[Discrimination] In the workplace, where the relations between capital and labor are often

skewed in favor of capital, inequality and discrimination by the employer are all the more
reprehensible. Discrimination, particularly in terms of wages, is frowned upon by the LC.
Equal pay for equal work Persons who work with substantially equal qualifications, skill,
effort, and responsibility, under similar conditions, should be paid similar salaries. If an
employer accords employees the same position and rank, the presumption is that these
employees perform equal work. The employer who has discriminated against the employee has
the burden of proving why the employee is being treated unfairly. (ISAE vs. Quisumbing
higher pay for foreign hires)

RA 8042 is discriminatory and unconstitutional. The enactment of the subject clause in R.A. No.
8042 introduced a differentiated rule of computation of the money claims of illegally dismissed
OFWs based on their employment periods, in the process singling out one category whose
contracts have an unexpired portion of one year or more and subjecting them to the peculiar
disadvantage of having their monetary awards limited to their salaries for 3 months or for the
unexpired portion thereof, whichever is less, but all the while sparing the other category from
such prejudice, simply because the latters unexpired contracts fall short of one year. (Serrano
vs. Gallant Maritime where clause unconstitutional because local workers do not have the same
ceiling)

Governing Laws
Employees of GOCCs with special charters are covered under the Civil Service while employees
of GOCCs under the Corporation Code are governed by the Labor Code. (Postigo vs. PTSI
where PTSI is governed by labor code, since it belongs to the private sector.)

The hiring and firing of employees of GOCCs are governed by the provisions of the Civil Service
Law and its RRs. Jurisdiction over such are therefore not lodged with the NLRC but with the Civil
Service Commission.

Overseas Employees (Foreign Employment and Illegal Recruitment)

The rights and interests of distressed overseas Filipinos, in general and Filipino migrant workers,
in particular, are adequately protected and safeguarded by the Migrant Workers Act. More
than just recruiting and deploying OFWs to their foreign principals, recruitment agencies should
be the first to come to the rescue of distressed OFWs. Upon them lies the primary obligation to
protect the rights and ensure the welfare of our OFWs. Whether employed locally or overseas,
all Filipino workers enjoy the protective mantle of Philippine labor and social legislation,
contract stipulations to the contrary notwithstanding. (Becmen vs. Sps Cuaresma suicide in
dorm)

Although the MWA transferred the exclusive and original jurisdiction to hear and decide money
claims arising out of ER EE relationships and those involving overseas Filipino workers from the
POEA to the LA, the act didnt remove from the POEA the original and exclusive jurisdiction to
hear disciplinary cases and other administrative cases for the POEA to better focus on such.
(ESL vs. Surio)

The liability of the principal/employer and the recruitment/placing agency for any and all claims
under Section 10 shall be joint and several, but it is not automatic. To make them liable jointly
and solidarily liable with their company, there must be a finding that they were remiss in
directing the affairs of that company, such as sponsoring or tolerating the conduct of illegal
activities. (Gagui vs. Dejero)

The MWA states that those criminally liable are the principals, accomplices, and accessories. In
case of juridical persons, the officers having control, management or direction of the business is
liable.

Although parties are free to stipulate such terms and conditions as they may deem necessary
for their transaction, these terms and conditions must still not be contrary to law, policy,
morals, good customs. A clause in a contract which grants an employer an unbridled discretion
to terminate an employee at will and without just cause is contrary to public policy, as well as
an employees right to security of tenure.

The theory of imputed knowledge ascribes the knowledge of the agent to that of the principal,
not the other way around. The knowledge of the principal-foreign employer cannot be imputed
to the agency. (Sunace vs. NLRC)

Seafarers are contractual employees and not regular employees. Their employment is governed
by the contracts they sign every time they are rehired and their employment is terminated
when the contract expires. As such, they are not entitled to separation pay (for only regular
employees are entitled to such) but they are entitled to indemnity for the remaining unexpired
portion of the term in their contract, as recompense for the unlawful taking. (Petroleum
Shipping vs. NLRC)

A distinction must be made between the perfection of the employment contract and the
commencement. Perfection is when the parties agreed on the object and the cause as well as
the terms and conditions (consent, object[service], cause [consideration]). Commencement is
when the employee had actually been deployed from point of hire. So if an employee was not
even deployed, the employment contract did not commence. But even so, at the perfection
there are already rights imbued, breach of which will give rise to a cause of action. (Santiago vs.
CF Sharp)

Imposing a condition (ex. signing a quitclaim) on the release of legal documents is tantamount
to bad faith which is an actionable wrong. It is unlawful for any entity to withhold or deny travel
documents from applicant workers before departure for monetary or financial considerations
other than those authorized by the Labor Code. (CF Sharp vs. Pioneer Insurance)
In order for a seafarer to be entitled to disability benefits, he must prove that the injury was
suffered during the term of his employment, and must submit himself to the company-
designated physician for evaluation within 3 days from his repatriation. It is considered a
permanent disability if he is unable to work for more than 120 days. Total disability means the
disablement of an employee to earn wages in the same kind of work similar in nature as that he
was trained for or accustomed to perform or any kind of work which a person of the same
situation could do.

The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of
computation of the money claims of illegally dismissed OFWs based on their employment
periods, in the process singling out one category whose contracts have an unexpired portion of
one year or more and subjecting them to the peculiar disadvantage of having their monetary
awards limited to their salaries for 3 months or for the unexpired portion thereof, whichever is
less, but all the while sparing the other category from such prejudice, simply because the
latters unexpired contracts fall short of one year. (Serrano vs. Gallant Maritime where clause
unconstitutional because local workers do not have the same ceiling)

The presumption is that the individual or entity is engaged in recruitment and placement
whenever he or it is dealing with two or more persons to whom, in consideration of a fee, an
offer or promise of employment is made in the course of the canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring (of) workers. The number of persons dealt with is
not an essential ingredient of the act of recruitment and placement of workers. Any of the acts
mentioned in the basic rule in Article 13(b) will constitute recruitment and placement even if
only one prospective worker is involved. The proviso merely lays down a rule of evidence that
where a fee is collected in consideration of a promise or offer of employment to two or more
prospective workers, the individual or entity dealing with them shall be deemed to be engaged
in the act of recruitment and placement. The words shall be deemed create that
presumption. (People vs. Panis)

The conduct of preparatory interviews is a recruitment activity. In addition, the fact that the
recruitment agency did not actually receive the fee is of no moment because it is the lack of the
necessary license of authority that renders the recrtuitment activity unlawful.

Construction of Doubt
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.

Doubts as to evidence on record shall be resolved in favor of the employee in line with the
policy under the Labor Code to afford protection to labor and construe doubts in favor of labor.
The consistent rule is that if doubts exist between the evidence presented by the employee and
employer, the scale of justice must be tilted in favor of the former.
It should be made clear that when the law tilts the scale in favor of labor, it is but recognition of
the inherent economic inequality between labor and management. The intent is to balance the
scale of justice, to put the parties on relatively equal positions. There may be cases where the
circumstances warrant favoring labor over the interests of management but never should the
scale be so tilted if the result is an injustice to the employer. (JPL Marketing vs. CA where court
didnt require employer to pay SIL/nominal damages because employees looked for other
employment without even being dismissed)

Management Prerogative
Except as limited by special laws, an employer is free to regulate, according to his own
discretion and judgment all aspects of employment, including hiring, work assignments,
working methods, time, place, and manner of work, tools to be used, processes to be followed,
supervision of workers, working regulations, transfer of employees, work suspension, layoff etc.

Every business enterprise endeavors to increase its profits. In the process, it may adopt or
devise means designed towards that goal. So long as the managements prerogatives are
exercised in good faith for the advancement of the employers interest and not for the purpose
of defeating or circumventing the rights of the employees under special laws or under valid
agreements, the court will uphold them. (San Miguel Brewery Union vs. Blas Ople where
managements offer to compensate members was considered as valid management
prerogative)

The determination of the continuing necessity of a particular officer or position in a business

corporation is managements prerogative, and the courts will not interfere with the exercise of
such so long as no abuse of discretion or merely arbitrary or malicious action on the part of the
management is shown. (Wiltshire File vs. NLRC where employee dismissed because of
redundancy)

Employee Employer Relationshiop

In determining the existence of an employer-employee relationship, the following elements are
considered:
(1) the selection and engagement of the workers;
(2) the payment of wages by whatever means;
(3) the power of dismissal; and
(4) the power to control the workers conduct, with the latter assuming primacy in the overall
consideration.
The most important element is the employers control of the employees conduct, not only as
to the result of the work to be done, but also as to the means and methods to accomplish. The
power of control refers to the existence of the power and not necessarily to the actual exercise
thereof. It is not essential for the employer to actually supervise the performance of duties of
the employee; it is enough that the employer has the right to wield that power.
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.

The employment status of a person is determined not by what the parties say it should be, but
by what the law defines it to be. So even if a contract specifies an independent relationship, it
does not mean that there is no EE ER relationship.

Although doubt should be titled in favor of the existence of an EE ER relationship, this can only
be applied when doubt exists on the implementation of the LC, and not where there is no
doubt. Where no doubt exists, as where a party fails to substantiate his claim of the existence
of an EE ER relationship (and hence, no relationship), the construction cannot be applied.

No particular form of evidence is required to prove the existence of an EE ER relationship. Any

competent and relevant evidence to prove the relationship may be admitted. (ex. testimonial
evidence, absence of time sheet, time record or payroll). For if only documentary evidence
would be required to show that relationship, no scheming employer would ever be brought
before the bar of justice.

As to form of payment, the fact that the employer is paid on a fixed piece work basis is of no
moment. Payment by result is still a method of compensation.

Any issue regarding the compulsory coverage of the SSS is well within the exclusive domain of
the SSC. The mandatory coverage under the SSS Law is premised on the existence of an
employer-employee relationship, except in cases of compulsory coverage of the self-employed.
Questions on the existence of an EE ER relationship for the purpose of determining the
coverage of the SSS is explicitly excluded from the jurisdiction of the NLRC and falls within the
jurisdiction of the SSS.

Insurance agents are considered independent contractors of their principals. The fact that they
are required to solicit business exclusively for their principals does not constitute control as this
is an accepted practice in law that they are barred from serving more than one insurance
company.

Talents are considered independent contractors. Individuals with special skills, expertise, or
talent enjoy the freedom to offer their services as independent contractors. He has a right to
render his skill without anyone dictating on how he should perform.

Independent contractors is contracted to do work according to his own methods and without
being subject to the control of the principal, except only as to the end result. Rules that merely
serve as guidelines to achieve the end goal are not indicative of control, it is when they dictate
the means and methods to be used to achieve the end goal that they become indicative of
control.
Working Conditions
(Overtime Pay, Night Shift Differential, Holiday Pay, Premium Pay for hours worked on rest
days, Service Incentive Leave, Service Charges)
The provisions on working conditions and rest periods apply to employees of all establishments
whether or not for profit, except for GOMAFIFADOR
(1) Government employees covered by CSL
(2) Managerial employees and managerial staff because they themselves decide the benefits
(3) Field Personnel because actual work hours are hard to establish
(4) Family members dependent on ER for support
(5) Domestic helpers governed by the Kasambahay Law
(6) Rate (workers paid by result as determined by Secretary of Labor

Managerial Employees
Managerial employees, if they meet all of the following conditions, namely:
(1) Their primary duty consists of the management of the establishment in which they are
employed or of a department or subdivision thereof:
(2) They customarily and regularly direct the work of two or more employees therein:
(3) They have the authority to hire or fire other employees of lower rank; or their suggestions
and recommendations as to the hiring and firing and as to the promotion or any other change
of status of other employees are given particular weight.

Officers or members of a managerial staff if they perform the following duties and
responsibilities:
(1) The primary duty consists of the performance of work directly related to management
policies of their employer;
(2) Customarily and regularly exercise discretion and independent judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty
consists of the management of the establishment in which he is employed or subdivision
thereof; or (ii) execute under general supervision work along specialized or technical lines
requiring special training, experience, or knowledge; or (iii) execute under general supervision
special assignments and tasks; and
(4) Who do not devote more 20 percent of their hours worked in a work-week to activities
which are not directly and closely related to the performance of the work described in
paragraphs (1), (2), and above."

[W]ith respect to rank and-file personnel, loss of trust and confidence, as ground for valid
dismissal, requires substantial evidence of proof of involvement in the alleged events [while
for] managerial employees, the mere existence of a basis for believing that such employee has
breached the trust of his employer would suffice for his dismissal. Substantial evidence is that
amount of proof as reasonable mind might accept as adequate to support a conclusion. (GASLI
vs. Galvez)

Field Personnel
Defined as non-agricultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty. They are those who are paid a
specific amount for rendering specific service.
If they are required to be at a specific place at a specific time, employees including drivers
cannot be said to be field personnel despite the fact that they are performing work away from
the principal office of the employee. The employees service is unsupervised by the employer.
(Autobus vs. Bautista, where the driver was not considered a field personnel because he was
under constant supervision of his employee, there being many pit stops etc.)

Employees engaged on task or contract basis or paid on purely commission basis are not
automatically exempted from service incentive leave unless they fall under the classificiation of
field personnel.

The burden of proving payment of monetary claims rests on the employer. The burden rests on
the defendant to prove payment, not on the petitioner to prove non-payment, because the
pertinent files which will show that OT, differentials, SIL and other claims have been paid are
not in the possession of the worker but in the custody and absolute control of the employer.
(Villar vs. NLRC)

Quitclaims or deeds of release cannot bar employees from demanding and receiving benefits to
which they are legally entitled, or stop them from contesting the legality of their dismissal.
Furthermore, the acceptance of these benefits does not amount to estoppel. (Villar vs. NLRC)

Company Practice
The test or rule on long practice requires an indubitable showing that the ER agreed to continue
giving benefits consistently and deliberately, knowingly fully well that said employees are not
covered by the law requiring payment thereof.

Inclusion of commission in basic salaries to determine amount of benefits and 13th month pay
Boie Tekada vs. De la Serna
commission, the fixed or guaranteed wage is patently the "basic salary" for this is what the
employee receives for a standard work period. Commissions are given for extra efforts exerted
in consummating sales or other related transactions. They are, as such, additional pay, which
this Court has made clear do not form part of the "basic salary."
Phil. Duplicators vs. NLRC
However, sales commissions which are effectively an integral portion of the basic salary
structure of an employee, shall be included in determining 13th month pay.

Wages
Form of Payment
- Only through legal tender
- Any other form is prohibited, even when expressly requested by the employee
However, payment through check or money order is allowed when:
- Customary
- Necessary as specified in regulations issued by the SOLE
- Or as stipulated in the CBA
- If paid through bank
Intestines and liver of fish is not considered legal tender, and hence cannot be considered part
of wages, even if requested by the employee. (Congson vs. NLRC)

A sales agents commissions are deemed part of his/her wage, and thus, if illegally terminated,
should be paid as wage differentials.

The age-old rule governing the relation between labor and capital, or management and
employee of a "fair days wage for a fair days labor" remains as the basic factor in determining
employees wages. If there is no work performed by the employee there can be no wage or pay
unless, of course, the laborer was able, willing and ready to work but was illegally locked out,
suspended or dismissed, or otherwise illegally prevented from working. (Akelco vs. NLRC)

Bonuses
Bonuses are considered a grant of liberality and gratuity of the employer. It is something given
in addition to what is ordinarily received. The granting of a bonus is an act of management
prerogative which cannot be forced upon the ER.

If the giving on the bonus is dependent on the companys end goal of production, it cannot be
considered part of the wages, because if the goal is not achieved, no bonus will be given. But if
the bonus will be given without condition, such as mere success of business or greater output,
the bonus becomes part of the wage. (Protacio vs. Mananghaya)

A bonus which becomes part of the wage or salary or compensation of the employee also
becomes a demandable and enforceable obligation on the part of the ER. Where it is not
payable to all but only to some employees and only when their labor becomes more efficient or
more productive, it is only an inducement for efficiency, a prize therefore, and not part of the
wage. (Eastern Telecom vs. ETEU where grating of 14th, 15th, 16th month bonuses have ripened
into part of their wages, because even if they faced losses, the company still granted the
bonuses to the employees)

Non-diminution of benefits
This rule explicitly prohibits employers from eliminating or reducing the benefits received by
their employees. This rule however applies only if the benefit is based on an express policy, a
written contract, or has ripened into a voluntary, deliberate, and consistent practice. (Wesleyan
University vs. Wesleyan University Faculty on giving of 2 retirement plans)

Chairs are not covered by Art. 100 on non-diminution of benefits. The rule refers to monetary
benefits or privileges given to the employee with monetary equivalents. (Royal Plant Union vs.
Cocal Cola)
Article 100 does not prohibit a union from offering and agreeing to reduce wages and benefits
of the employees as the right to free collective bargaining includes the right to suspend it, most
especially if the reason is to avoid salary distortion. (Octavio vs. PLDT where denial of claim to
salary increase was not considered diminution of benefit)

Not Subject to Garnishment

Art 1708 used the word "wages" and not "salary" in relation to "laborer" when it declared what
are to be exempted from attachment and execution. The term "WAGES" as distinguished from
"salary", applies to the compensation for manual labor, skilled or unskilled, paid at stated times,
and measured by the day, week, month, or season, while "SALARY" denotes a higher degree of
employment, or a superior grade of services, and implies a position of office: by contrast, the
term wages " indicates considerable pay for a lower and less responsible character of
employment, while "salary" is suggestive of a larger and more important service. (Gaa vs. CA)

Facilities, Supplements, Allowances

When an employer customarily furnishes his employee board, lodging or other facilities, the fair
and reasonable value thereof, as determined by the Secretary of Labor and Employment, is
included in wage.
In order to ascertain whether the subject allowances form part of petitioners wages, we
divide the discussion on the following: (1) customarily furnished (2) board, lodging or other
facilities and (3) fair and reasonable value as determined by the Secretary of Labor. (Millares
vs. NLRC)
Facilities - including articles or services for the benefit of the employee or his family but
excluding tools of the trade or articles or service primarily for the benefit of the employer or
necessary to the conduct of the employers business. (benefit EE, not including necessary ER
tools etc)
Dole MC 2 ER can deduct only not more than 70% of value of meals provided to its
employees.
Before an ER can deduct facilities from his EE wages, the following requisites must concur:
(1) The facilities are customarily furnished to the EE
(2) The provision on the deductibility of the facility must be voluntarily accepted in writing by
the EE
(3) The facilities must be charged at reasonable value.
Supplements extra remuneration or special privileges or benefits given to or received by the
laborers over and above their ordinary earnings and wages, also given for the benefit of the
employer. The distinction between facilities that are wage deductible and supplements that
are not lies not so much in the kind of benefit given, but the purpose for which they were given.
If they were necessary for the laborers and his familys existence, they are considered facilities.

Withholding of wages
Although an employer has the management prerogative to regulate all aspects of employment,
such does not include the right to temporarily withhold salary/wages without the consent of
the employee. However, article 113 provides the exception when it provides for the situations
wherein deduction from the wages of employees is allowed.
(a) In cases where the worker is insured with his consent by the employer, and the deduction is
to recompense the employer for the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to check-off has been
recognized by the employer or authorized in writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of
Labor such as the partial payment of a debt due to the employer, or as withholding taxes on
income. (SHS vs. Diaz)
An employer is also allowed to withhold terminal pay and benefits pending the employees
return of its properties lent to the employee. Requiring clearance before the release of last
payments to the employee is standard procedure among employers, whether public or private.
Clearance procedures are instituted so that properties are rightfully returned to the employers.

Due Process in Dismissal

A workers employment is property in the constitutional sense. He cannot be deprived of his
work without due process. In order for the dismissal to be valid, not only must it be based on
just cause supported by clear and convincing evidence, the employee must also be given an
opportunity to be hear and defend himself. It is the employer who has the burden of proving
that the dismissal was with just or authorized cause. Failure to discharge this burden means
that the dismissal is not justified and that the employee is entitled to reinstatement and
backwages.

In an illegal dismissal case, the burden of proof is 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
EE-ER relationship must first be established.

Every opportunity and assistance must be accorded to the employee by the management to
enable him to prepare adequately for his defense.

Nominal damages are warranted in cases of violation of statutory due process where employee
not directly notified of severance of employment. (Unilever vs. Rivera)

Handwritten listings and computer print-outs that are unsigned are without probative value,
especially In the light of the existence of record books. (Asuncion vs. NLRC terminated after
telling DOLE of labor standard violations)

Separation Pay
As a general rule, an employee who has been dismissed for any of the just causes enumerated
under Art. 282 of the Labor Code is not entitled to separation pay. In addition, separation pay
shall not be given if dismissed due to willful disobedience, gross and habitual neglect of duty,
fraud or willful breach of trust, and commission of a crime against the employer or his family.
Separation pay is only warranted when the cause for termination is not attributable to the
employees fault, as well as in cases of illegal dismissal in which reinstatement is no longer
feasible. It is not allowed when an employee is dismissed for just cause.

In exceptional cases however the Court has granted separation pay to a legally dismissed
employee as an act of social justice or on equitable grounds. In both instances, it is required
that the dismissal
(1) was not for serious misconduct and (2) did not reflect on the moral character of the
employee.

Under Art. 283 and 284 of the Labor Code, separation pay is authorized only in cases of
dismissals due to any of the ff reasons:
(1) installation of labor saving devices
(2) redundancy
(3) retrenchment
(4) cessation of the employers business
(5) when the employee is suffering from a disease and his continued employment is prohibited
by law or is prejudicial to his health and to the health of his co-employees
(6) when the employee is entitled to reinstatement but the establishment where he is to be
reinstated is closed or has ceased to operate or his present position no longer exists
However! Separation pay shall be allowed as a measure of social justice in those cases where
the employee is validly dismissed for causes other than serious misconduct or those reflecting
on his moral character, but only when he was illegally dismissed.

Labor Only Contracting

Labor only contracting is a prohibited act where the contractor or subcontractor merely
recruits, supplies, or places workers to perform a job, work or service for a principal.

Joint and several liability - In the event that a contractor/subcontractor fails to pay the wages of
his employees, the employer shall be jointly and severally liable with his sub/contractor to such
employees to the extent that he is liable to employees directly employed by him; if legitimate
job-contracting
Solidary liability for labor-only contracting; for violations of the Code i.e. illegal dismissal;
proof of connivance/knowledge of illegal dismissal by the contractor; failure to pay wages
The liability arising from an illegal dismissal is not like an order to pay the statutory minimum
wage where the principal can be held liable as an indirect employer, because the right to such
wage is derived from law.

There is labor only contracting if either

(1) the contractor does not have substantial capital of 5M or investment in the form of tools etc
and the employees work directly related to the main business of the employer OR
(2) the contractor does not have control over the employee//the principal has direct control
over the employee
Additional factors:
(1) the contractor does not have independent business nor undertake performance of their
work free from the control of the principal
(2) As in De los Santos vs. Bumaca, the contractor had to request the principal to dismiss the
erring employee. If it was the employer, it would not have needed the permission of the
principal. In addition, the time stamps had the name of the principal.
(3) Failure to register with the DOLE shall give rise to the presumption that the contractor is
engaged in labor only contracting.

In legitimate job contracting, the following conditions concur:

(1) the contractor carries on a distinct and independent business and undertake to perform the
job
a. On its own account
b. Under its own responsibility
c. According to its own manner and method
d. Free from the control principal in all matters connected with the performance of the
work;
Except as to the results thereof

The presumption is that a contractor is a labor only contractor unless such contractor
overcomes the burden of proving that it is not.