34199918 labor law i reviewer

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Part IIntroductory Materials

Section 1. Labor Law in General

1.1 Labor Law Defined [S, R, J]

1. Labor Legislation Consists of statutes, regulations andjurisprudence governing the relations between capital and laborby:

a. providing for certain terms and conditions of employment

orb. providing a legal framework within which these terms andconditions and the employment relationships may be

negotiated

adjusted and

administered.

2. Social Legislation Includes all laws that provide particularkinds of protection or benefits to society or segments thereof infurtherance of social justice. In that sense, labor laws arenecessarily social legislation.

promote public welfare

1.2 Law Classification

1. Labor Standards Law That which sets out the minimumterms, conditions and benefits of employment that ERs mustprovide or comply with and to which EEs are entitled as a matterof legal right.Ex. 8-hour labor law

2. Labor Relations Law That which defines [S R D & IM]

the status, rights and duties and the institutional mechanisms

that govern the individual and collective interaction of ERs andEEs or their representatives.Ex. Book V of Labor Code

3. Welfare Legislation designed to take care of contingencieswhich may affect workers, e.g. where there is loss of income forresearch beyond the workers control. BENEFITS* Social Security Law.

1.3 History and Origin

1.4 Basis for Enactment

1. Art. II, Sec.5, Const. : The maintenance of peace and order,the protection of life, liberty, and property, and the promotion of


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general welfare are essential for the enjoyment by all the peopleof the blessing of democracy.

2. Art. II, Sec. 18, Const. : The State affirms labor as a primarysocial economic force. It shall protect the rights of workers and

promote their welfare.

3. Art. XIII, Sec. I, Const. : The Congress shall give highestpriority to the enactment of measures that protect and enhancethe right of all the people to human dignity, reduce social,economic and political inequalities, and remove culturalinequities by equitably diffusing wealth and political power forthe common good.

To this end, the State shall regulate the acquisition, ownership,use, and disposition of property and its increments.

* Labor and social legislation are enacted pursuant to the policepower of the State. This is its inherent power to enact wholesomeand reasonable laws to promote order, safety, health, morals andgeneral welfare of society. In its exercise the state may interferewith personal liberty, with property and with business andoccupation. (Calalang vs. Williams).

* No longer may the due process clause and the freedom ofcontract be invoked to challenge labor and social legislation. Thishas long been discarded since the 1937 case ofWest Coast Hotel vs.

Parish (US) and the 1924 case of Pp. vs. Pomar (RP).

* Labor relation laws enable workers to obtain from theiremployers more than the minimum benefits set by laborstandard laws

1.5 Law and Worker

The SC reaffirms its concern for the lowly worker who, often at themercy of his ER, must look up to the law for protection. Fittingly, thelaw regards him with tenderness and even favor and always with

hope in his capacity to help in shaping the nations future. It is anerror to take him for granted. (Cebu Royal Plant vs. Deputy Minister ofLabor)

Section 2. Labor and the Constitution2.1Constitutional Provisions

1. Art. II, Sec. 9, Const. : The State shall promote a just anddynamic social order that will ensure the prosperity andindependence of the nation and free the people from poverty

through policies that provide adequate social services, promotefull employment, a rising standard of living, and an improvedquality of life for all.

2. Art. II, Sec. 10, Const. : The State shall promote social justicein all phases of national development.

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3. Art. II, Sec. 13, Const. : The State recognized the role of theyouth in nation-building and shall promote and protect theirphysical, moral, spiritual, intellectual, and social well-being. . .

4. Art. II, Sec. 14, Const. : The State recognizes the role ofwomen in nation-building, and shall ensure their fundamentalequality before the law of women and men.

5. Art. II, Sec. 18, Const. : The State affirms labor as a primarysocial economic force. It shall protect the rights of workers andpromote their welfare.

6. Art. XIII, Sec. 1, Const. : The Congress shall give highestpriority to the enactment of measures that protect and enhancethe right of all the people to human dignity, reduce social,

economic, and political inequalities, and remove culturalinequities by equitably diffusing wealth and political power forthe common good.To this end, the State shall regulate the acquisition, ownership,use, and disposition of property and its increments.

7. Art. XIII, Sec. 3 (1st par), Const. : The State shall*afford full protection to labor, local and overseas, organized andunorganized, and*promote full employment and equality of employmentopportunities for all . . .

8. Art. XIII, Sec. 4, Const. : The State shall, by law, undertake anagrarian reform program founded on the right of farmers andregular farmworkers, who are landless, to win collectively orcollectively the lands they till or, in the case of otherfarmworkers, to receive a just share of the fruits thereof . . .

9. Art. XIII, Sec. 11, Const. : The State shall adopt an integratedand comprehensive approach to health development which shallendeavor to make essential goods, health and other socialservices available to all the people at affordable cost . . .

10. The present Constitution has gone further than the 1973Constitution in guaranteeing vital social and economic rights tomarginalized groups of society, including labor. The framers ofthe Constitution intended to give primacy to the rights of laborand afford the sector full protection regardless of thegeographical location of the workers and whether they areorganized or not (Globe Mackay vs. NLRC).

2.2 Protection to Labor1. Art. XIII, Sec. 3, Const. : The State shall afford full protection

to labor, local and overseas, organized and unorganized, andpromote full employment and equality of employmentopportunities for all.

It shall guarantee the rights of all workers to 1) selforganization, 2) collective bargaining and negotiations, and 3)

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peaceful and concerted activities including the right to strike inaccordance with law.

They shall also participate in policy and decision-makingprocesses affecting their rights and benefits as may be provided bylaw.

The State shall promote the principle of shared responsibilitybetween workers and ERs and the preferential use of voluntarymodes in settling disputes, including conciliation, and shall enforcemutual compliance therewith to foster industrial peace.

The State shall regulate the relations between workers andERs, recognizing the right of labor to its just share in the fruits ofproduction and the right of enterprises to reasonable returns ininvestment, expansion and growth.

1935 Const. : The State shall afford protection to labor, especially

to working women and minors, and shall regulate the relationbetween landowner and tenant, and between labor and capital inindustry and in agriculture. The State may provide for compulsoryarbitration.

Three aggregates of power against which the individualemployee needs protection

1. collective labor - Union2. collective capital - management3. collective bargaining relationship

* The law, while protecting the rights of laborers, does not authorizethe oppression or destruction of the employer

Laissez Faire1. Laissez faire or the principle of free enterprise never found fullacceptance in this jurisdiction . . . (ACCFA vs. CUGCO)

2.3 Labor Sector

1. Art. II, Sec. 18, Const. : The State affirms labor as a primarysocial economic force. It shall protect the rights of workers and

promote their welfare.

2.4 Policy Considerations Social Justice

1. Art. II, Sec. 10, Const. : The State shall promote social justice inall phases of national development.

2. What does social justice envision? It envisions [E, R, C]a. equitable diffusion of wealth and political power for the

common good;

b. regulation of the acquisition, ownership, use anddisposition of property and its increments;

c. and creation of economic opportunities based on freedomof initiative and self-reliance. (Art. XIII, Sec. 1 & 2, Const. ;Alcantara)

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Definition[H, E, P, A]

1. Social justice is neither communism nor despotism, nor atornism,nor anarchy, but the humanization of laws and the equalizationof social and economic forces so that justice in its rational and

objectively secular conception may at least be approximated. Itmeans the promotion of the welfare of the people, the adoptionof measures by the government to ensure economic stability ofall the competent elements of society, through the exercise ofpowers underlying the existence of all governments on the time-honored principle of salus populi est suprema lex. (Calalang vs.Williams)

2. What does social justice guarantee?Social justice does not champion division of property of economicstatus; what it guarantees are equality of opportunity, equality of

political rights, equality before the law, equality between valuesgiven and received, and equitable sharing of the social andmaterial goods on the basis of efforts exerted in their production.(Guido vs. RPA)

Those who have less in life should have more inlaw

Equal pay for equal wok

Limits of Use

* The policy of social justice is not intended to countenancewrongdoing simply because it is committed by the underprivileged. Atbest it may mitigate the penalty but it certainly will not condone theoffense. Those who invoke social justice may do so only if their handsare clean and their motives blameless and not simply because theyhappen to be poor. (PLDT vs. NLRC)

2.5 Specific Labor Rights

* Art. XIII, Sec. 3, Const. : [In the relation between workers and ERsthe following rights shall be assured by the State:

a. Rights to self-organizationb. Right to collective bargainingc. Right to collective negotiationsd. Right to peaceful and concerted Activities including the

right to strikee. Right to security of Tenuref. Right to just and humane Conditions of workg. Right to a living Wageh. Right to participate in policy and Decision-making

processes (WACT BOND)

* Only to those that affect the rights of employees and haverepercussions on their right to security of tenure.Protection to Labor

1. The law must protect labor, at least to the extent of raising himto equal footing in bargaining relations with capital and to shieldhim from abuses brought about by the necessity for survival. It is

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safe to presume, therefore, that an EE or laborer who waives inadvance any benefit granted him by law does so, certainly not inhis interest or through generosity but under the forcefulintimidation of urgent need; and hence, he could not have soacted, freely and voluntarily. (Sanchez vs. Harry Lyons)

2.6 Other Rights

1. Art. II, Sec. 10, Const. : No law impairing the obligation ofcontracts shall be passed.

*** Compassionate Justice- disregarding rigid rules and giving due weight to all the

equities of the case- years of service without derogatory record taken into

account

- harshness of penalty also taken into account

2. Art. III, Sec. 16, Const. : All persons shall have the right to aspeedy disposition of their cases before all judicial, quasi-judicialor administrative bodies.

3. Art. III, Sec. 18 (2), Const. : No involuntary servitude in anyform shall exist except as a punishment for a crime whereof theparty shall have been duly convicted.

Labor as Property

* The right of a person to his labor is deemed property within themeaning of the Constitutional guarantees. That is his means oflivelihood. He cannot be deprived of his labor or work without dueprocess of law. (Phil. Movieworkers Assn. Vs. Premiere Productions)

Due Process Requirements

* The twin requirements of notice and hearing constitutes essentialelements of due process in cases of EE dismissal: the requirement ofnotice is intended to inform the EE of the ERs intent to dismiss and thereason for the proposed dismissal; upon the other hand, the

requirement of hearing affords the EE an opportunity to answer hisERs charges against him and accordingly to defend himself therefrombefore dismissal is effected. Neither of these 2 requirements can bedispensed with without running afoul of the Constitution. (CenturyTextile vs. NLRC)

Liberty of Contract and State Interference

* Legislation appropriate to safeguard to peoples vital interests maymodify or abrogate contracts already in effect. Reservation of essentialattributes of sovereign power is read into contracts as a postulate of

the legal order. All contracts made with reference to any matter that issubject to regulation under the police power must be understood asmade in reference to the possible exercise of that power. (Abella/Had.Danao vs. NLRC) such was the case when Art. 283 of the Labor Codegranted severance pay to workers who at the time of their employmentwere not entitled under the law to receive such pay. (Id.)

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** Employees have a vested and demandable right over existingbenefits voluntarily granted to them by their employer.

MGT. Rights [C P S T]1. Right to conduct business

2. Right to prescribe rules3. Right to select employees4. Right to transfer and discharge employees

Waiver and Compromise

* Not all waivers and quitclaims are invalid as against publicpolicy

1. It is only when there is clear proof that the waiver was wangledan unsuspecting person, or the terms of settlement are

unconscionable on its face, that the law will step in to annul thequestionable transaction.

2. But where it is shown that the person making the waiver did sovoluntarily, with full understanding of what he was doing, andthe consideration for the quitclaim is credible and reasonable,the transaction must be recognized as a valid and bindingundertaking. (Sicangco vs. NLRC)

3. Should a party fail or refuse to comply with the terms of a validcompromise or amicable settlement, the other party could eitherenforce the compromise by a writ of execution, or regard it asrescinded and to insist upon his original demand. (Morales vs.

NLRC)- Voluntary consideration not unconscionable- Waiver of future benefits is not valid and binding- The law does not consider as valid any agreement

a. to receive less compensation on what a worker isentitled to recover

b. to prevent him from demanding benefits to whichhe is entitled

* Instances when quitclaim, waiver or compromise is valid:1. C, a national promoter salesman, with high educational

attainment, tendered his resignation after a spot audit found outthat he had a tentative shortage of Php49,005.59. It isunbelievable that C, occupying a responsible position, and withhigh education attainment, can be rattled and confused intosigning a resignation letter, on account of a mere spot audit.(Callanta vs. NLRC)

2. Bank and EEs association, entered into a CBA providing for thewithdrawal of the pending case of the association against thebank for non-payment of Php60.00 ECOLA. There is nothing inthe compromise which contravenes the law, morals, good

customs, public order, or public policy. (Monte de Piedad vs. MOLE)

3. During pendency of appeal before the NLRC, workers executed avoluntary affidavit before the Labor Arbiter declaring intention towithdraw appeal in lieu of payment of severance pay. Theaffidavits executed voluntarily and knowingly in the presence of

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the Labor Arbiter has the effect and authority of res judicata.(Olaybar vs. NLRC)

4. A number of EEs made quitclaims in exchange for the droppingof charges of embezzlement of P25 million which the EEs

allegedly embezzled. The consideration for the waiver isadequate. (PBC vs. Echiveri)

Instances when quitclaim, waiver or compromise invalid:1. A worker hospitalized for several times for work-related accidents

was told by an immediate supervisor and a personnel officer toretire and execute a quitclaim or else would be dismissed andgot nothing. The retirement and quitclaim was made underthreat of dismissal. (Alcantara)

2. A messenger with 5 years employment resigned and executed a

quitclaim after being told by his manager to resign or elsecharges will be filed against him. The threat was unjust since themessenger did not commit any unlawful act. There wasintimidation, which vitiated consent. (Guatson Tours vs. NLRC)

3. A quitclaim of future benefits made by an EE at the time ofemployment (Alcantara)

4. After the CIR rendered a decision ordering the ER to pay wagedifferentials, the EEs executed a quitclaim waiving their rightsunder the decision. The quitclaim contravenes public policy since

after a civil action is filed in court, the cause of action may notbe subject of compromise unless the same is with leave of court.( Pampanga Sugar Devt. Vs. Sugar Workers Assn.)

5. A quitclaim executed by an OFW repatriated to the Philippinesbecause of an illness requiring surgical treatment inconsideration of the return travel fund. There was noconsideration since the EE regularly contributed to the fund.Besides, the quitclaim is negotiable and in congruous to thedeclared policy of the State to afford protection to labor and toassure the right of workers to security of tenure. (Cuales vs. NLRC)

6. ER appealed the decision of the POEA awarding $3,800.00disability benefits to worker. During pendency of appeal, theworker executed a quitclaim in exchange for Php18,000.00 sinceat the time the worker needed money for medical treatment. Thelaw does not consider valid any agreement to receive lesscompensation than what the workers should receive. It was clearthat the worker was forced to accept the payment out ofnecessity.(PISC vs. NLRC)

7. After the finality of judgment awarding them severance pay, theworkers executed a quitclaim before labor arbiter who had no

participation in the case. Such settlements must be approved bythe labor arbiter before whom the case is being heard. (St. GothardPub vs. NLRC)

Quitclaims are ineffective to bar recovery of the fullmeasure of the workers rights

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Dire Necessity is not an acceptable ground to annulreleases unless there is showing that

a. workers were forced to execute themb. the considerations for the quitclaims where unconscionably

low

Management Prerogatives1. Right to select and discharge employees with valid cause2. promulgate reasonable employment rules and regulation3. designation of work to employees4. transfer and promote employees5. control company operations6. install money-saving devices7. re-clarify or abolish positions8. sell or close business

Drug TestingG. R. : cannot right to privacyException:

- if job or occupation involve public safetyEx.ample:

a. bus driversb. security guards

Participation in Decision-making ProcessOnly if it affects his [R, D, W]:

c. rights

d. dutiese. welfare- not management prerogatives regarding business

operation- must at least be informed

1. The law explicitly considers it a State Policy to ensure theparticipation of workers in decision and policy-makingprocesses affecting their rights, duties and welfare. However, aline must be drawn between management prerogativesregarding business operations per se and those which affect

the rights of EEs. in treating the latter, management shouldsee to it that EEs are at least properly informed of its decisionsor modes of action. (PAL vs. NLRC) In this respect, a legislationproviding a workers representation in the Board of Directors ofcorporations is not valid since the constitutional guaranty doesnot include the workers right to participate in the managementof the enterprise. (Alcantara)

2. May the ER be compelled to share with its EEs the prerogativeof formulating a code of discipline? I a code of disciplineunilaterally formulated by the ER enforceable? Yes, the ER hasthe obligation to share with its EEs its prerogative of

formulating a code of discipline since this will be affecting theirrights and benefits. A code of discipline unilaterally formulatedand promulgated by the ER would be unenforceable. (Id.)

Section 3. Labor and the Civil Code

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3. 1 Role of Law

1. Art. 1700, NCC : The relation between capital and labor aremerely contractual. They are so impressed with public interestthat labor contracts must yield to common good. Therefore, such

contracts are subject to special laws on labor unions, collectivebargaining, strikes, lockouts, closed shops, wages, workingconditions, hours of labor and similar subjects.

3.2 ER-EE Standard of Conduct

* Art. 1701 : Neither capital nor labor shall act oppressively againstthe other, or impair the convenience of the public.

Fair Treatment

* The NCC states that every person must in the exercise of his rights,and in the performance of his duties, act with justice, give everyone hisdue, and observe honesty and good faith. (AHS Phils. vs. NLRC)

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Law Compliance

*The return-to-work order in this case not so much confers a right as itimposes a duty and while as a right it may be waived, it mustbe discharged as a duty even against a workers will. Thus, it

does not constitute a violation of the right against involuntaryservitude. (Sarmiento vs. Tuico) This is differentiated from theinstance where there is a mere breach of contractualstipulation. While the EE may be held liable for damages byvirtue of the breach of contract, he may not be compelled towork against his will because this will be involuntary servitude.(Alcantara)

EE Obedience and Complaince ER Orders

* It is a recognized principle 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 becomplied with until finally revised or amended unilaterally orpreferable through negotiation or by a competent authority.(SMC vs. Ubaldo) Deliberate disregard or disobedience of rules,defiance of management authority by the EEs cannot becountenance. Until and unless the rules or orders imposed bythe ER are declared to be illegal or improper by competentauthority, the EEs ignore or disobey them at their own peril.(GTE Directories vs. Sanchez)

ER Obligation

* An EE must be treated as a disdained subordinate but with respectand fairness, if not affection and gratitude due to an equalpartner. (Lagniton vs. NLRC)

Section 4. The Labor Code of the Philippines

4.1 Decree Title * Art. 1 : Labor Code of the Philippines

4.2 Effectivity * Art. 2 : 6 months after its promulgation.

4. 3 Applicability

1. Art. 6: All rights and benefits granted under this Code shall,except as many otherwise be provided, apply alike to all workers,whether agricultural, or non-agricultural.

2. Art. 276: The terms and conditions of employment of allgovernment of all government EEs, including EEs of GOCCsshall be governed by the Civil Service Law.

3. Art. IX-B, Sec. 2(1), Const. :The Civil Service embraces allbranches of Government, including GOCCs with originalcharters.

Test-GOCC

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1. The rule now is that only the GOCCs with original charters comeunder the Civil Service Law. (Cabrera vs. NLRC)

4.4 Implementing Rules1. Art. 5: Implementing rules and regulations of the DOLE and

other government agencies of the Code shall become effective* 15 days after announcement of their adoption in newspapers ofgeneral circulation.

Limitation Rule Making Power

1. * This power is limited to the promulgation of rules and regulationsto effectuate policies of the Code. Such rules and regulations mustconform to the terms and standard prescribed in the statute. Theycannot supplant its plain and explicit command. (Alcantara)

* A rule or regulation promulgated by an administrative body, such asthe DOLE, to implement a law, in excess of its rule-making authority isvoid. (Azucena)

2. Examples of void IRRs:* IRR providing the 10-day period specified in Art. 223 refers toworking days as stated in the article.

* An IRR providing that EEs paid by the month shall be presumed to bepaid for all days in the month, whether worked or not. In effect, willexcept EEs paid by the month from the enjoyment of the holiday pay

benefit. (Insular Bank EE Union vs. Inciong)

* IRR of RA 6715 excluding security guards from those allowed to joinunions. (MERALCO vs. SOLE)

* IRR including commission in the computation of 13th month pay.Unduly expanded the concept of basic salary. (Boie-Takeda vs. De LaSerna)

4.5 Policy Declaration

* Art. 3: The State shall (APERA)

1. Afford protection to labor2. Promote full employment3. Ensure equal work opportunities regardless of sex, race or creed4. Regulate the relations between workers and ERs.5. Assure the rights of workers to self-organization, collective

bargaining, security of tenure, and just humane conditions ofwork.

4.6 Law Interpretation

1. Art. 4 : All doubts in the implementation and interpretation ofthe provisions of this Code, including its implementing rules andregulations, shall be resolved in favor of labor.

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2. Art. 1702, NCC : In case of doubt, all labor legislation and laborcontracts shall be construed in favor of the safety and decentliving of the laborer.

In Favor Labor-Rationale

* This kind of interpretation gives meaning and substance to theliberal and compassionate spirit of the law. The policy is to extendthe decrees applicability to a greater number of EEs to enablethem to avail of the benefits under the law, in consonance with theStates avowed policy to give maximum aid and protection to labor.(Abella vs. NLRC)

Liberal Construction

* Are the provisions violative of the equal protection clause? No. The

ER and the laborer do not stand on equal footing; to ensureequality, the latter must, be afforded protection. Insofar as laborcontracts are concerned, the same are usually drafted and preparedby the ER. All doubts in their provisions should therefore beresolved against it. (Alcantara)

Doubt

* When these are 2 or more possible explanations regarding an issueaffecting workers rights, that which favors the worker must be chosen.(Clemente vs. GSIS)

No doubt

* The provision in case of doubt does not apply where the pertinentprovisions of the Labor Code leave no room for doubt either in theirinterpretation or application. (Bonifacio vs. GSIS)

Sweeping Interpretation

* The Supreme Court cannot also adopt a sweeping interpretation ofthe law, lest it engages itself in judicial legislation. (Bravo vs. EEC)

Factual Consideration and Rationality

* The care and solitude in the protection and vindication of the right ofworkingmen cannot justify disregard of relevant facts or schewal ofrationality in the construction of the text of applicable rules in order toarrive at disposition in favor of an EE. (PAL vs. NLRC)

Equity and Moral Consideration

* Considerations of equity and social justice cannot prevail against theexpressed provisions of labor laws. (Manning vs. NLRC)

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Balancing Conflicting Claims

* The basic policy of the law is to balance or to coordinate the rightsand interests of both workers and ERs. It should not be deduced thatthe basic policy is to favor labor to prejudice capital. (Azucena)

4.7 Enforcement and Sanctions

1. Art. 217 (a) (2), (3), (4), (6): Jurisdiction of Labor Arbiters andthe Commission

1. The Labor Arbiters shall have exclusive and original jurisdiction,except as otherwise provided, the following cases involving allworkers: (unfair labor practice)

2. Termination disputes (qualified by Art. 261 which grant voluntaryarbitrators original and exclusive jurisdiction over all unresolvedgrievances arising from CBAs and company personnel policies);

3. Cases involving terms and conditions of employment, ifaccompanied with a claim for reinstatement (including claims ofOFWs arising out of an ER-EE relationship, including claims foractual, moral and exemplary damages, as provided in Sec. 10,Migrant Workers Act);

4. Claims for actual, moral, exemplary and other damages arisingfrom the ER-EE relations;

5. Except claims for EEs Compensation, Social Security, Medicareand maternity benefits, all other claims, arising from the ER-EErelations; including

- those of persons in domestic or household service,

involving an amount exceeding Php5,000, regardless ofwhether of whether accompanied with a claim forreinstatement.

6. Disputes arising from Art. 264 including legality of strikes andlockouts

2. Art. 128 : Visitorial and Enforcement Power of the Secretary ofLabor or his duly authorized representative.

1. Accesss to ERs records and premises at anytime of the day ornight whenever work is being undertaken therein and copy

thereform;2. Question any EE; and3. Investigate any fact, condition or matter which may be necessary

to determine violations of this Code of any labor law, wage orderor rules and regulations issued pursuant thereto.

* In cases where the relationship of ER-EE still exists, the power toissue Compliance Orders to give effect to the labor standard provisionsof this Code and other social legislation.

Writs of execution to the appropriate authority shall beissued for the enforcement of the said orders, except in

cases:a. where the ER contests the findings of the labor

employment and enforcement officer; andb. raises issues supported by documentary profits

which were not considered in the course ofinspection.

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* Order Stoppage of work or suspension of operations of any unit ordepartment of an establishment when non-compliance poses graveand imminent danger to the health and safety of workers in theworkplace.

Within 24 hours, a hearing shall be conducted to determine

whether an order for the stoppage of work and suspensionof operations shall be lifted or not.

In case the violation is attributable to the fault of the ER,he shall pay EEs their EEs their salaries or wages duringsaid period.

* It shall be unlawful for any person to Obstruct, impede, delay orotherwise render ineffective the order of the Secretary of Labor.* No inferior court shall issue a temporary or permanent injunction orrestraining order or otherwise assume jurisdiction over any caseinvolving the enforcement orders in accordance with this Article.

* Any government EE found guilty of violation, after appropriateadministrative investigation, be subject to Summary dismissal from theservice.* The Secretary of Labor may require ERs to keep and maintainEmployment records as may be necessary. (AS CONES)

3. Art. 129. Recovery of wages, simple money and otherbenefits.* The Regional Director of the DOLE or any of the duly authorizedhearing officers of the Department is empowered, through summaryproceedings and after due notice, to hear and decide any matter

involving the recovery of wages and other monetary claims andbenefits, including legal interest owing to a person employed indomestic or household service: Provided

such complain does not include claim for reinstatement

aggregate money claims of each househelper does notexceed P5,000.00

* The complaint shall be resolved within 30 days from the date of thefiling of the same.

4. Art. 288 : Penalties and Jurisdiction -a. Except, as otherwise provided in the Code, or unless the

acts complained of hinges in a question or interpretationor implementation of ambiguous provisions of an existingCBA, any violation of this Code declared to be unlawful orpenal in nature shall be punished with:

a fine not less than P1,000.00 nor more than P10,000.00.

or imprisonment of not less than 3 months nor more than 3years.

Or both such fine and imprisonment at the discretion of thecourt.In addition to such penalty any alien found guilty shall be

summarily deported upon completion of service of service.b. Any criminal offense punished under this Code shall beunder the concurrent jurisdiction of the MTC and the RTC.

5. Art. 289 : The penalty (of the offenses listed in the Labor Code)shall be imposed upon the guilty officer of officers of a corporation,

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trust, firm, partnership, association pr entity which committed saidoffenses.

6. Art. 290. Prescription of Offensses -* Offenses penalized under this Code and the IRRs 3 years.

* Unfair labor practice 1 year from accrual of such unfair laborpractice.

7. Art. 291 : Prescription of Money Claims- All money claimsarising from ER-EE relations accruing during the effectivity of this Code 3 years from the time the cause of action is accrued.

8. Art. 292 : Money claims specified in Art. 291shall be filed beforethe appropriate entity independently of the criminal action that may beinstituted in the proper courts.

Pending the final determination of the merit of money claims

filed with the appropriate entity, no civil action shall be filed with anycourt.

This provision shall not apply to EEs compensation caseswhich shall be processed and determined strictly inaccordance with the pertinent provisions of this Code.

Section 5. Work Relationship

5. 1 Work Relationship

ER and EE

1. Art. 97 (a) and (b) : Person means individual, partnership,association, corporation, business trust, legal representative, orany organized group of persons.(b) ER includes any person acting directly or indirectly in theinterest of the ER in relation to an EE and shall include theGovernment and all its branches, subdivisions andinstrumentalities, all GOCCs and institutions, as well as non-profit private institutions, or organizations.

2. Art. 167 (f) and (g) : (f) ER means any person, natural orjuridical, employing the services of the EE.

(g) EE means any person compulsory covered by theGSIS . . ., including members of the AFP, and any personemployed as casual, emergency, temporary, substitute orcontractual, or any person compulsory covered by the SSS. . .

3. Art. 212 (e) and (f) : ER includes any person acting in theinterest of the ER directly or indirectly. The term shall not includeany labor organization or any of its officers except when actingas an ER.

(f) EE includes any person in the employ of an ER. The termshall not be limited to the EEs of a particular ER, unless thisCode explicitly states. It shall include any individual whose workhas ceased as a result or in connection with any current labordispute or because of unfair labor practice if he has not obtainedany other substantially equivalent or regular employment.

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CLASSIFICATION1. casual2. regular3. emergency4. temporary

5. substitute6. contractual

4. Is the purchaser of the assets of an ER corporation considered asuccessor ER of the latters EE? No. Labor contracts are notenforceable against a transferee of an enterprise, labor contractsbeing in personam, thus binding only between parties.

ER-EE Relationship Independent Contractor and LaborContractor

1. Art. 106 : Contractor or subcontractor

a. Whenever an ER enters into a contract with anotherperson for the performance of the formers work, the EEsof the contractor and of the latters subcontractor, if anyshall be paid in accordance with the provisions of thisCode.

In the event that the contractor or the subcontractor fails to paythe wages of his EE in accordance with this Code, the ER shall bejointly and severally be liable with his contractor or subcontractor to

such EEs to the extent of the work performed under the contract, inthe same manner and extent that he is liable to EEs directly employedby him.

b. There is labor-only contracting where:

1. the person supplying in workers to an ER does not have [C,I]

substantial capital

[substantial] investment in the form of tools, equipment,machineries, work premises, among others

2. and the workers recruited and placed by such persons areperforming activities which are directly related to the principal

business of such ER.

In such cases, the person or intermediary shall be consideredmerely as an agent of the ER who shall be responsible to theworkers in the same manner and extent as if the latter were directlyemployed by him.

2. Sec. 9, Rule VIII, Book III, IRRs : (a) Any person whoundertakes to supply workers to an ER shall be deemed to beengaged in labor-only contracting where such person :

* Does not have

substantial capital

[substantial] investment in the form of tools, equipment,machineries, work premises and other materials; and

* The workers recruited and placed by such person are performingactivities which are directly related to the principal business oroperations of the ER in which the workers are habitually employed.

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Labor-only contracting as defined herein is hereby prohibited and theperson acting as contractor shall be considered merely as an agent orintermediary of the ER who shall be responsible to the workers in thesame manner and extent as if the latter were directly employed byhim.

(c) For cases not falling under this Article, the Secretary of Labor shalldetermine through whether or not the contracting out is permissible inthe light of the circumstances of each case and after considering theoperating needs of the ER and the rights of the workers involved.

3. Art. 107 : Indirect ER The provisions of the immediatelypreceding Article shall likewise apply in any person, partnership,association or corporation which, not being an ER, contracts withan independent contractor for the performance of any work, jobor project.

4. Art. 109 : Every ER or indirect ER shall be held responsible withhis contractor or subcontractor for any violation of the provisionsof this Code. For purposes of determining the extent of their civilliability under this Chapter, they shall be considered direct ERs.

5. Sec. 8, Rule VIII, Book III, IRRs :Job Contracting There is job contracting permissible under the Code if the followingconditions are met:

1. The contractor carries on an independent business andundertakes the contract work [A R M - F]

a. on his own accountb. under his own responsibilityc. according to his own manner and methodd. free from the control and direction of his ER or principal in

all matters connected with the performance of the workexcept as to the results thereof; and

2. The contractor hasa. substantial capital orb. [substantial] investment in the form of tools, machineries,

work premises, and other materials which are necessary inthe conduct of his business.

*Where the ER-EE relationship has become ascertained, the ERbecomes bound by statutory requirements pertaining, though notlimited, to terms and conditions of employment, labor relations andpost employment. (Phone-Poulenc vs. NLRC) Nonetheless, when acontractor fails to pay the wages of his EEs, the ER who contracted outthe job to the contractor becomes jointly and severally liable with hiscontractor to the EEs of the latter to the extent of the workperformed under the contract as if such ER were the ER of thecontractors EEs. The law itself, establishes an ER-EE relationshipbetween the ER and the job contractors EEs for a limited purpose i.e.

in order to ensure that the latter get paid the wages due them. Asimilar situation obtains where there is a labor-only contracting. Thistime, however, for a comprehensive purpose: ER for purposes of thisCode, to prevent any violation or circumvention of any provision of thisCode. The law in effect holds both the ER and the labor onlycontractor responsible to the latters EEs for more effectivesafeguarding of the EEs rights under the Labor Code. (PBC vs. NLRC)

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A. DETERMINATION

* In determining whether the relationship is that of ER and EE or one ofindependent contractor, each case must be determined on its own

facts and all the features of the relationship must be considered.(Villaluga vs. NLRC)

** the existence of an ER-EE relationship is a question of law andcannot be made the subject of agreement

* the nature of ones business is not determined by self-servingappellations one attaches thereto but by the tests provided by statuteand prevailing case law

B. FACTORS

1. The existence of ER-EE relationship is determined by thefollowing elements namely:

a. the Selection and engagement of the EEsb. the payment of Wagesc. the power of Dismissal; andd. the power to control the EEs conduct

(WEDS) although the latter is the most important element. (RosarioBrothers vs. Ople) No particular form of evidence is required to prove theexistence of an ER-EE relationship. Any competent and relevantevidence to prove the relationship may be admitted (Opulencia vs. NLRC)

2. Is there an ER-EE relationship?

* Workers under a pakiao agreement arranged by G whom PRCconsidered as an independent contractor. ER gives orders to G, onwhere to store the copra, when to bring out, how much to load andwhere, and what class of copra to handle. The equipment used isowned by PRC. Yes. PRC has direct control over the handling of thecopra. The control test is satisfactorily met.

* Piece workers subject to specifications. Yes. The fact that the making

of the basket is subject to Dys specifications indicates the existence ofcontrol. (Dy Koh Beng vs. ILMU)

* Tailors, pressers, stitchers and similar workers employed by COD ona piece-work basis. The EEs are governed by the companysregulations i.e. 8-hour workday, recording of attendance etcFurthermore, a master cutter distributes job orders equally, supervisesthe work and sees to it that they were finished as soon as possible.Yes. The workers conduct in the performance of their work wascontrolled by the company(Rosario vs. Ople)

* Cargadores and pahinantes recruited by SMC through a laborcontractor who are governed by the regulations of the SMC whosework consisted of loading, unloading, pilling or palleting empty bottlesand wooden shells from company trucks and warehouses. Yes. Theevidence firmly establishes the control exercised by the SMC. (BLUM vs.Zamora)

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* Shoe shiners who had their own customers but shared proceeds withcompany. No. The company does not exercise any degree of control orsupervision over his work. The shoe shiner is a partner in trade. (Besavs. Trajano)

* Vendees of cigarettes who are governed by the regulations of thevendor company i.e. definite sales territory, requirement to submitdaily, weekly and monthly reports, etc. Yes. Vendor company hadcontrol over the vendee. (SSS vs. CA)

*I. S, a prominent social figure, had an agreement with TWS to act asbranch manager; The agreement provided that she would be entitledto a part of the commission on sale of tickets; and that she wouldshare in the expenses of maintaining the office. She was also asignatory to a lease agreement covering the branchs premises,holding herself solidarily liable for the prompt payment of rentals. No.

I. S was not subject to the control by TWS. The services rendered by I.Smust have been done by her pursuant to a contract of agency. (Sevillavs. CA)

* A plant manager hired by a marble company which was about toclose in a few months time due to business losses. The company hadno control over the former, either as to hours of work or method ofaccomplishing the work. The former was entitled to a percentage ofthe net profits of the company for that period. No. Manager wasmerely a party to a joint venture. (CMC vs. NLRC)

* Fishermen-crew of a trawl fishing vessel subject to control andsupervision of the owner of the vessel i.e. conduct of fishingoperations; time to report to fishing port, etc Yes. (Ruga vs. NLRC)

* Tailors, seamstresses and other workers of a haberdashery who werepaid on a piece-rate basis. They were directed by the proprietor of theestablishment as specified by the customers. They were required tofinish jobs orders in one day before due date. Yes. They did notexercise independence in their own methods, but on the contrary weresubject to the control of the establishment from the beginning of theirtask to their completion. They also had to rely on the tools and

equipment supplied by the haberdashery. (Makati Haberdashery vs. NLRC)

* The power of control refers merely to the existence of the power andnot the actual exercise thereof.

* Caddles who are not under the control and supervision of the golfclub as to working hours, manner of carrying out their services, etc.No. The club did not have the measure of control over the incidents ofthe caddys work and compensation that the ER would possess. (Manilavs. IAC)

* College teachers. Yes. The Court takes judicial notice that auniversity controls the work of the members of its faculty; that itprescribes the courses or subjects that they teach and the time andplace for teaching. (Feati vs. Bautista)

* Jeepney drivers working under the boundary system. Yes. The driverdoes not have any interest in the business because he did not invest

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anything in the acquisition of jeeps and did not participate in themanagement thereof. (Citizens League of Free Workers vs. Abbas)

C. CONTROL TEST

*** There is an ER-EE relationship where the ER controls or hasreserved the right to control the EE not only as the result of the workbut also as to the means by which said work is to be accomplished(Paradise vs. Ng). The test merely calls for the existence of the right tocontrol the manner of doing the work not the actual exercise of theright. (Ruga vs. NLRC) The line should be drawn between rules thatmerely serve as guidelines towards the achievement of the mutuallydesired results without dictating the means or methods employed inattaining it, and those that control or fix the methodology and bind orrestrict the party hired to the use of such means. The first , which aimonly to promote the result, create no ER-EE relationship unlike the

second, which addresses both the result and the means to achieve it.(Insular Life vs. NLRC) The control test calls merely for the existence ofthe right to control and manner of doing work, not the actual exerciseof the right. (Dy Keh Beng)

D. ECONOMIC TEST

1. The absence of ER-EE relationship may be determined througheconomic tests like the inclusion of the EE in the payrolls, havingirregular compensation and having a personal stake in thebusiness. (Sevilla vs. NLRC)

E. AGREEMENT

* The existence of an ER-EE relationship is a question of law and beingsuch, it cannot be made the subject of an agreement. (Tabas vs. CMC)

5.2 Independent Contractor and Labor Contractor Only

1. Art. 106 : Contractor or subcontractora. Whenever an ER enters into a contract with another person

for the performance of the formers work, the EEs of the

contractor and of the latters subcontractor, if any shall bepaid in accordance with the provisions of this Code.

In the event that the contractor or the subcontractor fails to paythe wages of his EE in accordance with this Code, the ER shall bejointly and severally liable with his contractor or subcontractor to suchEEs to the extent of the work performed under the contract, in thesame manner and extent that he is liable to EEs directly employed byhim.

b. There labor-only [considered as agent] contracting

where:* the person supplying workers to an ER does not have

substantial capital

[substantial] investment in the form of tools, equipment,machineries, work premises, among others

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With respect to the first requirement, the law does not require bothsubstantial capital and investment in the form of tools, equipment,machineries, etc. This is clear from the use of the conjunction or.(Neri vs. NLRC)

2. and the workers recruited and placed by such persons areperforming activities which are directly related to the principalbusiness of such ER.

With respect to the second requirement, the service provided by janitors, firemen, mechanics, hired helpers and similar workers areconsidered directly related to the operations of a company since this isnecessary to the proper maintenance of the premises and machineriesas well as the protection of the company premises against fires. (Guarinvs. NLRC)

In such cases, the person intermediary shall be considered merelyas an agent of the ER who shall be responsible to the workers in thesame manner and extent as if the latter were directly employed byhim.

*** Factors to Determine existence of Independent ContractorRelationship:

1. whether the contractor is carrying on an independent business;2. whether the work is part of the ERs general business;3. the nature and extent of the work;4. the skill required;

5. the terms and duration of the relationship;6. the right to assign the performance of the work to another;7. the control and supervision of the work and the ERs powers with

respect to the hiring, firing and payment of salaries;8. the duty to supply premises, tools and appliances. (Mafinco vs.

Ople)

** Examples of Independent Contractor:

* Commission agent : IPC Company entered into agreement withregistered representatives who worked on a commission basis. While

the agents were subject to a set of rules and regulations governing theperformance bond; the termination for certain causes, however, theagents were not required to report to work; to devote their timeexclusively for the company; to account for their time nor submit arecord of their activities; and that they were paid on a commissionbased on a certain percentage of sales. The fact that for a certainspecified causes (failure to meet annual quota) the relationship maybe terminated does not mean such control exists, for the causes oftermination have no relation to the means and methods of work. (IPCvs. SSS)

* Dealership : A contract whereby one engages to purchase and sellsoft drinks on trucks supplied by the manufacturer but providing thatthe other party (peddler) shall have the right to employ his ownworkers, shall post a bond to protect the manufacturer against lossesshall be responsible for damages caused to third person, shall obtainthe necessary licenses and permits and bear the expenses incurred inthe sale of the soft drinks. (Mafinco vs. NLRC)

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Another dealership agreement wherein the dealer: handles theproducts in accordance with existing laws and regulations; sends hisorders to the factory plant; is supplied by the factory with a deliverytruck and all expenses for repairs are borne by the factory; receives no

commission but given a discount for all sales; is responsible alone forany violation of the law, sells the product at the price agreed uponbetween the parties; and posts a surety bond of not less thanP10,000.00. (La Suerte vs. Director of Labor Relations)

* Security Agency : Shipping company entered into an agreementwith a security agency wherein the security agency was responsible forthe hiring and assignment of the guards, the guards were not known tothe shipping company for it dealt directly with the agency, and apayment of a lump sum to the agency who in turn paid thecompensation of the individual watchmen. Under the circumstances,

the guards cannot be considered EEs of the shipping company. It isthe security agency that recruits, hires and assigns the work of thewatchmen. It is the wages to which the watchman is entitled. Thepowers to dismiss lies with the agency. Lastly, since the company hasto deal with the agency, and not with the individual watchmen, onmatters, pertaining to the contracted task, it stands to reason that thecompany does not exercise any power or control over the watchmensconduct. (APL vs. Clave)

* Stevedoring Services : SHIPSIDE entered into a Contract forServices with La Union providing among others that the latter would

furnish all labor needed for stevedoring work in piers controlled by theformer. The net balance of the stevedoring charges will be dividedequally among the parties. The records do not show any participationon the part of SHIPSIDE with respect to the selection and engagementof the individual stevedores. The terms and conditions of their servicesare matters determined not by SHIPSIDE but by La Union. It is alsosufficiently established that La Union exercised supervision and controlover its labor force. While SHIPSIDE occasionally issued instructions tothe stevedores, such instructions, in legal contemplation are mererequests since the privity of contract lies between the workers and LaUnion. (SHIPSIDE vs. NLRC)

* Collection Agency : Singer entered into a collection agencyagreement with collectors providing among others that the collector isto be considered at all times to be an independent contactor; he wasrequired to comply with certain rules and regulations (i.e. use ofauthorized receipts, monthly collection quota, cash bond, andsubmission of report of all collections at least once a week); and hisservices can be terminated in case of failure to satisfy theseregulations. However, the agent was not required to observe officehours or to report to Singer except for remitting his collections. He didnot have to devote his time exclusively for Singer and the manner and

method of collection were left solely to the discretion of the agent, andhe shouldered his transaction services. (

* Messengerial/Janitorial Services :Janitors were hired by CSI andassigned to La Union Carbide. They drew their salaries from CSI. CSIexercised control over them through a SCI EE who gave orders andinstructions. Moreover, CSI had the power to assign its janitors to

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various clients and pull them out. CSI was a registered servicecontractor and did business with a number of known companies in thecountry. It maintains its own office and had its own office equipment. Itfurnishes its janitors the cleaning equipment. (Rhone-Poulene vs. NLRC)

BCC, capitalized at P1 million fully subscribed and paid forprovided janitorial and other services to various firms. It hired A and Band assigned them to work for FEBTC. The two reported for workwearing the prescribed uniform of the BCC; their leave of absenceswere filed directly with BCC; and their salaries drawn only from BCC.FEBTC however issued a job description which detailed the functions oftwo.Applying the control test, BCC is the ER of the two. Furthermore, ithad substantial capital. The guidelines in the job description were laiddown merely to ensure the desired result was achieved. It did not,however, tell how the work should be performed. (Neri vs. NLRC)

* Repair and Maintenance Service : F doing business, was hiredby Shell to conduct a hydro-pressure test. He was paid a lump sum forthe work he and his men accomplished. He utilized his own tools andequipment. He accepted business from other companies. He was notcontrolled by Shell with regard to the manner in which he conductedthe test. (Pilipinas Shell vs. CA)

** Instances of Labor-Only Contracting

* Agency hiring : PBC and CESI entered into an agreement under

which the latter undertook to supply the former with 11 messengers.The agreement provided that the messengers would remain EEs ofCESI; PBC remitted to CESI amount equivalent to the wages of themessengers; CESI in turn paid them and their names are not includedin the PBCs payroll; the bank, in cases of dismissal would requestCESI, and CESI would in fact withdraw such messenger, and themessengers performed their functions within the banks premises.CESI cannot be considered a job contractor because its undertaking isnot the performance of a specific job; it merely undertook to providethe bank with a certain number of persons able to carry out the workof messengers. (PBC vs. NLRC)

Under the Work Contract between A and a motorshop, Aundertook to supply labor and supervision in the performance ofautomotive body painting work. A and his men were paid lump sum,the company supplied the tools, equipment, machineries and materialsand moreover, the jobs were done in the premises of the motor shop.Aside from the fact that the company exercised control and directionover the work done by A and his men, the line of work-automobilepainting was directly related to, if not an integral part of the regularbusiness of the motor shop. (Broadway Motors vs. NLRC)

LS provided helpers, janitors, mechanics to NP, a corporationengaged in garment manufacturing. The agreement between the twoprovided that LS shall provide NP with workers, NP shall pay LS a feebased on rates fixed by the agreement, there is no ER-EE relationshipbetween the two and LS shall have exclusive direction in the selection,engagement and discharge of its personnel and the latter shall be

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within is full control. LS is a labor-only contractor since it is merelyan agent to procure workers for the real ER. (Guarin)

* Security Guard Hiring : Hyatt and VSS entered into a contract ofservices wherein VSS agreed to protect the properties and premises of

Hyatt by providing security guards. The security guards filled up Hyattemployment application forms and submitted the forms to the SecurityDepartment of the hotel. Their wages were paid directly by Hyatt andtheir assignments, promotions, supervisions and dismissal wereapproved by the Chief Security Officer of Hyatt. (Vallum Security vs. NLRC)

Section 6. Employment Policies, Recruitment and Placement ofWorkers, and Agencies

6. 1 Employment Policies

1. Art. 12 : Statement of Objectives It is the policy of the State:

a. To promote and maintain a state of Full employment throughimproved manpower training, allocation and utilization;

b. To protect every citizen desiring to work locally or overseas bysecuring for him the best possible terms and conditions ofemployment;c. To facilitate a free choice of Available employment by personsseeking work in conformity with national interest;

d. To facilitate and regulate the Movement of workers in conformitywith national interest;

e. To regulate the employment of Aliens, including the establishmentof a registration and/or work permit system;

f. To strengthen the network of public employment offices andrationalize the participation of the private sector in the Recruitmentand placement of workers, locally and overseas, to serve nationaldevelopment objectives;

g. To issue careful selection of Filipino workers for overseasemployment in order to protect the good name of the Philippinesabroad. (AFP MARC)

6.2 Employment Agencies

Private Sector-Agencies and Entities

A. PARTIES

A.1. Worker

* Art. 13 (a) Worker any member of the labor force, whetheremployed or unemployed

A.2 Agency

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* Art. 13 (c) : Private fee-charging employment agency anyperson or entity engaged in the recruitment or placement of workersfor a fee which is charged directly or indirectly, from the workers orERs or both.

A.3 Entity

* Art. 13 (e) : Private recruitment entity any person orassociation engaged in the recruitment and placement of workers,locally or overseas, without charging, directly or indirectly, any feefrom the workers or the ERs or both.

B. ALLOWED ENTITIES

B.1Allowed Private Agencies and Entities

* Art. 16 : Except as provided in Chapter II of this Title, no person orentity, other than the public employment offices, shall engage in therecruitment and placement of workers.

Sec. 1, Rule III, Book I, IRRs No person or entity shall engage inthe recruitment and placement of workers either for local or overseasemployment except the following: [allowed agencies]

1. public employment agencies2. POEA3. private recruitment entities4. private employment agencies

5. shipping or manning agents or representatives; and6. such other persons or entities as may be authorized by the

Secretary.

*Art. 25 : . . . the private employment sector shall participate in therecruitment and placement of workers, locally and overseas, undersuch guidelines, rules and regulations as may be issued by theSecretary of Labor.

B.2 Prohibited Business Agencies and Entities

1. Art. 18 : Ban on Direct Hiring No ER may hire a Filipino worker foroverseas employment except through the Boards and entitiesauthorized by the Secretary of Labor.a. Direct hiring by members of the diplomatic corps;b. International organizations and such other ERs as may be;c. allowed by the Secretary of Labor is exempted from this provision.

2. Art. 26 : Travel agencies and sales agencies of airline companiesare prohibited from engaging in the business of recruitment andplacement of workers for overseas employment, whether for profit ornot.

C. GOVERNMENT TECHNIQUES OF REGULATION PRIVATERECRUITMENT AND PLACEMENT BUSINESS

C.1 Licensing, Citizenship, Capitalization, Duration,Transferability and Fees

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1. Art. 27 : Citizenship Requirement:a. Only Filipino citizens orb. Only corporations, partnerships or entities at least 75% of

the authorized and voting capital stock of which is ownedand controlled by Filipino citizens shall be permitted to

participate in the recruitment and placement of workers,locally or overseas.

2. Art. 28 : Capitalization Substantial capitalization asdetermined by the Secretary of Labor. (P1 M)

Sec. 1, Rule V, Book I, IRRs : Qualification of Applicants forPrivate employment agencies All applicants for licenses to operateprivate employment agencies either for local or overseasrecruitment and placement shall possess the followingqualifications. . .

3. Art. 29 : Non-tranferability of License or Authority* No license or authority shall be used directly or indirectly by anyother person other than the one in whose favor it was issued; or* at any place other than that stated in the license of authority* nor such license or authority be transferred, conveyed or assignedto any other person or entity.* Any transfer of business address, appointment or designation ofany agent or representative including the establishment ofadditional offices everywhere shall be subject to the prior approvalof the DOLE.

4. Art. 15 (a) 2 : (a) The Bureau of Employment Services shall beprimarily responsible for developing and monitoring acomprehensive employment program. It shall have the powerand duty:2) To establish and maintain a registration and/or licensing

system to regulate private sector participation in the recruitmentand placement of workers, locally or overseas, and to secure thebest possible terms and conditions of employment for Filipinocontract workers and compliance therewith under such rules andregulations as may be issued by the Minister of Labor.

5. Distinguish authority from license? Authority means adocument issued by the Secretary of Labor and Employmentauthorizing a person or association to engage in recruitment andplacement activities as a private recruitment entity; while alicense is the document issued to a person or entity tooperate a private employment agency. (Art. 13)

6. What is the duration of a license recruit? A license is valid for aperiod of 2 years from the date of issuance unless soonercancelled, revoked or suspended for violation of the Labor Code

or its IRRs.* non-tranferrable

C.2 Bonds

1. Art. 31 : All applicants for license or authority shall post suchcash and surety bonds as determined by the Secretary of Labor

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to guarantee compliance with prescribed recruitmentprocedures, rules and regulations, and terms and conditions ofemployment as appropriate.

2. The purpose of bonds is to insure that if the rights of theseoverseas workers are violated by their ERs recourse would still

be available to them against the local companies that recruitedthem for the foreign principal. (Stronghold vs. CA)

C.3 Workers Fees

* Art. 32 : Any person applying with a private fee-chargingemployment agency for employment assistance shall not becharged any fee until1. he has obtained employment through its efforts; or2. he 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 theschedule of allowable fees.

C.4 Reports Submission

* Art. 33 : Whenever the public interest requires, the Secretary ofLabor may direct all persons or entities within the coverage of this Titleto submit a report on the status of employment, including jobvacancies, details of job requisitions, separation from job, wages, otherterms and conditions, and other employment data.

Percentage of salary remittance1. seaman 80%2. construction worker 70%3. professional workers with free board and lodging 70%4. professional without board and lodging 50%5. domestic helpers 50%6. other workers 50%

C.5 Prohibited Practices [IF FAITS CHOW]

1. Art. 34 : Prohibited Practices It shall be unlawful for any

individual, entity license or holder of authority:

1. To charge or accept; directly or indirectly, any amount greaterthan that specified in the schedule of allowable fees, or make aworker pay any amount greater than that actually received byhim as a loan or advance;

2. To furnish or publish any false notice or information or documentin relation to recruitment or employment; [includes the act offurnishing fake employment documents to a worker. (Azucena)

3. To give any false notice, testimony, information or document orcommit any Act of misrepresentation for the purpose of securing

a license of authority under this Code;4. To induce or attempt to induce a worker already employed to

quit his employment in order to offer him to another unless thetransfer is so designed to liberate the worker from oppressiveterms and conditions of employment;

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5. To influence or attempt to influence any person or entity not toemploy any worker who has not applied for employment throughhis agency;

6. To engage in the recruitment or placement of workers in jobsHarmful to public health or morality or to the dignity of the

Republic of the Philippines;7. To obstruct or attempt to obstruct inspection by the secretary ofLabor or by his duly authorized representatives;

8. To Fail to file reports on the status of employment, placementvacancies, remittance of foreign exchange earnings, separationfrom jobs, departures and such other matters of information asmay be required by the Secretary of Labor;

9. To substitute or alter employment contracts approved andverified by the DOLE from the time of actual signing thereof bythe parties up to and including the period of expiration of thesame without the approval of the Secretary of Labor Unless it is

to improve the terms and conditions of employment. (Vir-Jen vs.NLRC);

10. To become an officer or member of any corporationengaged in Travel agency or to be engaged directly or indirectlyin the management of a travel agency;

11. To Withhold or deny travel documents from applicantworkers before departure for monetary or financial considerationother than those authorized under this Code and itsimplementing rules and regulations.

2. A, Filipina, was recruited by a local private employment agency

for a tutoring job abroad. Upon arrival in the place of employment,she was made to work as a housemaid. What advice will you giveher? I will advice the Filipina to commence a criminal action againstthe employment agency for violation ofArt. 34 of the Labor Code.She was recruited under false pretense. (Alcantara)

3. STC, a travel agency, advertised for young women to work asdomestic helpers in Hongkong. Five women who left for Hongkongwere later brought to prostitution houses. Have the officers of STCcommitted any unlawful acts? Yes. Violation of Art. 26 and Art. 34(d) and (f) of the Labor Code. (Alcantara)

C.6 Illegal Recruitment

1. Art. 13 (b) : Recruitment and Placement - Act of [CEC-TUHPI]

a. Canvassingb. Enlistingc. Contractingd. Transportinge. Utilizingf. Hiring or

g. Procuring workers andh. Includes referrals, contracts services, promising or

advertising for employment, locally or abroad, whether forprofit or not.

ProvidedThat any person or entity which, in any manner, offers or promises fora fee employment to 2 or more persons shall be deemed engaged in

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recruitment or placement. [The number of persons dealt with is not, anessential ingredient of the act of recruitment or placement. Theprovision merely lays down a rule of evidence that where a fee iscollected in consideration of a promise or offer of employment to 2 ormore prospective workers, the individual or entity dealing with them

shall be deemed to be engaged in the act of recruitment or placement.(Pp vs. Panis)

** Illegal termination- full reimbursement fees + 12%- salaries for unexpired portion or 3 mos. For every year of

unexpired term whichever is lower

** Liability of private employment agency employmentcontract

- joint and solidary with employer

- all claims and liabilities that may arise in connection withthe implementation of the contracts

2. Any recruitment activities, including the prohibited practices,enumerated under Art. 34 of this Code, to be undertaken by non-licensees or non-holders of authority shall be deemed illegal andpunishable under Art. 39 of this Code.

* Illegal recruitment when committed by a:

syndicate

or in large scale

shall be considered an offense involving economic sabotage and shallbe penalized in accordance with Art. 39 hereof.

- non-bailable- life imprisonment

** Illegal recruitment by a syndicate Carried out by a group of 3or more persons conspiring and/or confederating with one another incarrying out any unlawful or illegal transaction, enterprise or schemedefined under the first paragraph hereof.

** Illegal recruitment in large scale Committed against 3 or more

persons individually or as a group.

[When the Labor Code speaks of illegal recruitment, committedagainst 3 or more persons, it must be understood as referring to thenumber of complainants therein, otherwise, prosecutions for singlecrimes of illegal recruitment can be cumulated to make out a case oflarge scale illegal recruitment. In other words, a conviction for large-scale illegal recruitment must be based on a finding in each case ifillegal recruitment of 3 or more persons whether individually or as agroup. (Pp vs. Reyes)

3. Sec. 8, Migrant Workers Act : A criminal action arising fromillegal recruitment as defined herein shall be filed with the RTC of theprovince or city where the offense was committed or where theoffended party actually resides at the time of the commission of theoffense: provided, That the court where the criminal action is first filedshall acquire jurisdiction to the exclusion of other courts.

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4. The crime of illegal recruitment has 2 elements:a. That the offender is a non-license or non-holder of

authority to lawfully engage in the recruitment andplacement of workers; and

b. That the offender undertakes any of the recruitment

activities defined under Art. 13 (b) of the Labor Code orany of the prohibited practices enumerated under Art. 34of the same Code.

5. G convinced F and S, that they could be employed for France for afee. G was also able to persuade A that he could give A a working visa.Nothing happened to F, S and A. G did not have any license to recruitor authority to recruit? A may be charged and convicted of a large-scale illegal recruitment since he did not have the license or authorityto recruit, and yet recruit at least 3 persons. (Pp vs. Turda) Furthermore,he can also be convicted and charged of estafa since the latter is a

malum in se while the former is a malum prohibium (Id.)

6. NATO, a national union of teachers was able to find jobs abroad forits member by directly contacting other teachers organizations inforeign countries, without charging additional fees. Is this legal? No.Only persons or entities with appropriate license or authority canengage in recruitment and placement of workers. Contact services areactivities that fall within the scope of recruitment and placement ofworkers. (Alcantara)

7. A paper manufacturing company in Cainta would like to know if it

needs to obtain a license authority before it can recruit workers for itsplant. No license or authority is necessary. The company is notengaged in the business of recruitment and placement of workers, it isnot recruiting workers to be employed by others. It does not representa principal. It is recruiting its own workers. (Alcantara)

C.7 Rule Making

* The Secretary of Labor and Employment has the power and authoritynot only to restrict and regulate the recruitment and placementactivities of all agencies but also promulgate rules and regulations to

carry out the objectives and implement the provisions governing saidactivities. (Eastern Assurance vs. Secretary of Labor)

C. 8 Enforcement

1. Art. 36 : The Secretary of Labor shall have the power to restrictand regulate the recruitment and placement activities of allagencies within the coverage of this Title and is herebyauthorized to issue orders and promulgate rules and regulationsto carry out the objectives and implement the provisions of thisTitle.

Sec. 2, Rule VI, Book I, IRRs : Pending investigation of thecomplaint or report, the Secretary may suspend the license of theprivate employment agency concerned. . .

2. Art. 37 : The Secretary or his duly authorized representativesmay, at any time, inspect the premises, books of account and

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records of any person or entity covered by this Title, require it tosubmit records regularly on prescribed forms, and act onviolations of any provisions of any provisions of this Title.

Public Sector Agencies

A. EMPLOYMENT OFFICES AND THE POEA

1. Art. 14 (a) : The Secretary of Labor shall have the power andauthority: (a) To organize and establish new employmentagencies in addition to the existing employment offices underthe DOLE as the need arises.

2. Sec. 3, EO 247 : POEA functionsa. Regulate private sector participation in the recruitment

and overseas placement of workers by setting up a

licensing and registration system;b. Formulate and implement in coordination with appropriate

entities concerned, a system for promoting and monitoringthe overseas employment of Filipino workers taking intoconsideration their welfare and the domestic manpowerrequirements;

c. Protect the rights of Filipino workers to fair and equitablerecruitment and employment practices and ensure theirwelfare;

d. Exercise original and exclusive jurisdiction to hear anddecide all pre-employment cases which are administrative

in character involving or arising out of violation ofrecruitment laws, rules and regulations, or violation of theconditions for issuance of license or authority to recruitworkers. The POEA has no jurisdiction to hear and decide aclaim for enforcement of a foreign judgment. Such a claimmust be brought before the regular courts. (Pacific Asia vs.NLRC)

B. Definition of Terms

Sec. 1 (j), (w), (z), (ff), and (qq), Rule II, Book I, Rules and

regulations on Overseas Employment

1. Contract Worker - Any person working or who has workedoverseas under a valid employment contract.

2. Manning agency Any person or entity recruiting seamenfor vessels plying international waters and fore related maritimeactivities.

3. Name Hire Worker who is able to secure employmentoverseas on his own without the assistance or participation of an

agency.

4. Overseas employment Employment of a worker outsidethe Philippines, including employment on hoard vessels plyinginternational waters covered by a valid employment contract.

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5. Placement fee Amount charged by a private employmentagency from a worker for its services in securing employment.

6. Service fee Amount charged by a license from its foreignER as payment for actual services rendered in relation to the

recruitment and employment of workers for said principal.

6. 3 Sanctions

1. Art. 35 : Suspension and/or Cancellation of License or Authority The Secretary of Labor shall have the power to suspend orcancel any license or authority to recruit EEs for overseasemployment for violations of rules and regulations by the DOLE,the POEA, or for violation of the provisions of this, and otherapplicable laws . .

2. Art. 39 : Penalties Violations of any provisions of this Tile orIRRs by license or holder of authority :

a. imprisonment of not less than 2 years nor more than 5years

b. or a fine of not less than P10,000.00 nor more thanP50,000.00

c. or both such imprisonment and fine, at the discretion ofthe court.

3. Violation of any of the provisions thereof or its implementingrules and regulations by a non-license or non-holder of authority

a. imprisonment of not less than 4 years nor more than 8years

b. or a fine of not less than P20,000.00 nor more thanP100,000.00

c. or both such imprisonment and fine, at the discretion ofthe court.

4. If the offender is a corporation, partnership, association or entity,the penalty shall be imposed upon the officer or officers of thecorporation, partnership, association or entity responsible forviolation; and if such officer is an alien, he shall in addition to the

penalties herein prescribed, be deported without furtherproceedings:

* Illegal recruitment:a. imprisonment of not less than 6 years and 1 day but not

more than 12 years andb. a fine of not less than P200,000.00 nor more than

P500,000.00.

* Illegal recruitment constituting Economic Sabotage:c. life imprisonment; and

d. a fine of not less than P500,000.00 nor more thanP1,000,000.00.

* The maximum penalty shall be imposed if:a . the person illegally recruited is less than 18 years of age;

orb. committed by a non-license or non-holder of authority.

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* The Secretary of Labor or his duly authorized representative mayorder the closure of illegal recruitment establishments.

5. Art. 38 (c) of the Labor Code granting the Secretary of Labor the

power to issue search or arrest warrants is declaredunconstitutional and null and void. (Salazar vs. Achacoso)

- money claims arising from ER-EE relationship prescribes in3 years

- strict rules of evidence are not applicable in claims forcompensation and disability benefits

5. In case of breach of the employment contract by a foreign-based ER,may the private employment agency or recruitment entity be heldliable? What is the nature of the liability of the recruitment and

placement agency and its principal? Yes. The agency or entityundertakes under oath to assume full and complete responsibility forall claims and liabilities which may arise in connection with the use ofthe license or authority. The agency is jointly severally liable with theprincipal or foreign-based ER for any of the violations of recruitmentagreement contract of employment. (Ambraque vs. NLRC; Pp vs. Catan)

Section 7. Alien Employment

7. 1 Technique of Regulation-Employment Permit

1. Art. 40 : Employment Permit of Non-resident Aliens Any alienseeking admission to the Philippines for employment purposesand any domestic or foreign ER who desires to engage an alienfor employment in the Philippines shall obtain an employmentpermit from the DOLE . . .

For an enterprise registered in preferred areas of investments, saidemployment permit must be issued upon recommendation of thegovernment agency charged with the supervision of the registeredenterprise.

Sec. 7, Rule XIV, Book I, IRRs : The employment permit shall bevalid for a minimum period of 1 year.

2. Art. 41 : Prohibition Against Transfer of Employment (a) Afterthe issuance of an employment permit, the alien shall nottransfer to another job or change his ER without prior approval ofthe Secretary of Labor.

Art. 288 : Any alien found guilty shall be summarily deported uponcompletion of service of sentence.

3. May an ER in the Philippines employ a worker who is not aFilipino citizen? Yes, except to nationalized activities such as:

a. public utility to develop, exploit and utilize naturalresources 60% Filipino;

b. Mass media 100% owned by Filipino citizensc. Advertising 70% Filipino ownedd. Retail Business 100% Filipino owned

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e. Financing business 60% Filipino owned

4. Are there exceptions to the prohibition against employment ofaliens in entities engaged in nationalized activities? Yes, when(a) the Secretary of Justice specifically authorizes the

employment of technical personnel; or (b) where aliens areelected members of Board of Directors in proportion to theirallowable participation in the capital; or (c) when allowed undercertain special laws. (Alcantara)

Coverage

* A resident alien need not obtain an employment permit in order to beemployed in the Philippines. (Almodiel vs. NLRC)

Employment Permit Conditions for Grant

1. Art. 40 : The employment permit may be issued to a non-resident alien or to the applicant ER after a determination of: [WA C]

a. competentb. able andc. willing

at the time of the application to perform the services for which thealien is desired. [The DOLE is the agency vested with jurisdiction todetermine the question of availability of the local workers. (GeneralMilling vs. Torres)

2. Sec. 5, Rule XIV, Book I, IRRs : Requirements forEmployment Permit Applicants The applicant for anemployment permit shall be accompanied by the following:

a. Curriculum vitae signed by the applicant indicating theeducational background, his work experience and otherdata showing that he possesses technical skills in his tradeor profession.

b. Contract of employment between the ER and the principal,which shall embody the following, among others:

That the non-resident alien shall comply with all applicablelaws and rules and regulations;

That the non-resident alien worker and ER shall bindthemselves to train at least 2 Filipino understudies; and

A designation by the ER of at least 2 understudies whichmust be the most ranking regular EEs in the section ordepartment for which the expatriates are being hired toensure actual transfer of technology.

Section 8. Development of Human Resources

8.1 Objectives - Definitions

1. Art. 43 : It is the objectives of this [F E D]a. Title to Develop human resourcesb. Establish training institutions, andc. Formulate such plans and programs as will ensure efficient

allocation, development and utilization of the nations

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manpower and thereby promote employment andaccelerate economic and social growth.

2. What is human resources development? Process by which theactual and potential labor force is made systematically to acquire

greater knowledge, skills and capabilities for the nationssustained economic and social growth. (Sec. 1, Rule I, Book II,IRRs)

3. Define manpower? Is the portion of the population which hasactual or potential capability to contribute to the production ofgoods and services. (Sec. 1 (c), Rule I, Book II, IRRs)

4. Is human resources development intended solely to trainworkers? No. Manpower development also means training forself-employment. This is known as entrepreneurship (Art. 44

(b).5. What is dual system/training? It refers to a delivery system of

quality technical and vocational education which requirestraining to be carried out alternatively in 2 venues:

a. in school andb. in the production plant.

In school, training provides the trainee the theoretical foundation,basic training, develops his skill and proficiency in actual workingconditions as it continues personal discipline and work value. (Sec. 4(p), RA 7796)

8.2 Program Incentive

* Art. 52 : Deduction from taxable income of of the value of labortraining but not to exceed 10% direct labor wage: Provided, That in thecase of apprenticeship programs, the program is recognized by DOLE.

8.3 Training and Employment of Special Workers Apprentices,Learners and Handicapped Workers

Policy Objectives

* What is the policy of the State on apprenticeship?1. To help meet the demand of the economy for trained manpower;2. To establish a national apprenticeship program through

participation of ERs workers, and government and non-government agencies; and

3. To establish apprenticeship standards for the protection ofapprentices. (Art. 57)

Definition

1. Art. 58 : Apprenticeship Practical training on the job

supplemented by related theoretical instruction.

2. Art. 73 : Learners Persons hired as trainees in semi-skilledand other industrial occupations which are non-apprenticeableand which may be learned through practical training on the job ina relatively short period of time which shall not exceed 3 months.

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3. Art. 78 : Handicapped workers Those whose earningcapacity is impaired by age or physical or mental deficiency orinjury

Who Can Employ and When

A. APPRENTICES must be approved by TESDA

1. Art. 60 : Only ERs in highly technical industries and only inapprenticeable occupations may employ apprentices.

Sec. 1, Rule IV, Book II, IRRs : Highly Technical Industries Trade, business, enterprise, industry or other activity which isengaged in the application

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