I.

THE CONSTITUTION AND PROTECTION TO LABOR

Constitutional Rights of Workers

- Article II
o Section 9. The state shall promote a just and dynamic social order that will ensure the prosperity and
independence of the nation and free the people from poverty through policies that provide adequate social
services, promote full employment, a rising standard of living, and an improved quality of life for all.
o Section 10. The State shall promote social justice in all phases of national development.
o Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of
workers and promote their welfare.
o Section 20. The State recognizes the indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investments.
- Article III
o Section 4. No law shall be passed abridging the freedom of speech, of expression, or of the press, or the
right of the people of peaceably to assemble and petition the government for redress of grievances.
o Section 8. The right of the people, including those employed in the public and private sectors, to form
unions, associations, or societies for purposes not contrary to law shall not be abridged.
o Section 10. No law impairing the obligation of contracts shall be passes.
o Section 16. All persons shall have the right to a speedy disposition of their cases before all judicial, quasi-
judicial, or administrative bodies.
o Section 18 (2). No involuntary servitude in any form shall exist except as a punishment for a crime
whereof the party shall have been duly convicted.
- Article XIII
o Section 2. The promotion of social justice shall include the commitment to create economic opportunities
based on freedom of initiative and self-reliance.
o Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized,
and promote full employment and equality of employment opportunities for all.

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

The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace.

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

o Section 13. The State shall establish a special agency for disabled person for their rehabilitation, self-
development and self-reliance and their integration into the mainstream of society.
o Section 14. The State shall protect working women by providing safe and healthful working conditions,
taking into account their maternal functions and such facilities and opportunities that will enhance their
welfare and enable them to realize their full potential in the service of the nation.

Civil Code

- Article 1700. The relation between capital and labor are not merely contractual. They are so impressed with
public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to the
special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions,
hours of labor and similar subjects.
- Article 1701. Neither capital nor labor shall act oppressively against the other, or impair the interest or
convenience of the public.
- Article 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety
and decent living for the laborer.
- Article 1703. No contract which practically amounts to involuntary servitude, under any guise whatsoever, shall
be valid.

Nature of Labor Contracts

Abbot Laboratories v. Alcaraz, (GR No. 192571, April 22, 2014)

A probationary employee, like a regular employee, enjoys security of tenure. However, in cases of probationary
employment, aside from just or authorized causes of termination, an additional ground is provided under Article 295 of
the Labor Code, i.e., the probationary employee may also be terminated for failure to qualify as a regular employee in
accordance with the reasonable standards made known by the employer to the employee at the time of the
engagement. Thus, the services of an employee who has been engaged on probationary basis may be terminated for any of
the following: (a) a just or (b) an authorized cause; and (c) when he fails to qualify as a regular employee in accordance
with reasonable standards prescribed by the employer.

Corollary thereto, Section 6(d), Rule I, Book VI of the Implementing Rules of the Labor Code provides that if the
employer fails to inform the probationary employee of the reasonable standards upon which the regularization would be
based on at the time of the engagement, then the said employee shall be deemed a regular employee, viz.:

(d) In all cases of probationary employment, the employer shall make known to the employee the standards under which
he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee
at that time, he shall be deemed a regular employee.

In other words, the employer is made to comply with two (2) requirements when dealing with a probationary employee:
first, the employer must communicate the regularization standards to the probationary employee; and second, the
employer must make such communication at the time of the probationary employee’s engagement. If the employer fails to
comply with either, the employee is deemed as a regular and not a probationary employee.

Davao Integrated Port Stevedoring Services v. Abarquez (GR No. 102 132, March 19, 1993)

A collective bargaining agreement (CBA), as used in Article 252 of the Labor Code, refers to a contract executed upon
request of either the employer or the exclusive bargaining representative incorporating the agreement reached after
negotiations with respect to wages, hours of work and all other terms and conditions of employment, including proposals
for adjusting any grievances or questions arising under such agreement.

While the terms and conditions of a CBA constitute the law between the parties, it is not, however, an ordinary contract to
which is applied the principles of law governing ordinary contracts. A CBA, as a labor contract within the contemplation
of Article 1700 of the Civil Code of the Philippines which governs the relations between labor and capital, is not merely
contractual in nature but impressed with public interest, thus, it must yield to the common good. As such, it must be
construed liberally rather than narrowly and technically, and the courts must place a practical and realistic construction
upon it, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve.

PAL., Inc. v. NLRC (GR No. 85985, August 13, 1993)

Indeed, industrial peace cannot be achieved if the employees are denied their just participation in the discussion of matters
affecting their rights. Thus, even before Article 211 of the labor Code (P.D. 442) was amended by Republic Act No. 6715,
it was already declared a policy of the State, "(d) to promote the enlightenment of workers concerning their rights and
obligations . . . as employees." This was, of course, amplified by Republic Act No 6715 when it decreed the "participation
of workers in decision and policy making processes affecting their rights, duties and welfare." PAL's position that it
cannot be saddled with the "obligation" of sharing management prerogatives as during the formulation of the Code,
Republic Act No. 6715 had not yet been enacted (Petitioner's Memorandum, p. 44; Rollo, p. 212), cannot thus be
sustained. While such "obligation" was not yet founded in law when the Code was formulated, the attainment of a
harmonious labor-management relationship and the then already existing state policy of enlightening workers concerning
their rights as employees demand no less than the observance of transparency in managerial moves affecting employees'
rights.

International School Alliance of Educators v. Quisumbing (GR No. 128845, June 1, 2000)

The Constitution enjoins the State to "protect the rights of workers and promote their welfare," "to afford labor full
protection." The State, therefore, has the right and duty to regulate the relations between labor and capital. These relations
are not merely contractual but are so impressed with public interest that labor contracts, collective bargaining agreements
included, must yield to the common good. Should such contracts contain stipulations that are contrary to public policy,
courts will not hesitate to strike down these stipulations.

Mabeza v. NLRC (GR No. 118506, April 18, 1997)

It is settled that in termination cases the employer bears the burden of proof to show that the dismissal is for just cause, the
failure of which would mean that the dismissal is not justified and the employee is entitled to reinstatement.

xxx

For abandonment to arise, there must be concurrence of two things: 1) lack of intention to work; and 2) the presence of
overt acts signifying the employee's intention not to work.

xxx

In dismissal cases, the law requires that the employer must furnish the employee sought to be terminated from
employment with two written notices before the same may be legally effected. The first is a written notice containing a
statement of the cause(s) for dismissal; the second is a notice informing the employee of the employer's decision to
terminate him stating the basis of the dismissal. During the process leading to the second notice, the employer must give
the employee ample opportunity to be heard and defend himself, with the assistance of counsel if he so desires.

Lopez v. Alturas Group (GR No. 191008, April 11, 2011)

Dismissals have two facets: the legality of the act of dismissal, which constitutes substantive due process, and the legality
of the manner of dismissal which constitutes procedural due process.

Procedural due process has been defined as giving an opportunity to be heard before judgment is rendered.

Petitioner was given the opportunity to explain his side when he was informed of the charge against him and required to
submit his written explanation with which he complied. That there might have been no hearing is of no moment, for
as Autobus Workers Union v. NLRC holds:

This Court has held that there is no violation of due process even if no hearing was conducted, where the
party was given a chance to explain his side of the controversy. What is frowned upon is the denial of the
opportunity to be heard. (Emphasis supplied) 

Parenthetically, the Court finds that it was error for the NLRC to opine that petitioner should have been afforded counsel
or advised of the right to counsel. The right to counsel and the assistance of one in investigations involving termination
cases is neither indispensable nor mandatory, except when the employee himself requests for one or that he manifests that
he wants a formal hearing on the charges against him.

II. GENERAL PROVISIONS

 Articles 1 to 24 of the Labor Code, as amended.

 Definition of Labor Standards Law

Labor Standards law is that which sets out the minimum terms, conditions and benefits of employment that employers
must provide or comply with and to which employees are entitled as a matter of legal rights.

Labor standards, as defined more specifically by jurisprudence, are the minimum requirements prescribed by existing
laws, rules and regulations relating to wages, hours of work, cost – of – living allowance, and other monetary and welfare
benefits, including occupational, safety, and health standards.

 Basis of the Enactment of Labor Laws

While social justice is the raison d’etre of labor laws, their basis or foundation is the police power of the State. It is the
power of Government to enact laws, within constitutional limits, to promote the order, safety, health, morals and general
welfare of society. (People vs. Vera Reyes, 67 Phil. 190.)

 Aim of the Enactment of Labor Laws

The aim and the reason and, therefore, the jurisdiction of labor laws is social justice.

Social justice means the promotion of the welfare of all the people, the adoption by the Government of measures
calculated to insure economic stability of all the component elements of society through the maintenance of proper
economic and social equilibrium in the interrelations of the members of the community, constitutionally, through the
exercise of powers underlying the existence of all governments, on the time-honored principle of salus populi est suprema
lex.

III. REGULATION OF RECRUITMENT AND PLACEMENT ACTIVITIES

Article 13 (b), Labor Code, as amended

Art. 13. Definitions. – (b) “Recruitment and placement” refers to any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring of workers, and includes referrals, contract services, promising or advertising
for employment, locally or abroad, whether for profit or not: Provided that any person or entity, in any manner, offers or
promises for a fee, employment to two or more persons shall be deemed to be engaged in recruitment and placement.

Article 25 to 42. Labor Code, as amended

RA 8042 as amended by RA10022

Perfection and Commencement of Overseas Employment Contracts

Santiago v. CF Sharp Crew Management, Inc. (GR No. 162419, July 10, 2007)

However, a distinction must be made between the perfection of the employment contract and the commencement of the
employer-employee relationship. The perfection of the contract, which in this case coincided with the date of execution
thereof, occurred when petitioner and respondent agreed on the object and the cause, as well as the rest of the terms and
conditions therein. The commencement of the employer-employee relationship, as earlier discussed, would have taken
place had petitioner been actually deployed from the point of hire. Thus, even before the start of any employer-employee
relationship, contemporaneous with the perfection of the employment contract was the birth of certain rights and
obligations, the breach of which may give rise to a cause of action against the erring party.

Stolt-Nielsen Transportation Group, Inc. v. Medequillo, Jr. (GR No. 177498, January 18, 2012)

We rule that distinction must be made between the perfection of the employment contract and the commencement of the
employer-employee relationship. The perfection of the contract, which in this case coincided with the date of execution
thereof, occurred when petitioner and respondent agreed on the object and the cause, as well as the rest of the terms and
conditions therein. The commencement of the employer-employee relationship, as earlier discussed, would have taken
place had petitioner been actually deployed from the point of hire. Thus, even before the start of any employer-employee
relationship, contemporaneous with the perfection of the employment contract was the birth of certain rights and
obligations, the breach of which may give rise to a cause of action against the erring party.

Bright Maritime Corporation v. Fantonial (GR No. 165935, February 8, 2012)

An employment contract, like any other contract, is perfected at the moment (1) the parties come to agree upon its terms;
and (2) concur in the essential elements thereof: (a) consent of the contracting parties, (b) object certain which is the
subject matter of the contract, and (c) cause of the obligation. The object of the contract was the rendition of service by
respondent on board the vessel for which service he would be paid the salary agreed upon.

Management Prerogatives and Security of Tenure of OFWs

Philippine-Singapore Transport Services, Inc. v. NLRC (GR No. 95449, August 18, 1997)

The power to dismiss an employee is a recognized prerogative that is inherent in the employer's right to freely manage and
regulate his business.

Such right, however, is subject to regulation by the State, basically in the exercise of its paramount police power. 

No less than the Constitution recognizes and guarantees the labor's right to security of tenure. Under the Labor Code of
the Philippines, as amended, specifically, Article 279 of the said Code, the security of tenure has been construed to mean
as that "the employer shall not terminate the services of an employee except for a just cause or when authorized" by the
Code. The two facets of this legal provision are: (a) the legality of the act of dismissal; and (b) the legality in the manner
of dismissal. The illegality of the act of dismissal constitutes discharge without just cause, while illegality in the manner
of dismissal is dismissal without due process.

Sameer Overseas Placement Agency, Inc. v. Cabiles (GR No. 170139, August 5, 2014)

Management prerogative is recognized in law and in our jurisprudence.

This prerogative, however, should not be abused. It is "tempered with the employee’s right to security of tenure." Workers
are entitled to substantive and procedural due process before termination. They may not be removed from employment
without a valid or just cause as determined by law and without going through the proper procedure.

Security of tenure for labor is guaranteed by our Constitution.

By our laws, overseas Filipino workers (OFWs) may only be terminated for a just or authorized cause and after
compliance with procedural due process requirements.

PCL Shipping Philippines, Inc. v. NLRC (GR No. 148418, July 28, 2005)

The unflinching rule in illegal dismissal cases is that the employer bears the burden of proof to show that the dismissal is
for just and valid cause and failure to do so would necessarily mean that the dismissal was illegal.  Thus, to effect a
completely valid and unassailable dismissal, an employer must show not only a sufficient ground therefore but must also
prove that procedural due process has been observed by giving the employee two (2) notices, (1) of the intention to
dismiss and (2) the decision to dismiss.

Triple Eight Integrated Services, Inc. v. NLRC (GR No. 129584, December 3, 1998)

Article 284 of the Labor Code is clear on the matter of termination by reason of disease or illness, viz:
Art. 284. Disease as a ground for termination An employer may terminate the services of an employee who has been
found to be suffering from any disease and whose continued employment is prohibited by law or prejudicial to his health
as well as the health of his co-employees: x x x.

Specifically, Section 8, Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code provides:

Sec. 8. Disease as a ground for dismissal Where the employee suffers from a disease and his continued employment is
prohibited by law or prejudicial to his health or to the health of his co-employees, the employer shall not terminate his
employment unless there is a certification by competent public authority that the disease is of such nature or at such a
stage that it cannot be cured within a period of six (6) months with proper medical treatment. If the disease or ailment can
be cured within the period, the employer shall not terminate the employee but shall ask the employee to take a leave. The
employer shall reinstate such employee to his former position immediately upon the restoration of his normal health.
(Underscoring supplied)

Obligation of Recruitment Agencies to OFWs

Nahas v. Olarte (GR No. 169247, June2, 2014)

As a final note, it is worth stating that recruitment agencies, as part of their bounden duty to protect the welfare of the
Filipino workers sent abroad from whom they take their profit, should in conscience not add to the misery of maltreated
and abused Filipino workers by denying them the reparation to which they are entitled. Instead, they must "faithfully
comply with their government prescribed responsibilities" and be the first to ensure the welfare of the very people upon
whose patronage their industry thrives.

Becmen Service Exporter and Promotion, Inc. v. Spouses Cuaresma (GR No. 182978-79, April 7, 2009)

In a foreign land where OFWs are likely to encounter uneven if not discriminatory treatment from the foreign
government, and certainly a delayed access to language interpretation, legal aid, and the Philippine consulate, the
recruitment agencies should be the first to come to the rescue of our distressed OFWs since they know the employers and
the addresses where they are deployed or stationed. Upon them lies the primary obligation to protect the rights and ensure
the welfare of our OFWs, whether distressed or not.

Article 19 of the Civil Code provides that every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith. Article 21 of the Code states that any
person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy
shall compensate the latter for the damage. And, lastly, Article 24 requires that in all contractual, property or other
relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental
weakness, tender age or other handicap, the courts must be vigilant for his protection.

Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social
legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public
policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of
sex, race and creed, and regulate the relations between workers and employers. This ruling is likewise rendered imperative
by Article 17 of the Civil Code which states that laws which have for their object public order, public policy and good
customs shall not be rendered ineffective by laws or judgments promulgated, or by determinations or conventions agreed
upon in a foreign country.

The relations between capital and labor are so impressed with public interest, and neither shall act oppressively against the
other, or impair the interest or convenience of the public. 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.

Interpretation of Overseas Employment

Centro Project Manpower Services Corporation v. Naluis & CA (GR No. 160123, June 17, 2015)

It is fundamental that in the interpretation of contracts of employment, doubts are generally resolved in favor of the
worker. It is imperative to uphold this rule herein. Hence, any doubt or vagueness in the provisions of the contract of
employment should have been interpreted and resolved in favor of Naluis.

PCL Shipping Philippines, Inc. and U-Ming Marine Transport Corp. v. NLRC (GR No. 153031, December 14, 2006)

The provisions of the Constitution as well as the Labor Code which afford protection to labor apply to Filipino employees
whether working within the Philippines or abroad. Moreover, the principle of lex loci contractus (the law of the place
where the contract is made) governs in this jurisdiction. In the present case, it is not disputed that the Contract of
Employment entered into by and between petitioners and private respondent was executed here in the Philippines with the
approval of the Philippine Overseas Employment Administration (POEA). Hence, the Labor Code together with its
implementing rules and regulations and other laws affecting labor apply in this case.

Breach of Contract of Overseas Employment Contracts

PERT/CPM Manpower Exponent Co., Inc. v. Vinuya, et.al (GR No. 192528, September 5, 2012

The agency and Modern Metal committed breach of contract. Aggravating the contract substitution imposed upon them by
their employer, the respondents were made to suffer substandard (shocking, as they put it) working and living
arrangements. Both the original contracts the respondents signed in the Philippines and the appointment letters issued to
them by Modern Metal in Dubai provided for free housing and transportation to and from the jobsite. The original
contract mentioned free and suitable housing. Although no description of the housing was made in the letters of
appointment except: "Accommodation: Provided by the company," it is but reasonable to think that the housing or
accommodation would be "suitable."

C.F. Sharp & Co. Inc. and Rocha v. Pioneer Insurance & Surety Corp. (GR No. 179469, February 15, 2012)

Under Article 1315 of the Civil Code, a contract is perfected by mere consent and from that moment the parties are bound
not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their
nature, may be in keeping with good faith, usage and law.

An employment contract, like any other contract, is perfected at the moment (1) the parties come to agree upon its terms;
and (2) concur in the essential elements thereof: (a) consent of the contracting parties, (b) object certain which is the
subject matter of the contract and (c) cause of the obligation. Despite the fact that the employer-employee relationship has
not commenced due to the failure to deploy respondents in this case, respondents are entitled to rights arising from the
perfected Contract of Employment, such as the right to demand performance by C.F. Sharp of its obligation under the
contract.

The commencement of an employer-employee relationship must be treated separately from the perfection of an
employment contract.

OSM Shipping Philippines, Inc. v. NLRC (GR N., 138193, March 5, 2003)

An employment contract, like any other contract, is perfected at the moment (1) the parties come to agree upon its terms;
and (2) concur in the essential elements thereof: (a) consent of the contracting parties, (b) object certain which is the
subject matter of the contract and (c) cause of the obligation. Based on the perfected contract, Private Respondent
Guerrero complied with his obligations thereunder and rendered his services on board the vessel. Contrary to petitioner's
contention, the contract had an object, which was the rendition of service by private respondent on board the vessel. The
non-deployment of the ship overseas did not affect the validity of the perfected employment contract.

Unica v. ANSCOR Swine Ship Management Corp. (GR No. 184318, February 12, 2014)

It is a settled rule that seafarers are considered contractual employees. Their employment is governed by the contracts they
sign every time they are rehired and their employment is terminated when the contract expires. Their employment is
contractually fixed for a certain period of time. Thus, when petitioner's contract ended on October 25, 2000, his
employment is deemed automatically terminated, there being no mutually-agreed renewal or extension of the expired
contract.

Prohibition in Contract Substitution

Princess Joy Placement and General Services, Inc. v. Binalla (GR No. 197005, June 4, 2014)

Binalla was a victim of contract substitution. He worked under an employment contract whose terms were inferior to the
terms certified by the POEA. Under the four-year contract he signed and implemented by his employer, Al Adwani, he
was paid only SR1500.00 or US$400 a month; whereas, under the POEA- certified two-year contract, he was to be paid
$550.00. The POEA-certified contract – for all intents and purposes and despite his claim that his signature on the
certified contract was forged – was the contract that governed Binalla’s employment with Al Adwani as it was the
contract that the Philippine government officially recognized and which formed the basis of his deployment to Saudi
Arabia. Clearly, the four-year contract signed by Binalla substituted for the POEA-certified contract.

Under Article 34 (i) of the Labor Code on prohibited practices, "it shall be unlawful for any individual, entity, licensee, or
holder of authority to substitute or alter employment contracts approved and verified by the Department of Labor and
Employment from the time of actual signing thereof by the parties up to and including the periods of expiration of the
same without the approval of the Secretary of Labor." Further, contract substitution constitutes "illegal recruitment" under
Article 38 (I) of the Code.

Nisda v. Sea Serve Maritime Agency (GR No. 179177, July 23, 2009)

In Placewell International Services Corporation v. Camote, we held that the subsequently executed side agreement of an
overseas contract worker with the foreign employer is void, simply because it is against our existing laws, morals and
public policy. The subsequent agreement cannot supersede the terms of the standard employment contract approved by the
POEA. Republic Act No. 8042, commonly known as the Migrant Workers Act of 1995, expressly prohibits the
substitution or alteration, to the prejudice of the worker, of employment contracts already approved and verified by the
Department of Labor and Employment (DOLE) from the time of the actual signing thereof by the parties up to and
including the period of the expiration of the same, without the approval of DOLE. Since the second employment contract
petitioner Nisda signed with respondent ADAMS was void for not having been sanctioned by the POEA, then petitioner
Nisda’s employment with respondent ADAMS was still governed by his POEA-SEC until his repatriation to
the Philippines on 17 July 2002.

Placewell International Services Corp. v. Camote (GR No. 169973, June 26, 2006)

R.A. No. 8042 explicitly prohibits the substitution or alteration to the prejudice of the worker, of employment contracts
already approved and verified by the Department of Labor and Employment (DOLE) from the time of actual signing
thereof by the parties up to and including the period of the expiration of the same without the approval of the
DOLE. Thus, we held in Chavez v. Bonto-Perez that the subsequently executed side agreement of an overseas contract
worker with her foreign employer which reduced her salary below the amount approved by the POEA is void because it is
against our existing laws, morals and public policy. The said side agreement cannot supersede her standard employment
contract approved by the POEA.

Applying the same rule in the case at bar, the unauthorized alteration in the employment contract of respondent,
particularly the diminution in his salary from US$370.00 to SR 800.00 per month, is void for violating the POEA-
approved contract which set the minimum standards, terms, and conditions of his employment.

Definition of Illegal Recruitment

People v. Tolentino (GR No. 208686, July 1, 2015)

Unlike illegal recruitment as defined under the Labor Code which is limited to recruitment activities undertaken by non-
licensees or non-holders of authority, under Article 6 of RA 8042, illegal recruitment (for overseas employment) may be
committed not only by non-licensees or non-holders of authority but also by licensees or holders of authority. Article 6
enumerates thirteen acts or practices [(a) to (m)] which constitute illegal recruitment, whether committed by any person,
whether a non-licensee, non-holder, licensee or holder of authority. Except for the last two acts [(l) and (m)] on the list
under Article 6 of RA8042, the first eleven acts or practices are also listed in Article 3414 of the Labor Code under the
heading "Prohibited practices." Thus, under Article 34 of the Labor Code, it is unlawful for any individual, entity, licensee
or holder of authority to engage in any of the enumerated prohibited practices, but such acts or practices do not constitute
illegal recruitment when undertaken by a licensee or holder of authority. However, under Article 38(A) of the Labor
Code, when a non-licensee or non-holder of authority undertakes such "prohibited practices," he or she is liable for illegal
recruitment. RA 8042 broadened the definition of illegal recruitment for overseas employment by including thirteen acts
or practices which now constitute as illegal recruitment, whether committed by a non-licensee, non-holder, licensee or
holder of authority.

Under RA 8042, a non-licensee or non-holder of authority commits illegal recruitment for overseas employment in two
ways: (1) by any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers, and
includes referring, contract services, promising or advertising for employment abroad, whether for profit or not; and (2)
by undertaking any of the acts enumerated under Section 6 of RA 8042. On the other hand, a licensee or holder of
authority is also liable for illegal recruitment for overseas employment when he or she undertakes any of the thirteen acts
or practices [(a) to (m)] listed under Section 6 of RA 8042. To constitute illegal recruitment in large scale, the offense of
illegal recruitment must be committed against three or more persons, individually or as a group.

Suliman v. People (GR No. 190970, November 24, 2014)

The crime of illegal recruitment is defined under Section 6 of RA 8042, otherwise known as the Migrant Workers and
Overseas Filipinos Act of 1995, which provides as follows:

Sec. 6. DEFINITIONS. - For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring, procuring workers and includes referring, contact services, promising or
advertising for employment abroad, whether for profit or not, when undertaken by a non-license or non-holder of
authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor
Code of the Philippines. Provided, that such non-license or non-holder, who, in any manner, offers or promises for a fee
employment abroad to two or more persons shall be deemed so engaged. It shall likewise include the following acts,
whether committed by any persons, whether a non-licensee, non-holder, licensee or holder of authority.

(a) To charge or accept directly or indirectly any amount greater than that specified in the schedule of allowable
fees prescribed by the Secretary of Labor and Employment, or to make a worker pay any amount greater than that
actually received by him as a loan or advance;

(b) To furnish or publish any false notice or information or document in relation to recruitment or employment;

(c) To give any false notice, testimony, information or document or commit any act of misrepresentation for the
purpose of securing a license or authority under the Labor Code;

(d) To induce or attempt to induce a worker already employed to quit his employment in order to offer him
another unless the transfer is designed to liberate a worker from oppressive terms and conditions of employment;
 (e) To influence or attempt to influence any persons or entity not to employ any worker who has not applied for
employment through his agency;

(f) To engage in the recruitment of placement of workers in jobs harmful to public health or morality or to dignity
of the Republic of the Philippines;

(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor and Employment or by his duly
authorized representative;

(h) To fail to submit reports on the status of employment, placement vacancies, remittances of foreign exchange
earnings, separations from jobs, departures and such other matters or information as may be required by the
Secretary of Labor and Employment;

(i) To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the
Department of Labor and Employment from the time of actual signing thereof by the parties up to and including
the period of the expiration of the same without the approval of the Department of Labor and Employment;

(j) For an officer or agent of a recruitment or placement agency to become an officer or member of the Board of
any corporation engaged in travel agency or to be engaged directly orindirectly in the management of a travel
agency;

(k) To withhold or deny travel documents from applicant workers before departure for monetary or financial
considerations other than those authorized under the Labor Code and its implementing rules and regulations;

(l) Failure to actually deploy without valid reasons as determined by the Department of Labor and Employment;
and

(m) Failure to reimburse expenses incurred by the workers in connection with his documentation and processing
for purposes of deployment, in cases where the deployment does not actually take place without the worker's
fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered as offense involving
economic sabotage.

Illegal recruitment is deemed committed by a syndicate carried out by a group of three (3) or more persons conspiring or
confederating with one another. It is deemed committed in large scale if committed against three (3) or more persons
individually or as a group.

The persons criminally liable for the above offenses are the principals, accomplices and accessories. In case of juridical
persons, the officers having control, management or direction of their business shall be liable.

People v. Domingo (GR No.181475, April 7, 2009)

The term recruitment and placement is defined under Article 13(b) of the Labor Code of the Philippines as follows:

xxx

On the other hand, Article 38, paragraph (a) of the Labor Code, as amended, under which the accused stands charged,
provides:

xxx

From the foregoing provisions, it is clear that any recruitment activities to be undertaken by non-licensee or non-holder of
authority shall be deemed illegal and punishable under Article 39 of the Labor Code of the Philippines. Illegal
recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group.

To prove illegal recruitment in large scale, the prosecution must prove three essential elements, to wit: (1) the person
charged undertook a recruitment activity under Article 13(b) or any prohibited practice under Article 34 of the Labor
Code; (2) he/she did not have the license or the authority to lawfully engage in the recruitment and placement of workers;
and (3) he/she committed the prohibited practice against three or more persons individually or as a group.

The Court finds that the prosecution ably discharged its onus of proving the guilt beyond reasonable doubt of appellant of
the crimes charged.

That no receipt or document in which appellant acknowledged receipt of money for the promised jobs was adduced in
evidence does not free him of liability. For even if at the time appellant was promising employment no cash was given to
him, he is still considered as having been engaged in recruitment activities, since Article 13(b) of the Labor Code states
that the act of recruitment may be for profit or not. It suffices that appellant promised or offered employment for a fee to
the complaining witnesses to warrant his conviction for illegal recruitment.

Persons Liable in Illegal Recruitment

License v. Authority

Art. 13. Definitions.

(d) “License” means a document issued by the Department of Labor authorizing a person or entity to operate a private
employment agency.

(f) “Authority” means a document issued by the Department of Labor authorizing a person or association to engage in
recruitment and placement activities as a private recruitment entity

Suspension or Cancellation of License or Authority

Art. 35. Suspension and/or Cancellation of License or Authority. – The Minister of Labor shall have the power to suspend
or cancel any license or authority to recruit employees for overseas employment for violation of rules and regulation
issued by the Ministry of Labor, the Overseas Employment Development Board, or for violation of the provisions of this
and other applicable laws, General Orders and Letter of Instructions.

Romero v. People (GR No. 171644, November 23, 2011)

A non-licensee or non-holder of authority is any person, corporation or entity which has not been issued a valid license or
authority to engage in recruitment and placement by the Secretary of Labor, or whose license or authority has been
suspended, revoked or cancelled by the POEA or the Secretary.  Clearly, the creation of the POEA did not divest the
Secretary of Labor of his/her jurisdiction over recruitment and placement of activities. The governing rule is still Article
35of the Labor Code. This is further discussed in this Court's ruling in Trans Action Overseas Corp. v. Secretary of
Labor, wherein it was ruled that:

In the case of Eastern Assurance and Surety Corp. v. Secretary of Labor, we held that:

The penalties of suspension and cancellation of license or authority are prescribed for violations
of the above-quoted provisions, among others. And the Secretary of Labor has the power under Section
35 of the law to apply these sanctions, as well as the authority, conferred by Section 36, not only to
restrict and regulate the recruitment and placement activities of all agencies, but also to promulgate rules
and regulations to carry out the objectives and implement the provisions governing said
activities. Pursuant to this rule-making power thus granted, the Secretary of Labor gave the POEA, on its
own initiative or upon a filing of a complaint or report or upon request for investigation by any aggrieved
person, xxx (authority to) conduct the necessary proceedings for the suspension or cancellation of the
license or authority of any agency or entity for certain enumerated offenses including -

1) the imposition or acceptance, directly or indirectly, of any amount of money, goods or

services, or any fee or bond in excess of what is prescribed by the Administration, and

2) any other violation of pertinent provisions of the Labor Code and other relevant laws, rules and
regulations.

The Administrator was also given the power to order the dismissal of the case or the suspension of the license or
authority of the respondent agency or contractor or recommend to the Minister the cancellation thereof.

This power conferred upon the Secretary of Labor and Employment was echoed in People v. Diaz, viz.:

A non-licensee or non-holder of authority means any person, corporation or entity which has not been issued a valid
license or authority to engage in recruitment and placement by the Secretary of Labor, or whose license or authority has
been suspended, revoked or cancelled by the POEA or the Secretary.

Capitalization in Recruitment

Substantial Capitalization of P 5, 000, 000.00 under POEA IRR 2016 (Before, it was P 3M)

Elements of Illegal Recruitment

People v. Hashim, et. al. (GR No. 194255, June 13, 2012)

To be convicted of the crime of illegal recruitment committed by a syndicate, the following elements must occur:

1. The accused have no valid license or authority required by law to enable them to lawfully engage in the
recruitment and placement of workers.
2. The accused engaged in this activity of recruitment and placement by actually recruiting, deploying and
transporting.
3. Illegal recruitment was committed by three persons conspiring and confederating with one another.
As to the first element, accused-appellant admitted that she did not have a valid license to recruit persons for overseas
employment, consistent with her defense that she did not engage in the recruitment of persons for employment.

Anent the second element, both victims, AAA and BBB, narrated in great detail how they were induced by accused-
appellant to accept an employment opportunity, and how they were successfully transported from Zamboanga City to
Malaysia where they eventually worked as prostituted women.

On the third element, accused-appellant posits that the prosecution failed to prove that there were more than two persons
involved in the alleged crime of illegal recruitment, since the trial court held only two of the accused liable for the crime.
The prosecution, she alleges, failed to establish that the other accused Macky, Jun, and Tas also had no license or
authority to recruit workers for overseas employment.

Romero v. People (GR No. 171644, November 23, 2011)

The crime of illegal recruitment is committed when two elements concur, namely: (1) the offender has no valid license or
authority required by law to enable one to lawfully engage in recruitment and placement of workers; and (2) he undertakes
either any activity within the meaning of "recruitment and placement" defined under Article 13 (b), or any prohibited
practices enumerated under Article 34 of the Labor Code.

Simple Illegal Recruitment

Ritualo v. People (GR No. 178337, June 25, 2009)

Illegal recruitment is committed when two essential elements concur:

(1) that the offender has no valid license or authority required by law to enable him to lawfully engage in the recruitment
and placement of workers, and

(2) that the offender undertakes any activity within the meaning of recruitment and placement defined under Article 13(b),
or any prohibited practices enumerated under Article 34 of the Labor Code.

Large Scale Illegal Recruitment

People v. Chua (GR No. 187052, September 13, 2012)

In order to hold a person liable for illegal recruitment, the following elements must concur: (1) the offender undertakes
any of the activities within the meaning of "recruitment and placement" under Article 13(b) of the Labor Code, or any of
the prohibited practices enumerated under Article 34 of the Labor Code (now Section 6 of Republic Act No. 8042) and (2)
the offender has no valid license or authority required by law to enable him to lawfully engage in recruitment and
placement of workers. In the case of illegal recruitment in large scale, a third element is added: that the offender commits
any of the acts of recruitment and placement against three or more persons, individually or as a group. All three elements
are present in the case at bar.

Syndicated Illegal Recruitment

People v. Daud, et. al. (GR No. 197539, June 2, 2014)

To commit syndicated illegal recruitment, three elements must be established: (1) the offender undertakes either any
activity within the meaning of recruitment and placement defined under Article 13(b), or any of the prohibited practices
enumerated under Art. 34 of the Labor Code; (2) he has no valid license or authority required by law to enable one to
lawfully engage in recruitment and placement of workers; and (3) the illegal recruitment is committed by a group of three
(3) or more persons conspiring or confederating with one another.

Conspiracy to Commit Illegal Recruitment

People v. Rea, et. al. (GR No. 197049, June 10, 2013)

Conspiracy may be deduced from the mode and manner in which the offense was perpetrated; or from the acts of the
accused evincing a joint or common purpose and design, concerted action and community of interest.32

It is equally clear from the narration of private complainants that appellants, together with Azul, conspired to commit the
crime of illegal recruitment. Azul referred all private complainants to Tendenilla, who made representations that she could
deploy them abroad. It was either Azul or Tendenilla who received the payment of placement fees. And as previously
stated, Rea met some of the complainants at the training center, and accompanied some of them while in Thailand. Their
actions showed unity of purpose and, taken all together, leave no doubt that they are coconspirators.

We reiterate the findings of the Court of Appeals, to wit:

In the case at bar, it cannot be doubted that both accused-appellants indispensably cooperated and coordinated in illegally
recruiting the private complainants. From the evidence, it can be seen that the success of the scheme depended on
accused-appellants’ joint efforts. Estrellita.

People v. Temporada (GR No. 173473, December 17, 2008)

An employee of a company or corporation engaged in illegal recruitment may be held liable as principal, together with his
employer, if it is shown that he actively and consciously participated in illegal recruitment. Appellant actively took part in
the illegal recruitment of private complainants. Rogelio Legaspi testified that after introducing herself as the General
Manager of ATTC, appellant persuaded him to apply as a technician in Singapore and assured him that there was a job
market therefor. In addition to the placement fee of P35, 000.00 which he paid to accused Bernadette Miranda, he also
handed the amount of P10, 000.00 to appellant who, in turn, issued him a receipt for the total amount of P45,
000.00. Upon the other hand, Soledad Atle and Luz Minkay, who applied as factory workers in Hongkong through co-
accused, Emily Salagonos, declared that it was appellant who briefed them on the requirements for the processing of their
application, and assured them and Dennis Dimaano of immediate deployment for jobs abroad.  For her part, Evelyn
Estacio testified that aside from the placement fee of P40, 000.00 that she paid to co-accused Baby Robles in connection
with her purported overseas employment, she also gave appellant P10, 000.00 for which she was issued a receipt for the
amount of P5, 000.00.

The totality of the evidence, thus, established that appellant acted as an indispensable participant and effective
collaborator of her co-accused in the illegal recruitment of complainants. As aptly found by the CA:

Without doubt, all the acts of appellant, consisting of introducing herself to complainants as general manager of ATTC,
interviewing and entertaining them, briefing them on the requirements for deployment and assuring them that they could
leave immediately if they paid the required amounts, unerringly show unity of purpose with those of her co-accused in
their scheme to defraud private complainants through false promises of jobs abroad. There being conspiracy, appellant
shall be equally liable for the acts of her co-accused even if she herself did not personally reap the fruits of their
execution.

Illegal Recruitment Committed by Foreign National

Principle of Territoriality – Philippine laws apply to foreign nationals, committing crimes within Philippine territory.

Illegal Recruitment as Malum Prohibitum

People v. Chua (GR No. 184058, March 10, 2010)

Assuming arguendo that appellant was unaware of the illegal nature of the recruitment business of Golden Gate that does
not free her of liability either. Illegal Recruitment in Large Scale penalized under Republic Act No. 8042, or The Migrant
Workers and Overseas Filipinos Act of 1995, is a special law, a violation of which is malum prohibitum, not malum in se.
Intent is thus immaterial. And that explains why appellant was, aside from Estafa, convicted of such offense.

[I]llegal recruitment is malum prohibitum, while estafa is malum in se. In the first, the criminal intent of the accused is
not necessary for conviction. In the second, such an intent is imperative. Estafa under Article 315, paragraph 2, of the
Revised Penal Code, is committed by any person who defrauds another by using fictitious name, or falsely pretends to
possess power, influence, qualifications, property, credit, agency, business or imaginary transactions, or  by means
of similar deceits executed prior to or simultaneously with the commission of fraud. (Emphasis supplied)

Illegal Recruitment; Testimonies of Witnesses

People v. Gasacao (GR No. 168445, November 11, 2005)

The foregoing testimonies of the private complainants clearly established that appellant is not a mere employee of Great
Eastern Shipping Agency Inc. As the crewing manager, it was appellant who made representations with the private
complainants that he can secure overseas employment for them upon payment of the cash bond.

It is well settled that to prove illegal recruitment, it must be shown that appellant gave complainants the distinct
impression that he had the power or ability to send complainants abroad for work such that the latter were convinced to
part with their money in order to be employed. Appellants act of promising the private complainants that they will be
deployed abroad within three months after they have paid the cash bond clearly shows that he is engaged in illegal
recruitment.

The trial courts appreciation of the complainant’s testimonies deserves the highest respect since it was in a better position
to assess their credibility.

Even assuming that appellant was a mere employee, such fact is not a shield against his conviction for large scale illegal
recruitment. In the case of People v. Cabais, we have held that an employee of a company or corporation engaged in
illegal recruitment may be held liable as principal, together with his employer, if it is shown that he actively and
consciously participated in the recruitment process. We further stated that:
 In this case, evidence showed that accused-appellant was the one who informed complainant of job
prospects in Korea and the requirements for deployment. She also received money from them as
placement fees. All of the complainants testified that they personally met the accused-appellant and
transacted with her regarding the overseas job placement offers. Complainants parted with their money,
evidenced by receipts signed by accused Cabais and accused Forneas. Thus, accused-appellant actively
participated in the recruitment of the complainants.

Clearly, the acts of appellant vis--vis the private complainants, either as the crewing manager of Great Eastern
Shipping Agency Inc. or as a mere employee of the same, constitute acts of large scale illegal recruitment which should
not be countenanced.

We find no reason to deviate from the findings of the trial court that appellant is guilty beyond reasonable doubt of large
scale illegal recruitment. It was established that he promised overseas employment to five applicants, herein private
complainants. He interviewed and required them to complete and submit documents purportedly needed for their
employment.

People v. Alzona (GR No. 132029, July 30, 2004)

It is important to keep in mind the oft-repeated rule that:

. . . where the issue is on credibility, the findings of the trial court will generally not be disturbed. The trial court
has the advantage of hearing the witnesses and observing their conduct during the trial, circumstances that carry
great weight in appreciating credibility. The trial court is thus in a better position to settle such an issue.

We have carefully reviewed the records of the case and find no cogent reason to overturn the factual findings of the trial
court, especially its evaluation of the credibility of the prosecution witnesses, thus: "the testimonies of private
complainants . . . given in clear, logical and straightforward manner, mentioning details of the incidents that could not
have been merely concocted, reflecting spontaneity and sincerity in the narration of events, are indicative of the truth of
what actually happened."

The testimonies of the four private complainants, viewed in their totality, have indeed established that appellant and
Miranda cooperated with each other in convincing private complainants to pay them a placement fee of P38, 000.00 for
employment as factory workers in Korea, despite the absence of the required license therefor.

Illegal Recruitment; Denial and Alibi as Defense

People v. Velasco, et. al. (GR No. 195668, June 25, 2014)

Denial, essentially a negation of a fact, does not prevail over an affirmative assertion of the fact.1âwphi1 Thus, courts –
both trial and appellate – have generally viewed the defense of denial in criminal cases with considerable caution, if not
with outright rejection. Such judicial attitude comes from the recognition that denial is inherently weak and unreliable by
virtue of its being an excuse too easy and too convenient for the guilty to make. To be worthy of consideration at all,
denial should be substantiated by clear and convincing evidence. The accused cannot solely rely on her negative and self-
serving negations, for denial carries no weight in law and has no greater evidentiary value than the testimony of credible
witnesses who testify on affirmative matters.13 It is no different here.

We concur with the RTC and the CA that Inovero was criminally liable for the illegal recruitment charged against her.
Strong and positive evidence demonstrated beyond reasonable doubt her having conspired with her co-accused in the
recruitment of the complainants. The decision of the CA amply recounted her overt part in the conspiracy. Under the law,
there is a conspiracy when two or more persons come to an agreement concerning the commission of a felony, and decide
to commit it.

Illegal Recruitment; Affirmative Testimony v. Negative Testimony

People v. Bartolome (GR No. 129486, July 4, 2008)

Accused-appellant cannot plausibly escape liability for her criminal acts by conveniently pointing to and passing the
blame on Capawan as the illegal recruiter. Like the trial court, we entertain serious doubts on this self-serving and
gratuitous version of accused-appellant. What is more, her denials cannot prevail over the positive declaration of the
prosecution witnesses. It is basic that affirmative testimony of persons who are eyewitnesses of the events or facts asserted
easily overrides negative testimony.

Prosecution of Illegal Recruitment

People v. Salvatierra (GR No. 200884, June 24, 2014)

It is necessary that the prosecution prove the concurrence of the following elements: (1) the offender undertakes any of the
activities within the meaning of "recruitment and placement" under Article 13 (b) of the labor Code, or any of the
prohibited practices enumerated under Article 34 of the Labor Code (now Section 6 of RA 8042) and (2) the offender has
no valid license or authority required by law to enable him to lawfully engage in recruitment and placement of workers. In
the case of illegal recruitment in large scale, a third element is added: that the offender commits any of the acts of
recruitment and placement against three or more persons, individually or as a group.

Illegal Recruitment; Admissibility of POEA Certification

People v. Ochoa (GR No. 173792, August 31, 2011)

Also worth re-stating is the justification provided by the Court of Appeals for the admissibility of the POEA
certification, viz: 

The certificate is admissible. It is true that the trial court, during the bail hearings, rejected the certification for being
hearsay because at that stage of the proceedings, nobody testified yet on the document. However, as the trial progressed,
an officer of the POEA, specifically in its licensing branch, had testified on the document. It does not follow, then, as
appellant would want this court to assume, that evidence rejected during bail hearings could not be admissible during the
formal offer of evidence.

This court admits that Ms. Cory Aquino was not the signatory of the document. Nevertheless, she could testify on the
veracity of the document because she is one of the officers of the licensing branch of the POEA.  Being so, she could
testify whether a certain person holds a license or not. It bears stressing that Ms. Aquino is familiar with the signature of
Mr. Mateo because the latter is her superior. Moreover, as testified to by Ms. Aquino, that as a policy in her office, before
a certification is made, the office checks first whether the name of the person requested to be verified is a reported
personnel of any licensed agency by checking their index and computer files.

As found in the offices records, appellant, in her personal capacity, is neither licensed nor authorized to recruit workers
for overseas employment. It bears stressing, too, that this is not a case where a certification is rendered inadmissible
because the one who prepared it was not presented during the trial. To reiterate, an officer of the licensing branch of the
POEA, in the person of Ms. Aquino, testified on the document. Hence, its execution could be properly determined and the
veracity of the statements stated therein could be ascertained.

Illegal Recruitment; Non-Collection of Fees

Sharp Crew Management v. Sec. Español, Jr. (GR No. 155903, September 14, 2007)

The fact that C.F. Sharp did not receive any payment during the interviews is of no moment.  From the language of Article
13(b), the act of recruitment may be for profit or not. Notably, it is the lack of the necessary license or authority, not the
fact of payment that renders the recruitment activity of LCL unlawful.

Illegal Recruitment; Absence of Receipt or Proof of Payment

People v. Jamilosa (GR No. 169076, January 27, 2007)

The failure of the prosecution to adduce in evidence any receipt or document signed by appellant where he acknowledged
to have received money and liquor does not free him from criminal liability. Even in the absence of money or other
valuables given as consideration for the services of appellant, the latter is considered as being engaged in recruitment
activities.

It can be gleaned from the language of Article 13(b) of the Labor Code that the act of recruitment may be for profit or
not. It is sufficient that the accused promises or offers for a fee employment to warrant conviction for illegal recruitment.

People v. Dionisio, et. al. (GR No. 130170, January 29, 2002)

Moreover, it was held in a number of cases that even the absence of receipts is not fatal to the case of the prosecution, for
as long as it is clearly established through the witnesses’ respective testimonies, that the accused is the one involved in
prohibited recruitment.

Illegal Recruitment; Effect of Affidavit of Desistance

People v. Gutierrez-Timod (GR No. 124439, February 5, 2004)

The Affidavits of Desistance executed by two of the complainants deserve little weight. The Court attaches no persuasive
value to affidavits of desistance, especially when executed as an afterthought. As held in the case of  People v. Ubina, "it
would be a dangerous rule for courts to reject testimonies solemnly taken before the courts of justice simply because the
witnesses who had given them later on changed their mind for one reason or another; for such rule would make solemn
trials a mockery and place the investigation of truth at the mercy of unscrupulous witnesses."

People v. Benedictus (GR No. 123906, March 27, 1998)

The Affidavit of Desistance deserves scant consideration. In the first place, it was executed after the complainants testified
under oath and in open court that they were offered job placements abroad and were made to pay placement or processing
fees. In the second place, the affidavit did not expressly repudiate their testimony in court on the recruitment activities of
the appellant. In fact, the appellant admitted that the complaining witnesses executed it after she had paid them back the
amounts they had given her.8 The affidavit was more of an afterthought arising from personal consideration of pity.

We have said before that courts should not attach persuasive value to affidavits of desistance, especially when executed as
an afterthought. Moreover, it would be a dangerous rule for courts to reject testimonies solemnly taken before the courts
of justice simply because the witnesses who had given them later on changed their mind for one reason or another, for
such rule would make solemn trial a mockery and place the investigation of truth at the mercy of unscrupulous
witnesses.10 It must always be remembered that a criminal offense is an outrage to the sovereign State. To the State
belongs the power to prosecute and punish crimes. While there may be a compromise upon the civil liability arising from
an offense, such compromise shall not extinguish the public action for the imposition of the legal penalty.

Illegal Recruitment; Good Samaritan as a Defense

People v. Meris (GR Nos. 117145-50 & 117447, March 28, 2000)

For her part, accused-appellant claims that she merely helped complainants find an agency that could secure for them
employment overseas. She acted as a "good samaritan" by facilitating their quest for a better economic status. She denied
receiving the fees paid by complainants and asserts that it was Julie Micua who recruited complainants and collected the
placement fees for overseas employment. An examination of the records, however, reveals that accused-appellant is as
culpable as Julie Micua.

As to which of the contending claims should be believed is fundamentally an issue of credibility. Well settled is the rule
that the issue of credibility is the domain of the trial that had observed the deportment and manner of the witnesses as they
testified. The findings of facts of a trial court, arrived at only after a hearing and evaluation of what can usually be
expected to be conflicting testimonies of witnesses certainly deserve respect by an appellant court. We find no cogent
reason to depart from this time-honored doctrine.

Illegal Recruitment; Issuance of Search Warrant/Warrant of Arrest

Bagawili v. People (GR No. 133563, March 4, 1999)

Sec. 5. Arrest Without Warrant; when lawful — A peace officer or a private person may, without a warrant, arrest a
person:

xxx xxx xxx

(b) when an offense has in fact just been committed, and he has personal knowledge of facts indicating that the person to
be arrested has committed it;

The Court of Appeals rationalized:

And in the case at bar, it can be said that when Garcia filled up the application forms for work aboard and paid P2,000.00
to Boneng as partial payment or advance payment of the placement fees required and was promised she could work in
Hongkong by Boneng, the latter was actually engaged in illegal recruitment as she had no license to recruit admittedly.

Hence, at that precise time Boneng was, already committing an offense of illegal recruitment in the presence of Garcia.
Garcia could have very well arrested her on the spot but she did not as she explained civilian agents are cautioned not to
effect arrest by the CIS authorities.

And when Garcia left and went downstairs to tell her CIS team that she already gave the P2,000.00 marked money to
Boneng after posing as an applicant for work abroad and describing Boneng as a short fat lady wearing pants and white T-
shirt and forthwith Nevado and Dulay 10 went up to the second floor to apprehend Boneng and recover the marked money
of P2,000.00 and the documents pertaining to the recruitment activity of Boneng has just committed an offense and the
effects thereof are still visible in her office, the marked money and documents of recruitment being there, when Nevado
and Dulay of the CIS, both peace officers, went up to effect her arrest.

xxx xxx xxx

The arrest therefore was legal as an exception under warrantless arrest under Section 5 (b) of Rule 113 of the Rules of
Court . . .

Salazar v. Achacoso (GR No. 81510, March 14, 1990)

The Court finds that a lone issue confronts it: May the Philippine Overseas Employment Administration (or the Secretary
of Labor) validly issue warrants of search and seizure (or arrest) under Article 38 of the Labor Code? It is also an issue
squarely raised by the petitioner for the Court's resolution.
Under the new Constitution, which states:

. . . no search warrant or warrant of arrest shall issue except upon probable cause to be determined
personally by the judge after examination under oath or affirmation of the complainant and the witnesses
he may produce, and particularly describing the place to be searched and the persons or things to be
seized.

it is only a judge who may issue warrants of search and arrest.

xxx

We reiterate that the Secretary of Labor, not being a judge, may no longer issue search or arrest warrants. Hence, the
authorities must go through the judicial process. To that extent, we declare Article 38, paragraph (c), of the Labor Code,
unconstitutional and of no force and effect.

Penalties for Illegal Recruitment in Large Scale

People v. Sadiosa (GR No. 107084, May 15, 1998)

In the case at bar, accused-appellant could have been validly charged separately with estafa under the same set of facts in
the illegal recruitment case, but she was fortunate enough not to have been so charged. Nevertheless, there is no doubt
from a reading of the information, that it accurately and clearly avers all of the ingredients that constitute illegal
recruitment in large scale. The prosecutor simply captioned the information with the generic name of the offense under the
Labor Code illegal recruitment. No misconceptions would have been engendered had he been more accurate in the
drafting of the information considering that there are at least four kinds of illegal recruitment under the law.  One is simple
illegal recruitment committed by a licensee or holder of authority. The law penalizes such offender with imprisonment of
not less than two years nor more than five years or a fine of not less than P10,000 nor more than P50,000, or both such
imprisonment and fine. Any person who is neither a licensee nor a holder of authority commits the second type of illegal
recruitment. The penalty imposed for such offense is imprisonment of not less than four years nor more than eight years or
a fine of not less than P20,000 nor more than P100,000 or both such imprisonment and fine at the discretion of the
court. The third type of illegal recruitment refers to offenders who either commit the offense alone or with another person
against three or more persons individually or as a group. A syndicate or a group of three or more persons conspiring and
confederating with one another in carrying out the act circumscribed by the law commits the fourth type of illegal
recruitment by the law. For the third and fourth types of illegal recruitment the law prescribes the penalty of life
imprisonment and a fine of P100,000.

Penalties for Estafa in relation to Illegal Recruitment

People v. Dujua, et. al. (GR No. 149014-16, February 5, 2004)

The following elements of estafa, as defined by Article 315 (2) (a) are also present in this case, to wit: (1) the accused has
defrauded the offended party by means of abuse of confidence or by deceit; and (2) as a result, damage or prejudice,
which is capable of pecuniary estimation, is caused to the offended party or third person. Appellant misrepresented
himself to Jaime Cabus and Roberto Perlas as one who can make arrangements for job placements in Taiwan and Japan
and, by reason of such misrepresentations, the two complainants were induced to part with their money, causing them
damage.

The RTC, however, erred in imposing upon appellant, for each count of estafa, the penalty of two (2) years, eleven (11)
months and eleven (11) days of prision correccional, as minimum, to four (4) years and two (2) months of prision
correccional, as maximum. Article 315 of the Revised Penal Code provides that:

ART. 315. Swindling (estafa). – Any person who shall defraud another by any of the means mentioned herein below shall
be punished by:

1st. The penalty of prision correccional in its maximum period to prision mayor in its minimum period, if the amount of
the fraud is over 12,000 but does not exceed 22,000 pesos, and if such amount exceeds the latter sum, the penalty
provided in this paragraph shall be imposed in its maximum period, adding one year for each additional 10,000 pesos; but
the total penalty which may be imposed shall not exceed twenty years. In such case, and in connection with the accessory
penalties which may be imposed and for the purpose of the other provisions of this Code, the penalty shall be
termed prision mayor or reclusion temporal, as the case may be.

People v. Fernandez (GR No. 199211, June 4, 2014)

As regards the penalties imposed in the crime of estafa, Article 315 of the RPC provides that an accused found guilty of
estafa shall be sentenced to the penalty of prision correccional in its maximum period to prision mayor in its minimum
period, if the amount of the fraud is over 12,000 but does not exceed 22,000 pesos, and if such amount exceeds the latter
sum, the penalty provided in this paragraph shall be imposed in its maximum period, adding one year for each additional
10,000 pesos.

Large Scale Illegal Recruitment; Application of ISLAW

People v. Fernandez (GR No. 199211, June 4, 2014)

Applying the Indeterminate Sentence Law, the minimum term is taken from the penalty next lower or anywhere within
prision correccional minimum and medium (i.e., from 6 months and 1 day to 4 years and 2 months). On the other hand,
the maximum term is taken from the prescribed penalty of prision correccional maximum to prision mayor minimum in its
maximum period, adding 1 year of imprisonment for every ₱10,000.00 in excess of ₱22,000.00, provided that the total
penalty shall not exceed 20 years.

Applying these principles to the present case, the maximum period of the prescribed penalty of prision correccional
maximum to prision mayor minimum is not prision mayor minimum as apparently assumed by the RTC. To compute the
maximum period of the prescribed penalty, prision correccional maximum to prision mayor minimum should be divided
into three equal portions of time each of which portion shall be deemed to form one period in accordance with Article65
of the RPC. Following this procedure, the maximum period of prision correccional maximum to prision mayor minimum
is from 6 years, 8 months and 21 days to 8 years. The incremental penalty, when proper, shall thus be added to anywhere
from 6 years, 8 months and 21 days to 8 years, at the discretion of the court.

Illegal Recruitment; Extent of Civil Liability

People v. Velasco, et. al. (GR No. 195668, June 25, 2014)

That the civil liability should be made part of the judgment by the RTC and the CA was not disputable. The Court pointed
out in Bacolod v. People19 that it was "imperative that the courts prescribe the proper penalties when convicting the
accused, and determine the civil liability to be imposed on the accused, unless there has been a reservation of the action to
recover civil liability or a waiver of its recovery," because:

It is not amiss to stress that both the RTC and the CA disregarded their express mandate under Section 2, Rule 120 of the
Rules of Court to have the judgment, if it was of conviction, state: "(1) the legal qualification of the offense constituted by
the acts committed by the accused and the aggravating or mitigating circumstances which attended its commission; (2) the
participation of the accused in the offense, whether as principal, accomplice, or accessory after the fact; (3) the penalty
imposed upon the accused; and (4) the civil liability or damages caused by his wrongful act or omission to be recovered
from the accused by the offended party, if there is any, unless the enforcement of the civil liability by a separate civil
action has been reserved or waived." Their disregard compels us to act as we now do lest the Court be unreasonably seen
as tolerant of their omission. That the Spouses Cogtas did not themselves seek the correction of the omission by an appeal
is no hindrance to this action because the Court, as the final reviewing tribunal, has not only the authority but also the duty
to correct at any time a matter of law and justice.

Illegal Recruitment v. Estafa v. Trafficking in Persons

Prohibited Activities/Practices (Article 34, Labor Code as amended)

Art. 34. PROHIBITED PRACTICES

It shall be unlawful for any individual, entity, licensee, or holder of authority:

(a) To charge or accept, directly or indirectly, any amount greater than that specified in the schedule of allowable
fees prescribed by the Secretary of Labor, or to make a worker pay any amount greater than that actually
received by him as a load or advance;
(b) To furnish or publish any false notice of information or document in relation to recruitment or employment;
(c) To give any false notice, testimony, information or document or commit any act of misrepresentation for the
purpose of secreting a license or authority under this Code;
(d) To induce or to attempt to induce a worker already employed to quit his employment in order to offer him to
another unless the transfer is designated to liberate the worker from the oppressive terms and condition of
employment;
(e) To influent or to attempt to influence any person or entity not to employ any worker who has not applied for
employment through his agency;
(f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to the
dignity of the Republic of the Philippines;
(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly authorized
representatives;
(h) To fail to file report on the status of employment, placement, vacancies, remittances of foreign exchange
earnings, separation from jobs, departures and such other matters or information as may be required by the
Secretary of Labor;
(i) To substitute or alter employment contracts approved and verified by the Department of Labor from the time
of actual signing thereof by the parties up to and including the periods of expiration of the same without the
approval of the Secretary of Labor;
(j) To become an officer or member of the Board of any corporation engaged in travel agency or to be engaged
directly or indirectly in the management of a travel agency; and
(k) To withhold or deny travel documents from application workers before departure for monetary or financial
considerations other than those authorized under the Code and its implementing rules and regulations.
Ban on Direct Hiring

Art. 18. BAN ON DIRECT HIRING

No employer may hire a Filipino worker for overseas employment except through the Boards and entities
authorized by the Department of Labor and Employment. Direct hiring by members of the diplomatic corps, international
organizations and such other employers as may be allowed by the Department of Labor and Employment is exempted
from this provision.

Liability of Local Recruitment Agency and Foreign Employer

Gagui v. Dejero (GR No. 196036, Octover 23, 2013)

In Sto. Tomas v. Salac,41 we had the opportunity to pass upon the constitutionality of this provision. We have thus
maintained:

The key issue that Gumabay, et al. present is whether or not the 2nd paragraph of Section 10, R.A. 8042, which holds the
corporate directors, officers, and partners of recruitment and placement agencies jointly and solidarily liable for money
claims and damages that may be adjudged against the latter agencies, is unconstitutional.

xxxx

But the Court has already held, pending adjudication of this case, that the liability of corporate directors and officers is not
automatic. To make them 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. In the case of
Becmen and White Falcon, while there is evidence that these companies were at fault in not investigating the cause of
Jasmin’s death, there is no mention of any evidence in the case against them that intervenors Gumabay, et al., Becmen’s
corporate officers and directors, were personally involved in their company’s particular actions or omissions in Jasmin’s
case. (Emphasis supplied)

Hence, for petitioner to be found jointly and solidarily liable, there must be a separate finding that she was remiss in
directing the affairs of the agency, resulting in the illegal dismissal of respondents. Examination of the records would
reveal that there was no finding of neglect on the part of the petitioner in directing the affairs of the agency. In fact,
respondents made no mention of any instance when petitioner allegedly failed to manage the agency in accordance with
law, thereby contributing to their illegal dismissal.

Sunace International Management Services v. NLRC (GR No. 161757, January 25, 2006)

The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the principal, employer Xiong, not the
other way around. The knowledge of the principal-foreign employer cannot, therefore, be imputed to its agent Sunace.

 There being no substantial proof that Sunace knew of and consented to be bound under the 2-year employment contract
extension, it cannot be said to be privy thereto. As such, it and its owner cannot be held solidarily liable for any of Divinas
claims arising from the 2-year employment extension. As the New Civil Code provides,

Contracts take effect only between the parties, their assigns, and heirs, except in case where the rights and
obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision
of law.

Furthermore, as Sunace correctly points out, there was an implied revocation of its agency relationship with its foreign
principal when, after the termination of the original employment contract, the foreign principal directly negotiated with
Divina and entered into a new and separate employment contract in Taiwan. Article 1924 of the New Civil Code reading 

The agency is revoked if the principal directly manages the business entrusted to the agent, dealing
directly with third persons. 

thus applies.

Termination of Contract of Migrant Worker without Just or Valid Cause

Serrano v. Gallant Maritime Services, Inc. (GR No. 167614, March 24, 2009)

Sameer Overseas Placement Agency, Inc. v. Cabiles (GR No. 170139, August 5, 2014)

Compensability of Injury for Overseas Workers

Bautista v. Elburg Shipmanagement Philippines, Inc. et. al. (GR No. 206032, August19, 2015)
Pursuant to the afore-quoted provision, two (2) elements must concur for an injury or illness to be compensable: first, that
the injury or illness must be work-related; and second, that the work-related injury or illness must have existed during the
term of the seafarer’s employment contract.

The 2000 POEA-SEC defines "work-related injury" as "injury(ies)" resulting in disability or death arising out of and in
the course of employment" and "work-related illness" as "any sickness resulting to disability or death as a result of an
occupational disease listed under Section 32-A of this contract with the conditions set therein satisfied," viz.:

 The seafarer's work must involve the risks described herein;

 The disease was contracted as a result of the seafarer's exposure to the described risks;
 The disease was contracted within a period of exposure and under such other factors necessary to contract it; and
 There was no notorious negligence on the part of the seafarer.

(Note: In addition to the requisites, it must be had that the illness or injury be certified by a company credited physician)

Kestrel Shipping Co., Inc. v. Munar (GR No. 198501, January 30, 2013)

The POEA Standard Employment Contract and the CBA clearly provide that when a seafarer sustains a work-related
illness or injury while on board the vessel, his fitness or unfitness for work shall be determined by the company-
designated physician. If the physician appointed by the seafarer disagrees with the company-designated physician’s
assessment, the opinion of a third doctor may be agreed jointly between the employer and the seafarer to be the decision
final and binding on them.

Rule on Death Benefits for Overseas Workers

Spouses Aya – ay v. Arpaphil Shipping and Magna Marine (GR No. 155359, January 31, 2006)

Part II, Section C, Nos. 1 and 3 of the POEA Standard Employment Contract Governing the Employment of All Filipino
Seamen on Board Ocean-Going Vessels provide:

C. Compensation and Benefits

1. In case of death of the seaman during the term of his Contract, the employer shall pay his beneficiaries the Philippine
Currency equivalent to the amount of US$50,000 and an additional amount of US$7,000 to each child under the age of
twenty-one (21) but not exceeding four children at the exchange rate prevailing during the time of payment.

xxxx

3. The other liabilities of the employer when the seaman dies as a result of injury or illness during the term of
employment are as follows:

a. The employer shall pay the deceased’s beneficiary all outstanding obligations due the seaman under this Contract.

xxxx

c. In all cases, the employer shall pay the beneficiaries of seamen the Philippine Currency equivalent to the amount of
US$1,000 for burial expenses at exchange rate prevailing during the time of payment. (Underscoring supplied)

In order to give effect to the aforequoted benefits, it must be shown that the employee died during the effectivity of the
contract of employment.

xxx

It is, therefore, crucial to determine whether Aya-ay died as a result of, or in relation to, the eye injury he suffered during
the term of his employment. If the injury is the proximate cause,37 or at least increased the risk, of his death for which
compensation is sought, recovery may be had for said death.38

Unless there is substantial evidence showing that: (a) the cause of Aya-ay’s death was reasonably connected with his
work; or (b) the sickness/ailment for which he died is an accepted occupational disease; or (c) his working conditions
increased the risk of contracting the disease for which he died, death compensation benefits cannot be awarded.

Nature of Employment

Millares v. NLRC (G.R. No. 110524, July 29, 2002)

From the foregoing cases, it is clear that seafarers are considered contractual employees. They cannot be considered as
regular employees under Article 280 of the Labor Code. Their employment is governed by the contracts they sign every
time they are rehired and their employment is terminated when the contract expires. Their employment is contractually
fixed for a certain period of time. They fall under the exception of Article 280 whose employment has been fixed for a
specific project or undertaking the completion or termination of which has been determined at the time of engagement of
the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration
of the season.19 We need not depart from the rulings of the Court in the two aforementioned cases which indeed
constitute stare decisis with respect to the employment status of seafarers.

In this jurisdiction and as clearly stated in the Coyoca case, Filipino seamen are governed by the Rules and Regulations of
the POEA. The Standard Employment Contract governing the employment of All Filipino seamen on Board Ocean-Going
Vessels of the POEA, particularly in Part I, Sec. C specifically provides that the contract of seamen shall be for a fixed
period. And in no case should the contract of seamen be longer than 12 months. It reads:

Section C. Duration of Contract

The period of employment shall be for a fixed period but in no case to exceed 12 months and shall be stated in the Crew
Contract. Any extension of the Contract period shall be subject to the mutual consent of the parties.

From all the foregoing, we hereby state that petitioners are not considered regular or permanent employees under Article
280 of the Labor Code. Petitioners' employment have automatically ceased upon the expiration of their contracts of
enlistment (COE). Since there was no dismissal to speak of, it follows that petitioners are not entitled to reinstatement or
payment of separation pay or back wages, as provided by law.

IV. TEST OF EMPLOYMENT RELATIONSHIP STATUS

Jardin v. NLRC (GR No. 119268, February 27, 2003)

FOUR FOLD TEST in determining employer-employee relationship (1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal; and (4) the power of control the employees conduct. Control is
deemed the most important that the other requisites may even be disregarded.

Francisco v. NLRC, Kasei Corp, etc. (GR No. 170087, August 31, 2006)

Economic Reality Test – employee is economically dependent to the employer for sustainability.

V. MANAGEMENT PREROGATIVE

Limitations of Management Prorogative

- Law
- Collective Bargaining Agreement
- Employment Contract
- Employment Practices (e.g. bonus)
- General Principles of Fair Play, Justice and Equity
- Police Power
- Employer Policies
- Must be exercised with good faith

Discipline

International School of Manila v. International School Alliance of Education (GR No. 167286, February 5, 2014)

The Court had occasion to explain in Century Iron Works, Inc. v. Bañas68 the concept of gross and habitual neglect of
duties. Thus:

Gross negligence connotes want or absence of or failure to exercise slight care or diligence, or the entire absence of care.
It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. Fraud and willful neglect of
duties imply bad faith of the employee in failing to perform his job, to the detriment of the employer and the latter’s
business. Habitual neglect, on the other hand, implies repeated failure to perform one’s duties for a period of time,
depending upon the circumstances.

We also reiterated in Union Motor Corporation v. National Labor Relations Commission that in dismissing an employee
for gross and habitual neglect of duties, the negligence should not merely be gross, it should also be habitual.

On gross inefficiency, we ruled in Lim v. National Labor Relations Commission that:

[G]ross inefficiency falls within the purview of "other causes analogous to the foregoing," and constitutes, therefore, just
cause to terminate an employee under Article 282 of the Labor Code. One is analogous to another if it is susceptible of
comparison with the latter either in general or in some specific detail; or has a close relationship with the latter. "Gross
inefficiency" is closely related to "gross neglect," for both involve specific acts of omission on the part of the employee
resulting in damage to the employer or to his business. In Buiser vs. Leogardo, this Court ruled that failure to observe
prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause for
dismissal. (Emphases ours; citations omitted.)
Viewed in light of the above doctrines, the Court is not convinced that the actuations of Santos complained of by the
petitioners constituted gross and habitual neglect of her duties.

Transfer of Employees

Pharmacia and UPJOHN v. Albayda (GR. No. 172724, August 23, 2010)

To determine the validity of the transfer of employees, the employer must show that the transfer is not unreasonable,
inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries,
privileges and other benefits. Should the employer fail to overcome this burden of proof, the employee's transfer shall be
tantamount to constructive dismissal.

The transfer of the herein employee was a valid exercise of a legitimate management prerogative to maximize business
opportunities, growth and development of personnel and that the expertise of respondent was needed to build the
company’s business in Cagayan de Oro City which dismally performed in 1999.

In addition, the reassignment of respondent was not a demotion as he will also be assigned as a District Sales Manager in
Mindanao or in Metro Manila and that the notice of his transfer did not indicate that his emoluments will be reduced.
Moreover, the respondent was entitled to Relocation Benefits and Allowance in accordance with petitioners Benefits
Manual.

Moreover, it bears to stress that respondent signed two documents signifying his assent to be assigned anywhere in the
Philippines.

Because of employee’s adamant refusal to be reassigned, the LA ruled that petitioners had valid grounds to terminate his
employment.

Bisig Manggagawa sa Tryco v. NLRC (GR No. 151309, October 15, 2008)

When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does not involve a demotion
in rank or diminution of salaries, benefits, and other privileges, the employee may not complain that it amounts to a
constructive dismissal. However, the employer has the burden of proving that the transfer of an employee is for valid and
legitimate grounds. The employer must show that the transfer is not unreasonable, inconvenient, or prejudicial to the
employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits.

Productivity Standard

Reyes-Rayel v. Philippines Luen Thai Holdings Crop. (GR No. 174893, July 11, 2012)

Jurisprudence provides that an employer has a distinct prerogative and wider latitude of discretion in dismissing a
managerial personnel who performs functions which by their nature require the employer’s full trust and confidence. As
distinguished from a rank and file personnel, mere existence of a basis for believing that a managerial employee has
breached the trust of the employer justifies dismissal. "[L]oss of confidence as a ground for dismissal does not require
proof beyond reasonable doubt as the law requires only that there be at least some basis to justify it."

Realda v. New Age Graphics, Inc, (GR No. 192190, April 25, 2012)

Failure to observe prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may
constitute just cause for dismissal. Such inefficiency is understood to mean failure to attain work goals or work quotas,
either by failing to complete the same within the allotted reasonable period, or by producing unsatisfactory results.  As the
operator of Graphics, Inc.’s printer, he is mandated to check whether the colors that would be printed are in accordance
with the client’s specifications and for him to do so, he must consult the General Manager and the color guide used by
Graphics, Inc. before making a full run. Unfortunately, he failed to observe this simple procedure and proceeded to print
without making sure that the colors were at par with the client’s demands. This resulted to delays in the delivery of output,
client dissatisfaction, and additional costs on Graphics, Inc.’s part.

Bonus

Lepanto Ceramics, Inc. v. Lepanto Ceramics Employees Association (GR. No. 180866, March 2, 2010)

By definition, a bonus is a gratuity or act of liberality of the giver. It is something given in addition to what is ordinarily
received by or strictly due the recipient. A bonus is granted and paid to an employee for his industry and loyalty which
contributed to the success of the employer’s business and made possible the realization of profits.

Generally, a bonus is not a demandable and enforceable obligation. For a bonus to be enforceable, it must have been
promised by the employer and expressly agreed upon by the parties. Given that the bonus in this case is integrated in the
CBA, the same partakes the nature of a demandable obligation. Verily, by virtue of its incorporation in the CBA, the
Christmas bonus due to respondent Association has become more than just an act of generosity on the part of the
petitioner but a contractual obligation it has undertaken.
Change of Working Hours

Manila Jockey Club Employees Labor Union-PTGWO v. Manila Jockey Club, Inc.,  (GR No. 167760 March 7, 2007)

We are not unmindful that every business enterprise endeavors to increase profits.  As it is, the Court will not interfere
with the business judgment of an employer in the exercise of its prerogative to devise means to improve its operation,
provided that it does not violate the law, CBAs, and the general principles of justice and fair play. We have thus held that
management is free to regulate, according to its own discretion and judgment, all aspects of employment, including
hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of
workers, working regulations, transfer of employees, work supervision, layoff of workers and discipline, dismissal, and
recall of workers.

While it is true that Section 1, Article IV of the CBA provides for a 7-hour work schedule from 9:00
a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. from Mondays to Saturdays, Section 2, Article XI, however,
expressly reserves on respondent the prerogative to change existing methods or facilities to change the schedules of
work. As aptly ruled by the CA:

x x x. Such exact language lends no other meaning but that while respondent may have allowed
the initial determination of the work schedule to be done through collective bargaining, it expressly
retained the prerogative to change it.

Moreover, it cannot be said that in agreeing to Section 1 of Article IV, respondent already waived that
customary prerogative of management to set the work schedule. Had that been the intention, Section 2 of
Article XI would not have made any reference at all to the retention by respondent of that
prerogative. The CBA would have instead expressly prohibited respondent from exercising it. x x x As it
were, however, the CBA expressly recognized in respondent the prerogative to change the work
schedule. This effectively rules out any notion of waiver on the part of respondent of its prerogative to
change the work schedule. 

The same provision of the CBA also grants respondent the prerogative to relieve employees from duty because of lack of
work. Petitioners argument, therefore, that the change in work schedule violates Article 100 of the Labor Code because it
resulted in the diminution of the benefit enjoyed by regular monthly-paid employees of rendering overtime work with
pay, is untenable. Section 1, Article IV, of the CBA does not guarantee overtime work for all the employees but merely
provides that "all work performed in excess of seven (7) hours work schedule and on days not included within the work
week shall be considered overtime and paid as such."

Marriage between Employees of Competitor – Employers

Duncan Association of Detailman-PTGWO v. Glaxo Welcome Philippines, Inc. (GR No. 162994, September 17, 2006)

Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs
and information from competitors, especially so that it and Astra are rival companies in the highly competitive
pharmaceutical industry.

The prohibition against personal or marital relationships with employees of competitor companies upon Glaxo’s
employees is reasonable under the circumstances because relationships of that nature might compromise the interests of
the company. In laying down the assailed company policy, Glaxo only aims to protect its interests against the possibility
that a competitor company will gain access to its secrets and procedures.

That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution recognizes
the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments and to
expansion and growth.20 Indeed, while our laws endeavor to give life to the constitutional policy on social justice and the
protection of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also
recognizes that management has rights which are also entitled to respect and enforcement in the interest of fair play.

Star Paper v. Simbo (GR No.164774, April 12, 2006)

The Labor Code is the most comprehensive piece of legislation protecting labor. The case at bar involves Article 136 of
the Labor Code which provides:

Art. 136. It shall be unlawful for an employer to require as a condition of employment or continuation of
employment that a woman employee shall not get married, or to stipulate expressly or tacitly that upon
getting married a woman employee shall be deemed resigned or separated, or to actually dismiss,
discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage.

Respondents submit that their dismissal violates the above provision. Petitioners allege that its policy may appear to be
contrary to Article 136 of the Labor Code but it assumes a new meaning if read together with the first paragraph of the
rule. The rule does not require the woman employee to resign. The employee spouses have the right to choose who
between them should resign. Further, they are free to marry persons other than co-employees. Hence, it is not the marital
status of the employee, per se, that is being discriminated. It is only intended to carry out its no-employment-for-relatives-
within-the-third-degree-policy which is within the ambit of the prerogatives of management.

It is true that the policy of petitioners prohibiting close relatives from working in the same company takes the nature of an
anti-nepotism employment policy. Companies adopt these policies to prevent the hiring of unqualified persons based on
their status as a relative, rather than upon their ability. These policies focus upon the potential employment problems
arising from the perception of favoritism exhibited towards relatives.

With more women entering the workforce, employers are also enacting employment policies specifically prohibiting
spouses from working for the same company. We note that two types of employment policies involve spouses: policies
banning only spouses from working in the same company (no-spouse employment policies), and those banning all
immediate family members, including spouses, from working in the same company (anti-nepotism employment policies).

Post – Employment Ban

TIU v. Platinum Plans Philippines, Inc. (GR No. 163512, February 28, 2007)

As early as 1916, we already had the occasion to discuss the validity of a non-involvement clause. In Ferrazzini v.
Gsell,8 we said that such clause was unreasonable restraint of trade and therefore against public policy. In Ferrazzini, the
employee was prohibited from engaging in any business or occupation in the Philippines for a period of five years after
the termination of his employment contract and must first get the written permission of his employer if he were to do so.
The Court ruled that while the stipulation was indeed limited as to time and space, it was not limited as to trade. Such
prohibition, in effect, forces an employee to leave the Philippines to work should his employer refuse to give a written
permission.

In G. Martini, Ltd. v. Glaiserman, we also declared a similar stipulation as void for being an unreasonable restraint of
trade. There, the employee was prohibited from engaging in any business similar to that of his employer for a period of
one year. Since the employee was employed only in connection with the purchase and export of abaca, among the many
businesses of the employer, the Court considered the restraint too broad since it effectively prevented the employee from
working in any other business similar to his employer even if his employment was limited only to one of its multifarious
business activities.

However, in Del Castillo v. Richmond, we upheld a similar stipulation as legal, reasonable, and not contrary to public
policy. In the said case, the employee was restricted from opening, owning or having any connection with any other
drugstore within a radius of four miles from the employer’s place of business during the time the employer was operating
his drugstore. We said that a contract in restraint of trade is valid provided there is a limitation upon either time or place
and the restraint upon one party is not greater than the protection the other party requires.

Finally, in Consulta v. Court of Appeals,11 we considered a non-involvement clause in accordance with Article 1306 of
the Civil Code. While the complainant in that case was an independent agent and not an employee, she was prohibited for
one year from engaging directly or indirectly in activities of other companies that compete with the business of her
principal. We noted therein that the restriction did not prohibit the agent from engaging in any other business, or from
being connected with any other company, for as long as the business or company did not compete with the principal’s
business. Further, the prohibition applied only for one year after the termination of the agent’s contract and was therefore
a reasonable restriction designed to prevent acts prejudicial to the employer.

Conformably then with the aforementioned pronouncements, a non-involvement clause is not necessarily void for being in
restraint of trade as long as there are reasonable limitations as to time, trade, and place.

In this case, the non-involvement clause has a time limit: two years from the time petitioner’s employment with
respondent ends. It is also limited as to trade, since it only prohibits petitioner from engaging in any pre-need business
akin to respondent’s.

In any event, Article 1306 of the Civil Code provides that parties to a contract may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public
order, or public policy.

Article 1159 of the same Code also provides that obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith. Courts cannot stipulate for the parties nor amend their
agreement where the same does not contravene law, morals, good customs, public order or public policy, for to do so
would be to alter the real intent of the parties, and would run contrary to the function of the courts to give force and effect
thereto.15 Not being contrary to public policy, the non-involvement clause, which petitioner and respondent freely agreed
upon, has the force of law between them, and thus, should be complied with in good faith.