such trainings; 6) For a suspended recruitment/manning agency to engage in any kind of recruitment activity including the processing of pending workers' applications; and 7) For a recruitment/manning agency or a foreign principal/employer to pass on the overseas Filipino worker or deduct from his or her salary the payment of the cost of insurance fees, premium or other insurance related charges, as provided under the compulsory worker's insurance coverage. The persons criminally liable for the above offenses are the principals, accomplices and accessories. In case of juridical persons, the officers having ownership, control, management or direction of their business who are responsible for the commission of the offense and the responsible employees/agents thereof shall be liable. In the filing of cases for illegal recruitment or any of the prohibited acts under this section, the Secretary of Labor and Employment, the POEA Administrator or their duly authorized representatives, or any aggrieved person may initiate the corresponding criminal action with the appropriate office. For this purpose, the affidavits and testimonies of operatives or personnel from the Department of Labor and Employment, POEA and other law enforcement agencies who witnessed the acts constituting the offense shall be sufficient to prosecute the accused. In the prosecution of offenses punishable under this section, the public prosecutors of the Department of Justice shall collaborate with the anti-illegal recruitment branch of the POEA and, in certain cases, allow the POEA lawyers to take the lead in the prosecution. The POEA lawyers who act as prosecutors in such cases shall be entitled to receive additional allowances as may be determined by the POEA Administrator. The filing of an offense punishable under this Act shall be without prejudice to the filing of cases punishable under other existing laws, rules or regulations."

As defined originally in Art. 38, illegal recruitment was limited to recruitment activities undertaken by nonlicensees or nonholders of authority. This has been changed by RA 8042. Under RA 8042, illegal recruitment comprises both the recruitment of non-licensees or non-holders of authority (first paragraph) and the doing of any of the prohibited acts listed (a-m), by any person, whether a licensed recruitment entity or not.

Q: When is there Illegal Recruitment? a) In LC, when one has NO license or authority and commits any of the acts in Art.13(b). For there to be a violation of Art.34 on Prohibited Acts, it is required that the actor has no license also. b) In MWA, when one has NO license or authority and commits any of the acts in Art.6 of MWA. For there to be a violation of the Prohibited Acts in the proviso of A6 (in A34 of LC), it does not matter whether or not there is license or authority. *To determine whether LC or the Migrant Workers Act of 1995 (RA 8042) applies, determine the place of work: If in RP: LC applies If Abroad: MWA applies Elements of Crime Acts: Art13b, Art34 Elements: (under LC) 1. no valid license/authority (A38) 2. does acts under Art13b or Art34 (Under MWA)

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1. 2.

no valid license/authority + performs acts under Art13b, LC has valid license/authority + performs acts under Art6, MWA

Ritualo v. People Illegal recruitment is committed when two essential elements concur: (1)that the offender has no valid license or authority required by law to enable him to lawfully engage in the recruitment and placement of workers, and (2)that the offender undertakes any activity within the meaning of recruitment and placement defined under Article 13(b), or any prohibited practices enumerated under Article 34 of the Labor Code. As to the second element, it must be shown that the accused gave the private complainant the distinct impression that he/she had the power or ability to send the private complainant abroad for work, such that the latter was convinced to part with his/her money in order to be employed. Thus, to be engaged in illegal recruitment, it is plain that there must at least be a promise or an offer of employment from the person posing as a recruiter whether locally or abroad.

People v. Sagayaga Illegal recruitment can be committed by even a licensee or holder of authority Under Section 6 (m) of Rep. Act No. 8042, illegal recruitment may be committed by any person, whether a non-licensee, non-holder of authority, licensee or holder of authority, thus: (m) Failure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the workers fault.... Under the last paragraph of the said section, those criminally liable are the principals, accomplices and accessories. In case of a juridical person, the officers having control, management or direction of the business shall be criminally liable. People v. Baytic Illegal recruitment is committed when two (2) elements concur. First, the offender has no valid license or authority required by law to enable one to engage lawfully in recruitment and placement of workers. Second, he or she undertakes either any activity within the meaning of "recruitment and placement" defined under Art. 13, par. (b), or any prohibited practices enumerated under Art. 34 of the Labor Code. In case of illegal recruitment in large scale, a third element is added: that the accused commits the acts against three or more persons, individually or as a group. * NB: These are the elements of illegal recruitment per se (recruitment without a license or authority). Under MWA, illegal recruitment can be committed even by licensed agencies. C.F. Sharp Crew Management v. Espanol Article 13(b) of the Labor Code defines recruitment and placement as: any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad whether for profit or not: Provided, That any person or entity which in any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in recruitment and placement. On the basis of this definition and contrary to what C.F. Sharp wants to portray - the conduct of preparatory interviews is a recruitment activity. The fact that C.F. Sharp did not receive any payment during the interviews is of no moment. From the language of Article 13(b), the act of recruitment may be "for profit or not." Notably, it is the lack of the necessary license or authority, not the fact of payment that renders the recruitment activity of LCL unlawful.

Large Scale Large scale or by syndicate: considered an offense involving economic sabotage Large scale illegal recruitment: committed against 3+ persons individually or as a group Illegal recruitment by syndicate: carried out by a group of 3+ persons conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme

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People v. Buli-e The essential elements of the crime of illegal recruitment in large scale are: 1. the accused engages in acts of recruitment and placement of workers defined under Article 13(b) or in any prohibited activities under Article 34 of the Labor Code; 2. the accused has not complied with the guidelines issued by the Secretary of Labor and Employment, particularly with respect to the securing of a license or an authority to recruit and deploy workers, either locally or overseas; and 3. the accused commits the unlawful acts against three or more persons, individually or as a group. When illegal recruitment is committed in large scale or when it is committed by a syndicate, it is considered as an offense involving economic sabotage People v. Dujua The essential elements of the crime of illegal recruitment in large scale are: (1) the accused engages in acts of recruitment and placement of workers defined under Article 13(b) or in any prohibited activities under Art. 34 of the Labor Code; (2) the accused has not complied with the guidelines issued by the Secretary of Labor and Employment, particularly with respect to the securing of a license or an authority to recruit and deploy workers, either locally or overseas; and (3) the accused commits the unlawful acts against three or more persons, individually or as a group.

Referrals People v. Meris [She told victims that she would accompany them to agency where she also applied] The query is WON she merely introduced complainants to the recruiters or did her actions go beyond that. Although the accused was not an employee of the alleged illegal recruiter, evidence shows that she was the one who approached complainants and prodded them to seek employment abroad. This is clearly an act of referral. Their recruitment would not have been consummated were it not for the direct participation of the accused in the recruitment process. *NB: Sec.13(b) recruitment includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not People v. Fortuna The rule has been said that a person charged with illegal recruitment may be convicted on the strength of the testimony of the complainants, if found to be credible and convincing, and that the absence of receipts to evidence payment to the recruiter would not warrant an acquittal. Employees Under Sec.6 of RA 8042, the persons criminally liable for illegal recruitment are the principals, accomplices and accessories. In case of juridical persons, the officers having control, management or direction of their business shall be liable (See People v. Sagayaga). General rule: an employee who does not control, manage or direct the business may not be held liable for illegal recruitment. Where it is shown that the employee was merely acting under the direction of his superiors and was unaware that his acts constituted a crime, he may not be held criminally liable. Exception: An employee may be held liable as principal, together with his employer, if it is shown that he actively and consciously participated in illegal recruitment. People v. Corpuz An employee of a company or corporation engaged in illegal recruitment may be held liable as principal, together with his employer, if it is shown that he actively and consciously participated in illegal recruitment. However, where it is shown that the employee was merely acting under the direction of his superiors and was unaware that his acts constituted a crime, he may not be held criminally liable for an act done for and in behalf of his employer. Where there is insufficient evidence that accused actively and consciously participated in illegal recruitment, and it was shown that she was merely an employee acting under the orders of her employers, she should be acquitted.

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People v. Sagayaga Under the last paragraph of the Sec.6 of RA 8042, those criminally liable are the principals, accomplices and accessories. In case of a juridical person, the officers having control, management or direction of the business shall be criminally liable People v. Gutierrez Accused cannot escape liability by claiming that she was not aware that before working for her employer in the recruitment agency, she should first be registered with the POEA. Illegal recruitment in large scale is malum prohibitum, not malum in se. Good faith is not a defense Section 11, Rule II, Book II of the Rules and Regulations Governing Overseas Employment requires the prior approval of the POEA of the appointment of representatives or agents: Section 11. Appointment of Representatives. Every appointment of representatives or agents of licensed agency shall be subject to prior approval or authority of the Administration. The approval may be issued upon submission of or compliance with the following requirements: a. Proposed appointment or Special Power of Attorney; b. Clearances of the proposed representative or agent from NBI; c. A sworn or verified statement by the designating or appointing person or company assuming full responsibility for all the acts of the agent or representative done in connection with the recruitment and placement of workers. Approval by the Administration of the appointment or designation does not authorize the agent or representative to establish a branch or extension office of the licensed agency represented. Any revocation or amendment in the appointment should be communicated to the administration. Otherwise, the designation or appointment shall be deemed as not revoked or amended. Section 1, Rule X of the same Book, in turn, provides that recruitment and placement activities of agents or representatives appointed by a licensee, whose appointments were not authorized by the Administration shall likewise constitute illegal recruitment. Here, it is proven that Gutierrezs appointment as representative of Serafudin was without authorization by the POEA. She is liable for illegal recruitment in a large scale.

2.08 Enforcement and Sanctions


Art. 36. Regulatory power. The Secretary of Labor shall have the power to restrict and regulate the recruitment and placement activities of all agencies within the coverage of this Title and is hereby authorized to issue orders and promulgate rules and regulations to carry out the objectives and implement the provisions of this Title. Art. 37. Visitorial Power. The Secretary of Labor or his duly authorized representatives may, at any time, inspect the premises, books of accounts and records of any person or entity covered by this Title, require it to submit reports regularly on prescribed forms, and act on violation of any provisions of this Title. Art. 38. (c) The Secretary of Labor and Employment or his duly authorized representatives shall have the power to cause the arrest and detention of such non-licensee or non-holder of authority if after investigation it is determined that his activities constitute a danger to national security and public order or will lead to further exploitation of job-seekers. The Secretary shall order the search of the office or premises and seizure of documents, paraphernalia, properties and other implements used in illegal recruitment activities and the closure of companies, establishments and entities found to be engaged in the recruitment of workers for overseas employment, without having been licensed or authorized to do so. Art. 39. Penalties. The penalty of life imprisonment and a fine of One Hundred Thousand Pesos (P1000,000.00) shall be imposed if illegal recruitment constitutes economic sabotage as defined herein; a) Any licensee or holder of authority found violating or causing another to violate any provision of this Title or its implementing rules and regulations shall, upon conviction thereof, suffer the penalty of imprisonment of not less than two years nor more than five years or a fine of not less than P10,000 nor more than P50,000, or both such imprisonment and fine, at the discretion of the court; b) Any person who is neither a licensee nor a holder of authority under this Title found violating any provision thereof or its implementing rules and regulations shall, upon conviction thereof, suffer the penalty of imprisonment of not less than four years nor more than eight years or a fine of not less than P20,000 nor more than P100,000 or both such imprisonment and fine, at the discretion of the court; c) If the offender is a corporation, partnership, association or entity, the penalty shall be imposed upon the officer or officers

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of the corporation, partnership, association or entity responsible for violation; and if such officer is an alien, he shall, in addition to the penalties herein prescribed, be deported without further proceedings; d) In every case, conviction shall cause and carry the automatic revocation of the license or authority and all the permits and privileges granted to such person or entity under this Title, and the forfeiture of the cash and surety bonds in favor of the Overseas Employment Development Board or the National Seamen Board, as the case may be, both of which are authorized to use the same exclusively to promote their objectives. RA 10022, Sec.7. Section 10 of Republic Act No. 8042, as amended, is hereby amended to read as follows: "SEC. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damage. Consistent with this mandate, the NLRC shall endeavor to update and keep abreast with the developments in the global services industry. The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several. This provision shall be incorporated in the contract for overseas employment and shall be a condition precedent for its approval. The performance bond to de filed by the recruitment/placement agency, as provided by law, shall be answerable for all money claims or damages that may be awarded to the workers. If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages. Such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any substitution, amendment or modification made locally or in a foreign country of the said contract. Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages under this section shall be paid within thirty (30) days from approval of the settlement by the appropriate authority. In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, or any unauthorized deductions from the migrant worker's salary, the worker shall be entitled to the full reimbursement if his placement fee and the deductions made with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. In case of a final and executory judgement against a foreign employer/principal, it shall be automatically disqualified, without further proceedings, from participating in the Philippine Overseas Employment Program and from recruiting and hiring Filipino workers until and unless it fully satisfies the judgement award. Noncompliance with the mandatory periods for resolutions of case provided under this section shall subject the responsible officials to any or all of the following penalties: a) The salary of any such official who fails to render his decision or resolution within the prescribed period shall be, or caused to be, withheld until the said official complies therewith; b) Suspension for not more than ninety (90) days; or c) Dismissal from the service with disqualification to hold any appointive public office for five (5) years. Provided, however, That the penalties herein provided shall be without prejudice to any liability which any such official may have incured under other existing laws or rules and regulations as a consequence of violating the provisions of this paragraph.

Determine: * The Place of work to know which law to apply (LC or MWL) * The Acts involved (C-E-C-T-U-H-P or R-C, etc.) * The nature of the offense (Simple, in Large Scale or by a Syndicate) *NB: Art. 38(c) is declared unconstitutional by the Court. Under the Constitution, only a judge may issue warrants of search and arrest. [Azucena] However, it is submitted that the power of the Secretary of DOLE to order the closure of illegal recruitment establishments still subsists, the same being considered essentially administrative and regulatory in nature.

Serrano v. Gallant Maritime Service Issue here is the constitutionality of the last clause of Sec.10 of RA 8042: Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. Court held: Said clause is unconstitutional for being an invalid classification, in violation of the equal protection clause.

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Prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally discharged were treated alike in terms of the computation of their money claims: they were uniformly entitled to their salaries for the entire unexpired portions of their contracts. But with the enactment of R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of one year or more in their employment contract have since been differently treated in that their money claims are subject to a 3-month cap, whereas no such limitation is imposed on local workers with fixed-term employment. The Court concludes that the subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage. Disposition: Petitioner is awarded his salaries for the entire unexpired portion of his employment contract consisting of nine months and 23 days computed at the rate of US$1,400.00 per month. Becmen Service Exporter v. Cuaresma Executive Secretary v. CA SC had already applied RA 8042 thereby affirming its validity. Legality of certain portions of RA 8042 was questioned illegal recruitment, penalties, and venue. 2.09 Liability of Agency Becmen etc. v. Cuaresma Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. Private employment agencies are held jointly and severally liable with the foreign-based employer for any violation of the recruitment agreement or contract of employment. This joint and solidary liability imposed by law against recruitment agencies and foreign employers is meant to assure the aggrieved worker of immediate and sufficient payment of what is due him. If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages. G&M (Phil.) Inc. v. Batomalaque Contractual undertakings submitted to the Bureau of Employment Services constitute the legal basis for holding petitioner, and other private employment or recruitment agencies, liable jointly and severally with its principal, the foreign-based employer, for all claims filed by recruited workers which may arise in connection with the implementation of the service agreements or employment contracts. First of all, in applying for its license to operate a private employment agency for overseas recruitment and placement, petitioner was required to submit, among others, a document or verified undertaking whereby it assumed all responsibilities for the proper use of its license and the implementation of the contracts of employment with the workers it recruited and deployed for overseas employment. Second, it was also required to file with Bureau a formal appointment or agency contract executed by the foreign-based employer in its favor to recruit and hire personnel for the former, which contained a provision empowering it to sue and be sued jointly and solidarily with the foreign principal for any of the violations of the recruitment agreement and the contracts of employment. And third, it was required as well to post such cash and surety bonds as determined by the Sec. of Labor to guarantee compliance with prescribed recruitment procedures, rules and regulations, and terms and conditions of employment as appropriate 2.10 Migrant Workers Act
RA 8042: Sec. 2. DECLARATION OF POLICIES. a) In the pursuit of an independent foreign policy and while considering national sovereignty, territorial integrity, national interest and the right to self-determination paramount in its relations with other states, the State shall, at all times, uphold the dignity of its citizens whether in country or overseas, in general, and Filipino migrant workers, in particular. b) 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. Towards this end, the State shall provide adequate and timely social, economic and legal services to Filipino migrant workers. c) While recognizing the significant contribution of Filipino migrant workers to the national economy through their foreign

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exchange remittances, the State does not promote overseas employment as a means to sustain economic growth and achieve national development. The existence of the overseas employment program rests solely on the assurance that the dignity and fundamental human rights and freedoms of the Filipino citizens shall not, at any time, be compromised or violated. The State, therefore, shall continuously create local employment opportunities and promote the equitable distribution of wealth and the benefits of development. d) The State affirms the fundamental equality before the law of women and men and the significant role of women in nationbuilding. Recognizing the contribution of overseas migrant women workers and their particular vulnerabilities, the State shall apply gender sensitive criteria in the formulation and implementation of policies and programs affecting migrant workers and the composition of bodies tasked for the welfare of migrant workers. e) Free access to the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any persons by reason of poverty. In this regard, it is imperative that an effective mechanism be instituted to ensure that the rights and interest of distressed overseas Filipinos, in general, and Filipino migrant workers, in particular, documented or undocumented, are adequately protected and safeguarded. f) The right of Filipino migrant workers and all overseas Filipinos to participate in the democratic decision-making processes of the State and to be represented in institutions relevant to overseas employment is recognized and guaranteed. g) The State recognizes that the ultimate protection to all migrant workers is the possession of skills. Pursuant to this and as soon as practicable, the government shall deploy and/or allow the deployment only to skilled Filipino workers. h) Non-governmental organizations, duly recognized as legitimate, are partners of the State in the protection of Filipino migrant workers and in the promotion of their welfare, the State shall cooperate with them in a spirit of trust and mutual respect. i) Government fees and other administrative costs of recruitment, introduction, placement and assistance to migrant workers shall be rendered free without prejudice to the provision of Section 36 hereof. Nonetheless, the deployment of Filipino overseas workers, whether land-based or sea-based by local service contractors and manning agencies employing them shall be encouraged. Appropriate incentives may be extended to them. RA 8042: Sec. 4. DEPLOYMENT OF MIGRANT WORKERS. - The State shall deploy overseas Filipino workers only in countries where the rights of Filipino migrant workers are protected. The government recognizes any of the following as guarantee on the part of the receiving country for the protection and the rights of overseas Filipino workers: a) It has existing labor and social laws protecting the rights of migrant workers; b) It is a signatory to multilateral conventions, declaration or resolutions relating to the protection of migrant workers; c) It has concluded a bilateral agreement or arrangement with the government protecting the rights of overseas Filipino workers; and d) It is taking positive, concrete measures to protect the rights of migrant workers. RA 8042: Sec. 6. Definitions. - See above. RA 8042: Sec.10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several. This provisions shall be incorporated in the contract for overseas employment and shall be a condition precedent for its approval. The performance bond to be filed by the recruitment/placement agency, as provided by law, shall be answerable for all money claims or damages that may be awarded to the workers. If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages. Such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any substitution, amendment or modification made locally or in a foreign country of the said contract. Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages under this section shall be paid within four (4) months from the approval of the settlement by the appropriate authority. In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. Non-compliance with the mandatory periods for resolutions of cases provided under this section shall subject the responsible officials to any or all of the following penalties: a) The salary of any such official who fails to render his decision or resolutions within the prescribed period shall be, or caused to be, withheld until the said official complies therewith; b) Suspension for not more than ninety (90) days; or c) Dismissal from the service with disqualifications to hold any appointive public office for five (5) years. Provided, however, that the penalties herein provided shall be without prejudice to any liability which any such official may

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have incurred under other existing laws or rules and regulations as a consequence of violating the provisions of this paragraph. RA 10022, Sec.7. See above.

Flourish Maritime Shipping v. Almanzor Involves interpretation of Sec.10 of RA 8042: SECTION 10. Money Claims. In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. The correct interpretation of this provision was settled in Marsaman Manning Agency Inc. v. National Labor Relations Commission, where this Court held that the choice of which amount to award an illegally dismissed overseas contract worker, i.e., whether his salaries for the unexpired portion of his employment contract, or three (3) months salary for every year of the unexpired term, whichever is less, comes into play only when the employment contract concerned has a term of at least one (1) year or more. *NB: overruled by Serrano v. Gallant Maritime. Three months clause declared unconstitutional. Phil. Employ Services v. Paramio Illegally dismissed OFWs are entitled to the full reimbursement of their placement fee with interest at twelve percent (12%) per annum, plus their salaries for the unexpired portion of his employment contract, or for three months for every year of the unexpired term, whichever is less under paragraph 5, Section 10 of Rep. Act No. 8042. An overseas Filipino worker who is illegally terminated shall be entitled to his salary equivalent to the unexpired portion of his employment contract if such contract is less than one year. However, if his contract is for a period of at least one year, he is entitled to receive his salaries equivalent to the unexpired portion of his contract, or three months salary for every year of the unexpired term, whichever is lower *NB: Overruled by Serrano. Placewell Int. Services Corp. v. Camote R.A. No. 8042 explicitly prohibits the substitution or alteration to the prejudice of the worker, of employment contracts already approved and verified by the Department of Labor and Employment (DOLE) from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the DOLE. The unauthorized alteration in the employment contract of respondent, particularly the diminution in his salary from US$370.00 to SR 800.00 per month, is void for violating the POEA-approved contract which set the minimum standards, terms, and conditions of his employment.

2.11 Pre-termination Flourish Maritime v. Almanzor The employment contract involved in the instant case covers a two-year period but the overseas contract worker actually worked for only 26 days prior to his illegal dismissal. Thus, the three months salary rule applies. There is a similar factual milieu between the case at bench and Olarte v. Nayona.[ The only difference lies in the length of the subject employment contract: Olarte involved a one-year contract; while the employment in this case covers a two-year period. However, they both fall under the three months salary rule since the term of the contract is at least one year or more. In Olarte, as well as in JSS Indochina Corporation v. Ferrer, we ordered the employer of an illegally dismissed overseas contract worker to pay an amount equivalent to three (3) months salary.

Section 3. Alien Employment


REQUISITES: 1. Employment Permit (Art. 40) a. Non-Resident Aliensneed employment permit from DOLE b. Resident Aliensno need for employment permit

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2.

3. 4. 5.

Secretary of Labor and Employment determines: a. Non-availability of a person in the Philippines who is able, competent and willing at the time of the application to perform the services for which the alien is desired (Art. 40) b. Other factors like economic and national interest considerations Only Secretary of Labor and Employment is authorized to issue employment permit. No transfer of employment from one employer to another because the employee was granted only for that particular job (Art. 41). There must be an understudy program to assure technology transfer (IRR).

Omnibus Guidelines For The Issuance Of Employment Permits To Foreign Nationals Pursuant to the provisions of Articles 5, and 40 of PD 442, as amended, the provisions of RULE XIV, Book I of its Implementing Rules and Regulations, Section 17(5), Chapter 4, Title VII of the Administrative Code of 1987, the following Omnibus Guidelines for the issuance of Employment Permits are hereby promulgated: Rule I. Coverage and Exemption 1. The following shall apply for Alien Employment Permit (AEP): 1.1 All foreign nationals seeking admission to the Philippines for the purpose of employment; 1.2 Missionaries or religious workers who intend to engage in gainful employment; 1.3 Holders of Special Investors Resident Visa (SIRV), Special Retirees Resident Visa (SRRV), Treaty Traders Visa (9d) or Special Nonimmigrant Visa (47(a)2), who occupy any executive, advisory, supervisory, or technical position in any establishment; 1.4 Agencies, organizations or individuals whether public or private, who secure the services of foreign professionals to practice their professions in the Philippines in the Philippines under reciprocity and other international agreements. 1.5 Non-Indo Chinese Refugees who are asylum seekers and given refugee status by the United Nations High Commissioner on Refugees (UNHCR) or the Department of Justice under DOJ Department Order No. 94, series of 1998; 1.6 Resident foreign nationals seeking employment in the Philippines. 2. Exemption. The following categories of foreign nationals are exempt from securing an employment permit in order to work in the Phiilppines. 2.1 All members of the diplomatic services and foreign government officials accredited by the Philippine Government; 2.2 Officers and staff of international organizations of which the Philippine government is a cooperating member, and their legitimate spouse desiring to work in the Philippines; 2.3 Foreign nationals elected as members of the Governing board who do not occupy any other position, but have only voting rights in the corporation; and 2.4 All foreign nationals granted exemption by special laws and all other laws that may be promulgated by the Congress. RULE II. Procedures in the Processing of Applications for AEP 1. All foreign nationals seeking employment in the Philippines under Rule 1 hereof or their prospective employers, shall file their applications with the DOLE Regional Office having jurisdiction over the intended place of work. 2. Fees - The applicant shall pay filing, publication and permit fees in the amount of Eight Thousand Pesos (P8,000.00) for each application for AEP with a validity of one (1) year. Three Thousand Pesos (P3,000.00) shall be charged for every additional year of validity or a fraction thereof. 3. An AEP shall be issued based on the following: 3.1 Compliance bye the applicant employer or the foreign national with the substantive and documentary requirements; 3.2 Determination of the DOLE Secretary that there is no Filipino national who is competent, able and willing to do the job for which the services of the applicant is desired; 3.3 Assessment of the DOLE Secretary that the employment of the foreign national will redound to national benefit; 4. Denial of Application for AEP - An application for AEP may be denied based on the ground of non-compliance with any of the requirements for issuance of AEP or for misrepresentation of facts in the application or submission of falsified or tampered documents. Foreign nationals whose applications have been denied shall not be allowed to re-apply in any of the DOLE Regional Offices. 5. Renewal of Permit - An application for renewal of AEP shall be filed at least fifteen (15) days before its expiration. For elective officers, applications for renewal shall be filed upon election or at least thirty (30) days before the effectivity of the applicant's term of office if the succeeding term of office is ascertained. Failure to file the application for renewal of permit within the prescribed period shall be subject to fines of Five Thousand Pesos (5,000.00), if filed within six (6) months after the prescribed period and Ten Thousand Pesos (10,000.00), if filed after six (6) months. Failure to renew the AEP within one (1) year after its expiration shall be a cause for its revocation or cancellation. 6. The employer shall notify the DOLE-RO which issued the permit of the date of the assumption to duty of the foreign national within thirty (30) days from issuance of the permit. 7. Validity of Permits - The validity of permits shall be as follows: 7.1 As a general rule, the validity of permits shall be for a period of one (1) year, unless the employment contract, consultancy services, or other modes of engagement or term of office for elective officers, provides for a longer period.

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7.2 The effectivity of the renewal shall be on the day after the expiration of the previous permit, regardless of whether or not the renewal is granted before or after the expiration of the previous permit. 7.3 As a general rule, the permits shall be valid only for the position and the employer for which it was issued, except in case of foreign nationals who are holders of multiple positions in one corporation, where one AEP shall be valid for such multiple positions. 7.4 The permits of resident foreign nationals shall be valid for multiple employers, regardless of the nature and duration of their employment, provided that they shall report changes in their employment status and the identity of their employers to the DOLE Regional Office which has issued the permit. RULE III. Revocation/Cancellation of Employment Permits Issued 1. The permits issued may, motu proprio or upon a petition, be cancelled or revoked based on any of the following grounds: 1.1 Misrepresentation of facts or falsification of the documents submitted; 1.2 The foreign national has been declared as an undesirable alien by competent authorities; 1.3 Non-compliance with the conditions for which the AEP was issued; 1.4 Failure to renew AEP within one (1) year after its expiration. 2. Petitions for cancellation or revocation of permits issued shall be resolved within thirty (30) calendars from receipt thereof. 3. Any aggrieved party may file a Motion for Reconsideration and/or Appeal and the same shall be resolved based on Paragraph 4 of this Rule. 4. Remedies in Case of Denial or Cancellation - A Motion for Reconsideration maybe filed by an aggrieved party within seven (7) calendar days after receipt of the Order of Denial/Cancellation. The DOLE Regional Director shall resolve the said Motion for Reconsideration within ten (10) calendar days from receipt thereof. A motion for Reconsideration filed after the period of seven (7) calendar days but within ten (10) calendar days after receipt of the denial shall be treated as an appeal. An appeal from the decision of the DOLE Regional Director may be filed with the Secretary of labor and Employment within ten (10) calendar days from receipt of an Order from the DOLE Regional Director. The decision of the Secretary of Labor and Employment shall be final and unappealable. RULE IV. Penal and Transitory Provisions 1. The DOLE Regional Directors, after due notice and hearing, shall have the power to order and impose a fine of Five Thousand Pesos (P5,000.00) on foreign nationals found working without an AEP for less than one (1) year and Ten Thousand Pesos (P10,000.00) for more than one (1) year. 2. All applications for employment permit/certificates pending at the DOLE-RO upon the effectivity of these Guidelines shall be covered and processed under the provisions of these Guidelines.. 3. Holders of provisional and extended AEPs issued under Memorandum dated 24 August 2001 regarding Alternative Interim Measures for the Issuance of Alien Employment Permits, shall apply for an AEP pursuant to these Guidelines on or before the expiration of the provisional and extended AEP. 4. Foreign nationals who are already working in the country and who have not yet secured the requisite employment permit shall have ninety (90) days from the effectivity of these Guidelines to secure the said employment permit without penalty.

See Consti re preferential use of local labor. But alien employment is VALID. A40 LC re employment of non-resident aliens; employment permit. In sum, the law requires: o Employment permit o No person in the Philippines is competent, able and willing to perform the services of the particular job, and o Such finding is made only by Sec. of Labor.

3.01 Coverage Almodiel v NLRC Art. 40 of the Labor Code which requires employment permit refers to non-resident aliens. The employment permit is required for entry into the country for employment purposes and is issued after determination of the non-availability of a person in the Philippines who is competent able and willing at the time of application to perform the service for which the alien is desired. A resident alien does not fall within the ambit of this provision. 3.02 Technique Regulation Employment Permit
CONST. Art.XII, Sec.12. The State shall promote preferential use of Filipino labor, domestic materials and locally produced goods, and adopt measures that help make them competitive. LC. 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.

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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 competent, able and willing at the time of application to perform the services for which the alien is desired. For an enterprise registered in preferred areas of investments, said employment permit may be issued upon recommendation of the government agency charged with the supervision of said registered enterprise. Art. 41. Prohibition against transfer of employment. a) After the issuance of an employment permit, the alien shall not transfer to another job or change his employer without prior approval of the Secretary of Labor. b) Any non-resident alien who shall take up employment in violation of the provision of this Title and its implementing rules and regulations shall be punished in accordance with the provisions of Articles 289 and 290 of the Labor Code. c) In addition, the alien worker shall be subject to deportation after service of his sentence. Art. 42. Submission of list. Any employer employing non-resident foreign nationals on the effective date of this Code shall submit a list of such nationals to the Secretary of Labor within thirty (30) days after such date indicating their names, citizenship, foreign and local addresses, nature of employment and status of stay in the country. The Secretary of Labor shall then determine if they are entitled to an employment permit. RA 7916 The Special Economic Zone Act of 1995 Sec 2(b); 3(c); 4; 10; 40 Sec 2. Declaration of Policy. - It is the declared policy of the government to translate into practical realities the following State policies and mandates in the 1987 Constitution, namely: b)"The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods, and adopt measures that help make them competitive." (Sec. 12, Art. XII) In pursuance of these policies, the government shall actively encourage, promote, induce and accelerate a sound and balanced industrial, economic and social development of the country in order to provide jobs to the people especially those in the rural areas, increase their productivity and their individual and family income, and thereby improve the level and quality of their living condition through the establishment, among others, of special economic zones in suitable and strategic locations in the country and through measures that shall effectively attract legitimate and productive foreign investments. Sec 3. Purposes, Intents and Objectives. - It is the purpose, intent and objective of this Act: c)To promote the flow of investors, both foreign and local, into special economic zones which would generate employment opportunities and establish backward and forward linkages among industries in and around the economic zones; Sec 4. Definition of Terms. - For purposes of this Act, the following definitions shall apply to the following terms: a)"Special economic zones (SEZ)" - hereinafter referred to as the ECOZONES, are selected areas with highly developed or which have the potential to be developed into agroindustrial, industrial tourist/recreational, commercial, banking, investment and financial centers. An ECOZONE may contain any or all of the following: industrial estates (IEs), export processing zones (EPZs), free trade zones, and tourist/recreational centers. b)"Industrial estate (IE)" - refers to a tract of land subdivided and developed according to a comprehensive plan under a unified continuous management and with provisions for basic infrastructure and utilities, with or without pre-built standard factory buildings and community facilities for the use of the community of industries. c)"Export processing zone (EPZ)" - a specialized industrial estate located physically and/or administratively outside customs territory, predominantly oriented to export production. Enterprises located in export processing zones are allowed to import capital equipment and raw materials free from duties, taxes and other import restrictions. d)"Free trade zone" - an isolated policed area adjacent to a port of entry (as a seaport) and/or airport where imported goods may be unloaded for immediate transshipment or stored, repacked, sorted, mixed, or otherwise manipulated without being subject to import duties. However, movement of these imported goods from the freetrade area to a non-free-trade area in the country shall be subject to import duties. Enterprises within the zone are granted preferential tax treatment and immigration laws are more lenient. Sec 10. Immigration. - Any investor within the ECOZONE whose initial investment shall not be less than One hundred fifty thousand dollars ($150,000), his/her spouse and dependent children under twenty-one (21) years of age shall be granted permanent resident status within the ECOZONE. They shall have freedom of ingress and egress to and from the ECOZONE without any need of special authorization from the Bureau of Immigration. The PEZA shall issue working visas renewable every two (2) years to foreign executives and other aliens, possessing highlytechnical skills which no Filipino within the ECOZONE possesses, as certified by the Department of Labor and Employment. The names of aliens granted permanent residents status and working visas by the PEZA shall be reported to the Bureau of Immigration within thirty (30) days after issuance thereof. Sec 40. Percentage of Foreign Nationals. Employment of foreign nationals hired by ECOZONE enterprises in a supervisory, technical or advisory capacity shall not exceed five percent (5%) of its workforce without the express authorization of the Secretary

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of Labor and Employment. RA 7918 Amending Omnibus Investments Code of 1987 Sec 39(g) Art. 39. Incentives to Registered Enterprises. All registered enterprises shall be granted the following incentives to the extent engaged in a preferred area of investment: (g) Employment of Foreign Nationals. Subject to the provisions of Section 29 of Commonwealth Act No. 613, as amended, a registered enterprise may employ foreign nationals in supervisory, technical or advisory positions for a period not exceeding five (5) years from its registration, extendible for limited periods at the discretion of the Board: Provided, however, That when the majority of the capital stock of a registered enterprise is owned by foreign investors, the positions of president, treasurer, and general manager or their equivalents may be retained by foreign nationals beyond the period set forth within. Foreign nationals under employment contract within the purview of this incentive, their spouses and unmarried children under twenty-one (21) years of age, who are not excluded by Section 29 of Commonwealth Act No. 613, as amended, shall be permitted to enter and reside in the Philippines during the period of employment of such foreign nationals. A registered enterprise shall train Filipinos as understudies of foreign nationals in administrative, supervisory and technical skills and shall submit annual reports on such training to the Board.

General Milling Corp. v. Torres *Tim Cones employment permit was cancelled.+ The Labor Code itself specifically empowers respondent Secretary to make a determination as to the availability of the services of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which an alien is desired. The DOLE is the agency vested with jurisdiction to determine the question of availability of local workers. The constitutional validity of legal provisions granting such jurisdiction and authority and requiring proof of non-availability of local nationals able to carry out the duties of the position involved, cannot be seriously questioned. Notes: Only Sec. of Labor is authorized to issue EPs. Other agencies power is only recommendatory. Sec of Labors authority to grant and deny EP is broad. [a] re power of Sec. of Labor in granting or denying EP, other factors are included like economic consideration and considerations of national interest. See A12 LC which states consistent with the national interest. *b+ There can be no transfer of employment from one ER to another because EP was granted only for that particular job. [c] There must be an understudy program to assure the transfer of technology.

Section 4. Employment of Apprentices, Learners and Handicapped Workers STATUTORY REFERENCE Labor Code Art. 57-81 TESDA Act of 1994 (RA 7796) Dual Training Act Systems Act of 1994 (RA 7686) Magna Carta of Disabled Persons (RA7277)
4.01 Policy Objectives
RA 7796 (TESDA Act of 1994) Sec. 2 Declaration of Policy. It is hereby declared the policy of the State to provide relevant, accessible, high quality and efficient technical education and skills development in support of the development of high quality Filipino middle-level manpower responsive to and in accordance with Philippine development goals and priorities. The State shall encourage active participation of various concerned sectors, particularly private enterprises, being direct participants in and immediate beneficiaries of a trained and skilled work force, in providing technical education and skills development opportunities. Sec. 3 Statement of Goals and Objectives. It is the goal and objective of this Act to: a) Promote and strengthen the quality of technical education and skills development programs to attain international competitiveness. b) Focus technical education and skills development on meeting the changing demands for quality middle-level manpower; c) Encourage critical and creative thinking by disseminating the scientific and technical knowledge base of middle-level manpower development

Special Class of Workers

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- Apprentice - Learners - Handicapped *On learners and handicapped workers the intent of the law is that, part of national interest and development is to have a trained manpower. Century Canning Corp v. CA Article 57 of the Labor Code provides that the State aims to establish a national apprenticeship program through the participation of employers, workers and government and non-government agencies and to establish apprenticeship standards for the protection of apprentices. To translate such objectives into existence, prior approval of the DOLE to any apprenticeship program has to be secured as a condition sine qua non before any such apprenticeship agreement can be fully enforced. The role of the DOLE in apprenticeship programs and agreements cannot be debased. 4.02 Apprentice A. Definition
RA 7796 Sec. 4 (j). Apprenticeship is training within employment with compulsory related theoretical instructions involving a contract between an apprentice and an employer on an approved apprenticeable occupation;

Apprentices these refer to persons who undergo training within employment with compulsory related theoretical instructions involving a contract between an apprentice and an ER during a period established assured by an apprenticeable occupation. 2 concepts: o highly skilled, and o only ER can appoint apprentice

B.

Apprenticeable occupation

RA 7796 Sec. 4 (m). Apprenticeable Occupation is an occupation officially endorsed by a tripartite body and approved for apprenticeship by the Authority;

C.

Qualification When a child works directly under sole responsibility ofparents/legal guardian o Only members of employers family employed o Provided: No danger and provide with education Public and entertainment/info (cinema, theater, radio, TV) o DOLE permit needed o Concluded by parents o Express agreement by child o Prevent child exploitation and discrimintation o Continuing program for training and skills acquisition

RA 7610 (as amended by RA 7658) Sec 12. Employment of Children. Children below fifteen (15) years of age may be employed except: (1) When a child works directly under the sole responsibility of his parents or legal guardian and where only members of the employer's family are employed: Provided, however, That his employment neither endangers his life, safety and health and morals, nor impairs his normal development: Provided, further, That the parent or legal guardian shall provide the said minor child with the prescribed primary and/or secondary education; or (2) When a child's employment or participation in public & entertainment or information through cinema, theater, radio or television is essential: Provided, The employment contract concluded by the child's parent or guardian, with the express agreement

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of the child concerned, if possible, and the approval of the Department of Labor and Employment: Provided, That the following requirements in all instances are strictly complied with: (a) The employer shall ensure the protection, health, safety and morals of the child; (b) the employer shall institute measures to prevent the child's exploitation or discrimination taking into account the system and level of remuneration, and the duration and arrangement of working time; and; (c) The employer shall formulate and implement, subject to the approval and supervision of competent authorities, a continuing program for training and skill acquisition of the child. In the above exceptional cases where any such child may be employed, the employer shall first secure, before engaging such child, a work permit from the Department of Labor and Employment which shall ensure observance of the above requirement. The Department of Labor Employment shall promulgate rules and regulations necessary for the effective implementation of this Section.

D. Allowed Employment Requirement Program Approval Nitto Enterprises v. NLRC Article 57 of the Labor Code provides that the State aims to "establish a national apprenticeship program through the participation of employers, workers and government and non-government agencies" and "to establish apprenticeship standards for the protection of apprentices." To translate such objectives into existence, prior approval of the DOLE to any apprenticeship program has to be secured as a condition sine qua non before any such apprenticeship agreement can be fully enforced. The act of filing the proposed apprenticeship program with the Department of Labor and Employment is a preliminary step towards its final approval and does not instantaneously give rise to an employer-apprentice relationship. E. Terms and Conditions of Employment Maximum term of 6 months, but may be extended by agreement by the parties Minimum 75% minimum wage Apprenticeship program approved by DOLE o Only the DOLE can: determine if trade or skill is apprenticeable, determine if enterprise is highly skilled, and approve the program of apprenticeship

Sec. 61 Contents of Apprenticeship Agreements.Apprenticeship agreements, including the wage rates of apprentices, shall conform to the rules issued by the Secretary of Labor and Employment. The period of apprenticeship shall not exceed six (6) months. Apprenticeship agreements providing for wage rates below the legal minimum wage, which in no case shall start below 75 percent of the applicable minimum wage, may be entered into only in accordance with apprenticeship programs duly approved by the Secretary of Labor and Employment. The Department shall develop standard model programs of apprenticeship. (As amended by Sec. 1, EO 111, Dec. 12, 1986) Sec. 72. Apprentices Without Compensation.The Secretary of Labor and Employment may authorize the hiring of apprentices without compensation whose training on the job is required by the school or training program curriculum or as requisite for graduation or board examination.

F.

Costs Employer may deduct costs of training expenses from taxable income, provided: o Apprenticeship program is recognized by DOLE o Deduction shall not exceed 10% of direct labor wage o Pay apprentice minimum wage (not 75% of the minimum wage)

Sec. 71. Deductibility of Training Costs.An additional deduction from taxable income of one-half (1/2) of the value of labor training expenses incurred for developing the productivity and efficiency of apprentices shall be granted to the person or enterprise organizing an apprenticeship program: Provided, That such program is duly recognized by DOLE: Provided, further, That such deduction shall not exceed ten (10%) percent of direct labor wage: and Provided, finally, That the person or enterprise who wishes to

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avail himself or itself of this incentive should pay his apprentices the minimum wage.

G. Enforcement
Sec. 65: Investigation of Violation of Apprenticeship Agreement.- Upon complaint of any interested person or upon its own initiative, the appropriate agency of the DOLE or its authorized representative shall investigate any violation of an apprenticeship agreement pursuant to such rules and regulations as may be prescribed by the Secretary of Labor and Employment. Sec. 66. Appeal to the Secretary of Labor and Employment.The decision of the authorized agency of the DOLE may be appealed by any aggrieved person to the Secretary of Labor and Employment within five (5) days from receipt of the decision. The decision of the Secretary of Labor and Employment shall be final and executory. Sec. 67. Exhaustion of Administrative Remedies. - No person shall institute any action for the enforcement of any apprenticeship

i.

4.03 Learners Defined


RA 7796 Sec. 4 (n) Learners refer to persons hired as trainees in semi-skilled and other industrial occupation w/c are non-apprenticeable. Learnership programs must be approved by the Authority.

ii.

Allowed Employment Learners may be hired when: o No experience workers are available o It is necessary to prevent curtailment of employment opportunities o Employment does NOT create unfair competition in terms of labor costs or impair lower working standards
Sec. 74 (b) When Learners May Be Hired.Learners may be employed when no experienced workers are available, the employment of learners is necessary to prevent curtailment of employment opportunities, and the employment does not create unfair competition in terms of labor costs or impair or lower working standards.

iii.

Terms and Conditions of Employment Period of Learnership: Not exceeding 3 mos. W Wages: Shall begin at not less than 75% of applicable minimum wage Deemed Regular: Upon completion of learnership, and when after working for 2 mos, terminated by ER w/o fault of learner, before end of stipulated period.
Sec. 75: Learnership Agreement.Any employer desiring to employ learners shall enter into a learnership agreement with them, which agreement shall include: (a) The names and addresses of the learners; (b) The duration of the learnership period, which shall not exceed three (3) months; (c) The wages or salary rates of the learners which shall begin at not less than seventy-five percent (75%) of the applicable minimum wage; and (d) A commitment to employ the learners if they so desire, as regular employees upon completion of the learnership. All learners who have been allowed or suffered to work during the first two (2) months shall be deemed regular employees if training is terminated by the employer before the end of the stipulated period through no fault of the learners. The learnership agreement shall be subject to inspection by the Secretary of Labor and Employment or his duly authorized representative. Sec. 76. Learners in Piecework.Learners employed in piece or incentive-rate jobs during the training period shall be paid in full for the work done.

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DISTINCTION BETWEEN APPRENTICESHIP AND LEARNERSHIP SIMILARITY: Both involve training periods for jobs requiring skills that can be acquired through actual work experience. Since both learners and apprentices are not as fully productive as regular workers, learners and apprentices may be paid wages 25% lower than the applicable legal minimum wage. DIFFERENCE: A learner trains in a semi-skilled job or in industrial occupations that require training for less than 3 months. Training period is shorter than apprenticeship because the job is more easily learned. The job is nonapprenticeable because its practical skills can be learned in 3 months. A learner is NOT an apprentice, but an apprentice is, conceptually, also a learner. An apprentice trains in a skilled or highly-skilled job or in a job found only in a highly technical industry. Since it is a skilled job, the training period exceeds 3 months. Since the job is more easily learnable in learnership, the employer is committed to hire the learner-trainee as an employee after the training period. No such commitment exists in apprenticeship. 4.05 Handicapped Worker Handicapped Workers Law: RA 7277 Magna Carta for Disabled Persons These are workers whose earning capacities are impaired, by reason of age, physical or mental infirmity. But these infirmities are not deterrent to gain an employment or livelihood. Handicapped workers will be treated like a regular worker. Disabled persons have the same rights as other persons to take their proper place in society. If qualified, handicapped workers may be considered apprentices or for apprenticeship A. Defined
RA 7277. Magna Carta for Disabled Persons Sec. 4 (a). Disabled persons are those suffering from restriction or different abilities, as a result of a mental, physical or sensory impairment, to perform an activity in the manner or within the range considered normal for a human being; (b) Impairment is any loss, diminution or aberration of psychological, physiological, or anatomical structure or function; (c) Disability shall mean 1) a physical or mental impairment that substantially limits one or more psychological, physiological or anatomical function of an individual or activities of such individual; 2) a record of such an impairment; or 3) being regarded as having such an impairment; (d) Handicap refers to a disadvantage for a given individual, resulting from an impairment or a disability, that limits or prevents the function or activity, that is considered normal given the age and sex of the individual;

B. Allowed Employment RA 7277 Sec.5. Equal Opportunity for Employment. No disabled person shall be denied access to opportunities for suitable employment. A qualified disabled employee shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able bodied person. Five percent (5%) of all casual emergency and contractual positions in the Departments of Social Welfare and Development; Health; Education, Culture and Sports; and other government agencies, offices or corporations engaged in social development shall be reserved for disabled persons.

Regular Worker Bernardo v NLRC A qualified disabled EE should be given the same terms and conditions of a qualified able-bodied person. This means that a handicapped EE, if his infirmity does not impair his earning capacity, should be considered and treated like a normal EE. Effect: he should be paid full compensation and not 75%)

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