2.7.-enforcement-and-sanctions-arts.-36-39-labor-code.docx

2.7. ENFORCEMENT AND SANCTIONS – ARTS. 36-39, LABOR CODE Executive Secretary v. CA, G.R. No. 131719, May 25, 2004, 429 SCRA 81 (2004) Facts: Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995, took effect on July 15, 1995. Before the law took effect, ARCO-Phil filed a petition asking the court to declare some provisions of the law unconstitutional. The law required that only skilled workers were to be deployed for employed abroad. According to the respondent, the right of unskilled workers to due process is violated because they are prevented from finding employment and earning a living abroad. It cannot be argued that skilled workers are immune from abuses by employers, while unskilled workers are merely prone to such abuses. It was pointed out that both skilled and unskilled workers are subjected to abuses by foreign employers. Furthermore, the prohibition of the deployment of unskilled workers abroad would only encourage fly-by-night illegal recruiters. The respondent, likewise, alleged that Section 6, subsections (a) to (m) is unconstitutional because licensed and authorized recruitment agencies are placed on equal footing with illegal recruiters. It contended that while the Labor Code distinguished between recruiters who are holders of licenses and non-holders thereof in the imposition of penalties, Rep. Act No. 8042 does not make any distinction. The penalties in Section 7(a) and (b) being based on an invalid classification are, therefore, repugnant to the equal protection clause, besides being excessive; hence, such penalties are violative of Section 19(1), Article III of the Constitution. 9 It was also pointed out that the penalty for officers/officials/employees of recruitment agencies who are found guilty of economic sabotage or large-scale illegal recruitment under Rep. Act No. 8042 is life imprisonment. Issue: The core issue in this case is whether or not the trial court committed grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the assailed order and the writ of preliminary injunction on a bond of only P50,000; and Whether or not the appellate court erred in affirming the trial court's order and the writ of preliminary injunction issued by it. Held: It must be borne in mind that subject to constitutional limitations, Congress is empowered to define what acts or omissions shall constitute a crime and to prescribe punishments therefor. The power is inherent in Congress and is part of the sovereign power of the State to maintain peace and order. Whatever views may be entertained regarding the severity of punishment, whether one believes in its efficiency or its futility, these are peculiarly questions of legislative policy. The comparative gravity of crimes and whether their consequences are more or less injurious are matters for the State and Congress itself to determine. Specification of penalties involves questions of legislative policy. Due process prohibits criminal stability from shifting the burden of proof to the accused, punishing wholly passive conduct, defining crimes in vague or overbroad language and failing to grant fair warning of illegal conduct. Class legislation is such legislation which denies rights to one which

are accorded to others, or inflicts upon one individual a more severe penalty than is imposed upon another in like case offending. Bills of attainder are legislative acts which inflict punishment on individuals or members of a particular group without a judicial trial. Essential to a bill of attainder are a specification of certain individuals or a group of individuals, the imposition of a punishment, penal or otherwise, and the lack of judicial trial. Penalizing unlicensed and licensed recruitment agencies and their officers and employees and their relatives employed in government agencies charged with the enforcement of the law for illegal recruitment and imposing life imprisonment for those who commit large scale illegal recruitment is not offensive to the Constitution. The accused may be convicted of illegal recruitment and large scale illegal recruitment only if, after trial, the prosecution is able to prove all the elements of the crime charged. The possibility that the officers and employees of the recruitment agencies, which are members of the respondent, and their relatives who are employed in the government agencies charged in the enforcement of the law, would be indicted for illegal recruitment and, if convicted sentenced to life imprisonment for large scale illegal recruitment, absent proof of irreparable injury, is not sufficient on which to base the issuance of a writ of preliminary injunction to suspend the enforcement of the penal provisions of Rep. Act No. 8042 and avert any indictments under the law. The normal course of criminal prosecutions cannot be blocked on the basis of allegations which amount to speculations about the future. There is no allegation in the amended petition or evidence adduced by the respondent that the officers and/or employees of its members had been threatened with any indictments for violations of the penal provisions of Rep. Act No. 8042. Neither is there any allegation therein that any of its members and/or their officers and employees committed any of the acts enumerated in Section 6(a) to (m) of the law for which they could be indicted. Neither did the respondent adduce any evidence in the RTC that any or all of its members or a great number of other duly licensed and registered recruitment agencies had to stop their business operations because of fear of indictments under Sections 6 and 7 of Rep. Act No. 8042. The respondent merely speculated and surmised that licensed and registered recruitment agencies would close shop and stop business operations because of the assailed penal provisions of the law. A writ of preliminary injunction to enjoin the enforcement of penal laws cannot be based on such conjectures or speculations. The Court cannot take judicial notice that the processing of deployment papers of overseas workers have come to a virtual standstill at the POEA because of the assailed provisions of Rep. Act No. 8042. The respondent must adduce evidence to prove its allegation, and the petitioners accorded a chance to adduce controverting evidence. The respondent even failed to adduce any evidence to prove irreparable injury because of the enforcement of Section 10(1)(2) of Rep. Act No. 8042. Its fear or apprehension that, because of time constraints, its members would have to defend foreign employees in cases before the Labor Arbiter is based on speculations. Even if true, such inconvenience or difficulty is hardly irreparable injury.

By issuing the writ of preliminary injunction against the petitioners sans any evidence, the trial court frustrated, albeit temporarily, the prosecution of illegal recruiters and allowed them to continue victimizing hapless and innocent people desiring to obtain employment abroad as overseas workers, and blocked the attainment of the salutary policies embedded in Rep. Act No. 8042. It bears stressing that overseas workers, land-based and sea-based, had been remitting to the Philippines billions of dollars which over the years had propped the economy. In issuing the writ of preliminary injunction, the trial court considered paramount the interests of the eleven licensed and registered recruitment agencies represented by the respondent, and capriciously overturned the presumption of the constitutionality of the assailed provisions on the barefaced claim of the respondent that the assailed provisions of Rep. Act No. 8042 are unconstitutional. The trial court committed a grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the assailed order and writ of preliminary injunction. It is for this reason that the Court issued a temporary restraining order enjoining the enforcement of the writ of preliminary injunction issued by the trial court. No cost. 2.08. LIABILITY OF AGENCY G&M (Phil.) Inc. v. Batomalaque, G.R. No.151849, June 23, 2005, 461 SCRA 111 (2005) Facts: Respondent Epifanio Cruz filed a complaint against petitioner for illegal dismissal, underpayment and non-payment of wages, and refund of transportation expenses after being deported by his employer, Salim Al Yami Est. According to respondent, the cause for his dismissal was his complaint for sub-human working conditions, non-payment of wages and overtime pay, salary deduction and change of employer. Respondent alleged that when he arrived in the Kingdom of Saudi Arabia, he was made to sign an employment contract in blank and his salary was reduced to SR604.00. Respondent further claims that he was only paid in an amount equivalent to five months’ salary and he did not receive his salary for the last two months. Respondent submitted a copy of his pay slip showing the amount of SR604.00 as his basic salary. Petitioner G & M (Phils.), Inc. recruited respondent Cruz as trailer driver for its foreign principal, Salim Al Yami Est., for a period of two years, and with a stipulated monthly salary of US$625. Petitioner contends that respondent abandoned his job when he joined an illegal strike and refused to report for work, constituting a breach of his employment contract and a valid cause for termination of employment. The Labor Arbiter and the NLRC granted Cruz's claim for underpayment of wages and two months unpaid salary, strengthened by the Court of Appeals' dismissal of G & M's special civil action for certiorari, hence this petition for review on certiorari under Rule 45 of the Rules of Court. ISSUE: Whether or not in complaints involving underpayment of salaries, the employee has the burden of proving such underpayment? Held: No.

It is the burden of petitioner, G&M Phils. Inc. to prove that the salaries paid by its foreign principal complied with the contractual stipulations of their agency-Worker agreement. The rule is that the burden of proving payment of monetary claims rests on the employer, in this case, herein petitioner, being the employment agency or recruitment entity, and agent of the foreign principal, Salim Al Yami Est. which recruited respondent. Where a person is sued for a debt admits that the debt was originally owed, and pleads payment in whole or in part, it is incumbent upon him to prove such payment. This is based on the principle of evidence that each party must prove his affirmative allegations. Since petitioner asserts that respondent has already been fully paid of his stipulated salary, the burden is upon petitioner to prove such fact of full payment. The debtor has the burden of showing with legal certainty that the obligation has been discharged by payment. Petition denied for lack of merit. 2.09. MIGRANT WORKERS ACT - R.A. No. 8042, SECS. 2, 4; 6; AND 10, AS AMENDED BY R.A. NO. 10022 Phil. Employ Services v. Paranio, G.R. No. 144786, April 15, 2004, 427 SCRA 732 (2004) Facts: On different dates from April 1996 to October 1996, respondents Joseph Paramio, Ronald Navarra, Romel Sarmiento, Recto Guillermo, Ferdinand Bautista and Apolinario Curameng, Jr. applied for employment in Taiwan with petitioner, Phil. Employ Services and Resources, Inc. (PSRI for brevity), a domestic corporation engaged in the recruitment and deployment of Filipino Workers Overseas. Their applications were processed along with the requisite papers and documents in support thereof, and they paid P19,000 each as placement fee. Thereafter, they executed in the Philippines separate one-year contracts of employment with their employer in Taiwan, Kuan Yuan Fiber Co., Ltd. Hsei-Chang. The respondents were deployed in Taiwan as operators on different dates and each of them had a monthly salary of NT$15,360 (New Taiwan Dollars), with free food and accommodation. After the orientation given by their employer, the respondents were told that their schedule of work was up to 9:00 p.m. except for respondent Navarra who was made to work up to 12:00 midnight. The respondents were downhearted when they discovered that, upon their arrival in their quarters, they had no beddings, pillows and blankets. They encountered worse problems in the course of their employment. The respondents brought their problems to the attention of the management. In March of 1997, Fabian Chua, local manager of the petitioner PSRI, made a surprise visit to Kuan Yuan in Taiwan and was apprised of the said complaints. However, instead of solving the problems, Chua cautioned the respondents not to air their complaints and to simply forget about whatever plans they had in mind. Disappointed, the respondents, along with their co-workers, contacted the Overseas Workers Welfare Administration (OWWA) in Taiwan and sought the latters assistance, only to be frustrated when their requests were not favorably acted upon. May 14, 1997, respondent Paramio got ill as a result of the employers failure to give breakfast on the said date and dinner the night before. His manager still ordered him to work. When he pleaded that he be allowed to take some rest, the manager refused. Respondent Paramio was, instead, made to carry a container weighing around 30 kilograms. Due to his condition, the container slipped

from his hands and he injured his thumb. He was brought to the hospital where he was operated on and treated for his wound. Instead of giving him financial assistance for his hospital bills, his employer told him a week after his release from the hospital that it would be better for him to go home to the Philippines to recuperate. An official from the Taiwanese Labor Department intervened for respondent Paramio and his employer was told that it had no right to repatriate the respondent because the accident which caused the injury happened while the latter was at work. On October 22, 1997, respondents Sarmiento, Guillermo, Curameng, Jr. and Bautista, together with respondents Paramio and Navarra, filed separate complaints before the NLRC Arbitration Branch against Bayani Fontanilla for illegal dismissal, non-payment of overtime pay, refund of placement fee, tax refund, refund of plane fares, attorney’s fees and litigation expenses. In their position paper, the respondents raised the issue of whether or not the petitioner PSRI and Bayani Fontanilla were liable for the reimbursement of their respective placement fees, nightshift differentials, overtime pay and damages, and their salaries for the unexpired portion of their respective contracts. WHEREFORE, judgment is hereby rendered against the petitioner. Aggrieved, the petitioner appealed before the National Labor Relations Commission (NLRC), the NLRC issued a resolution finding that the respondents were legally dismissed and set aside the decision of the labor arbiter. Respondents filed a petition of Rule 65 to CA, the CA rendered a decision partly granting the petition in that it nullified the March 29 and May 17, 1999 Resolutions of the NLRC and reinstated the decision of the labor arbiter with modification. Issue: (a) whether or not the respondents were illegally dismissed; and (b) whether or not the deed of release and quitclaim executed by respondent Navarra was valid. Held: The petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 54744 is AFFIRMED WITH MODIFICATIONS. The petitioner is ordered to pay the following: (1) The amount of NT$46,080 or its peso equivalent to respondent Ronald Navarra minus the amount of P49,000 already advanced to him; (2) To the respondents Romel Sarmiento, Recto Guillermo, Ferdinand Bautista, Apolinario Curameng, Jr. and Joseph Paramio, their respective salaries corresponding to the unexpired portion of their respective contracts; (3) The amount of the placement fees as indicated in the respective official receipts issued to each of the respondents, with interest of 12% per annum, in conformity with Section 10, paragraph 5 of Rep. Act No. 8042; (4) To each of the respondents, the amount of P4,300 representing the expenses they incurred for their return to the Philippines.

Placewell International Services, Corp., v. Camote, G.R. No. 169973, June 26, 2006, 492 SCRA 761 (2006) Facts: Petitioner Placewell International Services Corporation (PISC) deployed respondent Ireneo B. Camote to work as building carpenter for SAAD Trading and Contracting Co. (SAAD) at the Kingdom of Saudi Arabia (KSA) for a contract duration of two years, with a corresponding salary of US$370.00 per month. At the job site, respondent was allegedly found incompetent by his foreign employer; thus the latter decided to terminate his services. However, respondent pleaded for his retention and consented to accept a lower salary of SR 800.00 per month. Thus, SAAD retained respondent until his return to the Philippines two years after. On November 27, 2001, respondent filed a sworn Complaint for monetary claims against petitioner alleging that when he arrived at the job site, he and his fellow Filipino workers were required to sign another employment contract written in Arabic under the constraints of losing their jobs if they refused; that for the entire duration of the new contract, he received only SR 590.00 per month; that he was not given his overtime pay despite rendering nine hours of work every day; that he and his co-workers sought assistance from the Philippine Embassy but they did not succeed in pursuing their cause of action because of difficulties in communication. Issue: Whether there is estoppel by laches Held: R.A. No. 8042 explicitly prohibits the substitution or alteration to the prejudice of the worker, of employment contracts already approved and verified by the Department of Labor and Employment (DOLE) from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the DOLE. The 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. Petitioner’s contention that respondent is guilty of laches is without basis. Laches has been defined as the failure of or neglect for an unreasonable and unexplained length of time to do that which by exercising due diligence, could or should have been done earlier, or to assert a right within reasonable time, warranting a presumption that the party entitled thereto has either abandoned it or declined to assert it. Thus, the doctrine of laches presumes that the party guilty of negligence had the opportunity to do what should have been done, but failed to do so. Conversely, if the said party did not have the occasion to assert the right, then, he cannot be adjudged guilty of laches. Laches is not concerned with the mere lapse of time; rather, the party must have been afforded an opportunity to pursue his claim in order that the delay may sufficiently constitute laches.

In the instant case, respondent filed his claim within the three-year prescriptive period for the filing of money claims set forth in Article 291 of the Labor Code from the time the cause of action accrued. Thus, we find that the doctrine of laches finds no application in this case. Section 3. Alien Employment STATUTORY REFERENCE: ARTS. 40-42; REVISED GUIDELINES FOR ISSUANCES OF EMPLOYMENT PERMIT – 1988; DEPARTMENT ORDER NO. 146-15, SERIES OF 2015 – REVISED RULES FOR THE ISSUANCE OF EMPLOYMENT PERMITS TO FOREIGN NATIONALS (See POLICY CHANGES) 3.1. COVERAGE Non-Resident Alien Almodiel v. NLRC, G.R. No. 100641, June 14, 1993, 223 SCRA 341 (1993) Facts: Petitioner is a CPA hired as Cost Accounting Manager of Respondent Raytheon Philippines, Inc. As such, his major duties were (1) plan, coordinate, and carry out year-end physical inventory (2) formulate and issue out hard copies of standard product costing and other cost pricing analysis if needed and required and set up the written cost accounting system for the whole company. however, when the standard cost accounting system for Raytheon plans worldwide was adopted and installed in the Philippine operations, the services of the petitioner was reduced to only the submission of period reports that would use computerized forms prescribed and designed by the international head office of the company in California, USA. On January 1989, petitioner was told of the abolition of his position on the ground of redundance. He was constrained to file the complaint for illegal dismissal after his request to have him transferred to another department was denied. He also alleged that the functions of his position were absorbed by the Payroll/MIS/finance Department which is headed by a resident alien without working permit from the DOLE. The NLRC ruled for Raytheon and directed the latter to pay the petitioner P100, 000.00 as separation pay. Hence, this petition. Issue: WON the termination of the petitioner on the ground of redundancy was tainted with malice, Bad faith and irregularity. Held: An employer has no legal obligation to keep more employees that are necessary for the operation of the business. Considering further that petitioner held a managerial position, Raytheon had a broad latitude of discretion in abolishing the position. The reason obviously is that officers in such 3ey positions perform not only functions which by nature require the employers full trust and

confidence but also functions that spell the success or failure of an enterprise.likeewise destitute of merit is petitioners imputation of unlawful discrimination when Raytheon caused corollary functions appertaining to cost accounting to be absorbed by a resident alien without working permit. Article of the 40 of the Labor Code which requires employment permit refers to nonresident aliens. 3.2. TECHNIQUE REGULATION - EMPLOYMENT PERMIT – ARTS. 40-42, LABOR CODE; ART. XII, SEC. 12, CONSTITUTION R.A. No. 7916 – The Special Economic Zone Act of 1995 - Secs. 2(b); 3(c); 4, 10; 40 R.A. No. 7918 – Amending Omnibus Investments Code of 1987 – Sec. 39(g) Alien Employment Permit (AEP) General Milling Corporation v. Torres, G.R. No. 93666, April 22, 1991, 196 SCRA 215 (1991) Facts: Earl Timothy Cone is a US citizen, who was hired by General Milling as a sports consultant and assistant coach. He possessed an alien employment permit which was changed to pre-arranged employee by the Board of Special Inquiry of the Commission on Immigration and Deportation. GMC requested that Cone’s employment permit be changed to a full-fledged coach, which was contested by The Basketball Coaches Association of the Philippines. Alleging that GMC failed to show that there is no competent person in the Philippines to do the coaching job. Secretary of Labor cancelled Cone’s employment permit. Issue: Whether or not the Secretary of Labor act with grave abuse of discretion in revoking Cone’s Alien Employment Permit Held:

The Secretary of Labor did not act with grave abuse of discretion in revoking Cone’s Alien Employment Permit. GMC’s claim that hiring of a foreign coach is an employer’s prerogative has no legal basis. Under Section 40 of the Labor Code, an employer seeking employment of an alien must first obtain an employment permit from the Department of labor. GMC’s right to choose whom to employ is limited by the statutory requirement of an employment permit. Section 4. Employment of Apprentices, Learners and Handicapped Workers 4.1. POLICY OBJECTIVES – SECS. 2-3, R.A. No. 7796 4.2. APPRENTICE Allowed Employment Requirement Program Approval Nitto Enterprises v. NLRC, G.R. No. 114337, September 29, 1995, 248 SCRA 654 (1995) Facts:

Petitioner Nito Enterprises hired Capili as an apprentice machinist under an apprenticeship agreement for six months for a daily wage, which was 75% of applicable minimum wage. However, shortly 2 months after he started work, Capili was asked to resign for the reason that he had been causing accidents, that he has been doing certain things beyond the scope of his duty, and that he had even injured himself in handling one of the machines, to the financial prejudice of the company as his medication would be shouldered by Nito Enterprises. Capili later filed a complaint for illegal dismissal, which the Labor Arbiter dismissed. This decision was reversed by the NLRC, holding that Capili was a regular employee. With this, Nito came to the Supreme Court. Nito Enterprises assails the NLRC decision on the ground that no apprenticeship program had yet been filed and approved at the time the agreement was executed.

Issue: Is Capili a regular employee or an apprentice? Held: Capili is a regular employee. Apprenticeship needs DOLE’s prior approval, or apprentice becomes regular employee. Petitioner did not comply with the requirements of the law. It is mandated that apprenticeship agreements entered into by the employer and apprentice shall be entered only in accordance with the apprenticeship program duly approved by the Minister of Labor and Employment. Prior approval by the Department of Labor and Employment of the proposed apprenticeship program is, therefore, a condition sine quo non before an apprenticeship agreement can be validly entered into. The act of filing the proposed apprenticeship program with the Department of Labor and Employment is a preliminary step towards its final approval and does not instantaneously give rise to an employer-apprentice relationship. Hence, since the apprenticeship agreement between petitioner and private respondent has no force and effect in the absence of a valid apprenticeship program duly approved by the DOLE, private respondent’s assertion that he was hired not as an apprentice but as a delivery boy (“kargador” or “pahinante”) deserves credence. He should rightly be considered as a regular employee of petitioner as defined by Article 280 of the Labor Code and pursuant to the constitutional mandate to protect the rights of workers and promote their welfare. 4.3. LEARNERS 4.4. HANDICAPPED WORKER – R.A. No. 7277, AS AMENDED BY R.A. NO. 9442 Defined – Secs. 4(a), (b), (c), (d), 1-8 (R.A. No. 7277) Allowed Employment – Sec. 5 (R.A. No. 7277) Regular Worker Bernardo v. NLRC, G.R. No. 122917, July 12, 1999, 310 SCRA 186 (1999)

Facts: Petitioners numbering 43 are deaf–mutes who were hired on various periods from 1988 to 1993 by respondent Far East Bank and Trust Co. as Money Sorters and Counters through a uniformly worded agreement called ‘Employment Contract for Handicapped Workers. Subsequently, they are dismissed. Petitioners maintain that they should be considered regular employees, because their task as money sorters and counters was necessary and desirable to the business of respondent bank. They further allege that their contracts served merely to preclude the application of Article 280 and to bar them from becoming regular employees. Private respondent, on the other hand, submits that petitioners were hired only as “special workers and should not in any way be considered as part of the regular complement of the Bank.” Rather, they were “special” workers under Article 80 of the Labor Code. Issue: WON petitioners have become regular employees. Held: The uniform employment contracts of the petitioners stipulated that they shall be trained for a period of one month, after which the employer shall determine whether or not they should be allowed to finish the 6-month term of the contract. Furthermore, the employer may terminate the contract at any time for a just and reasonable cause. Unless renewed in writing by the employer, the contract shall automatically expire at the end of the term. Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers and renewed the contracts of 37 of them. In fact, two of them worked from 1988 to 1993. Verily, the renewal of the contracts of the handicapped workers and the hiring of others lead to the conclusion that their tasks were beneficial and necessary to the bank. More important, these facts show that they were qualified to perform the responsibilities of their positions. In other words, their disability did not render them unqualified or unfit for the tasks assigned to them. In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled employee should be given the same terms and conditions of employment as a qualified able-bodied person. Section 5 of the Magna Carta provides: “Section 5. Equal Opportunity for Employment.—No disabled person shall be denied access to opportunities for suitable employment. A qualified disabled employee shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able bodied person.”

The fact that the employees were qualified disabled persons necessarily removes the employment contracts from the ambit of Article 80. Since the Magna Carta accords them the rights of qualified able-bodied persons, they are thus covered by Article 280 of the Labor Code, which provides: “ART. 280. Regular and Casual Employment. — The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, x x x” “The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least one year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity, and while such activity exists.” Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers and renewed the contracts of 37 of them. In fact, two of them worked from 1988 to 1993. Verily, the renewal of the contracts of the handicapped workers and the hiring of others lead to the conclusion that their tasks were beneficial and necessary to the bank. More important, these facts show that they were qualified to perform the responsibilities of their positions. In other words, their disability did not render them unqualified or unfit for the tasks assigned to them. Without a doubt, the task of counting and sorting bills is necessary and desirable to the business of respondent bank. With the exception of sixteen of them, petitioners performed these tasks for more than six months. Petition granted. Section 5. Conditions of Employment – Hours of Work STATUTORY REFERENCE: ARTS. 82-90, LABOR CODE; BOOK III, RULES 1, IA, II, OMNIBUS RULES 5.1. HOURS REGULATION Rationale and Enforcement Manila Terminal Co. Inc. v. CIR, G.R. No. L-4148, July 16, 1952, 91 Phil. 625 (1952) Facts: Manila Terminal Company, Inc. hereinafter to be referred as to the petitioner, undertook the arrastre service in some of the piers in Manila’s Port Area at the request and under the control of

the United States Army. The petitioner hired some thirty men as watchmen on twelve-hour shifts at a compensation of P3 per day for the day shift and P6 per day for the night shift. The watchmen of the petitioner continued in the service with a number of substitutions and additions, their salaries having been raised during the month of February to P4 per day for the day shift and P6.25 per day for the nightshift. The private respondent sent a letter to Department of Labor requesting that the matter of overtime pay be investigated. But nothing was done by the Dept. of Labor. Later on, the petitioner instituted the system of strict eight-hour shifts. The private respondent filed an amended petition with the Court of Industrial Relations praying, among others, that the petitioner be ordered to pay its watchmen or police force overtime pay from the commencement of their employment. By virtue of Customs Administrative Order No. 81 and Executive Order No. 228 of the President of the Philippines, the entire police force of the petitioner was consolidated with the Manila Harvor Police of the Customs Patrol Service, a Government agency under the exclusivecontrol of the Commissioner of Customs and the Secretary of Finance The Manila Terminal Relief and Mutual Aid Association will hereafter be referred to as the Association. Judge V. Jimenez Yanson of the Court of Industrial Relations in his decision ordered the petitioner to pay to its police force but regards to overtime service after the watchmen had been integrated into the Manila Harbor Police, the has no jurisdiction because it affects the Bureau of Customs, an instrumentality of the Government having no independent personality and which cannot be sued without the consent of the State. The petitioner filed a motion for reconsideration. The Association also filed a motion for reconsideration in so far its other demands were dismissed. Both resolutions were denied. The public respondent decision was to pay the private respondents their overtime on regular days at the regular rate and additional amount of 25% overtime on Sundays and legal holidays at the regular rate only, and watchmen are not entitled to night differential pay for past services. The petitioner has filed a present petition for certiorari. Issue: WON overtime pay should be granted to the workers Held: The Supreme Court affirmed the appealed decision that the petitioner's watchmen will be entitled to extra compensation only from the dates they respectively entered the service of the petitioner, hereafter to be duly determined by the Court of Industrial Relations. Based on Fair Labor Standards Act of the United States which provides that "any employer who violates the provisions of section 206 and section 207 of this title shall be liable to the employee or employees affected in the amount of their unpaid minimum wages or their unpaid overtime compensation as the case may be," - a provision not incorporated in Commonwealth Act No. 444, our Eight-Hour Labor Law. We cannot agree to the proposition, because sections 3 and 5 of Commonwealth Act 444 expressly provides for the payment of extra compensation in cases where overtime services are required, with the result that the employees or laborers are entitled to collect such extra compensation for past overtime work. To hold otherwise would be to allow an employer to violate the law by simply, as in this case, failing to provide for and pay overtime compensation.

5.2. COVERAGE -- ARTS. 82-90, LABOR CODE Rationale Exemption – Managerial Employees Peñaranda v. Baganga Plywood Corp., G.R. No. 159577, May 3, 2006, 489 SCRA 94 (2006) Facts: In June 1999, Peñaranda was hired by Baganga Plywood Corporation (owned by Hudson Chua) to take charge of the operations and maintenance of its steam plant boiler. Peñaranda was employed as a Foreman/Boiler Head/Shift Engineer tasked to do the following tasks among others: 1. To supply the required and continuous steam to all consuming units at minimum cost. 2. To supervise, check and monitor manpower workmanship as well as operation of boiler and accessories. 3. To evaluate performance of machinery and manpower. 5. To train new employees for effective and safety while working.

7. To recommend personnel actions such as: promotion, or disciplinary action. In 2001, BPC shut down due to some repairs and maintenance. BPC did not technically fire Peñaranda but due to the latter’s insistence, BPC gave him his separation benefits. BPC subsequently reopened but Peñaranda did not reapply. Peñaranda now claims that BPC still needed to pay him his overtime pays and premium pays. The NLRC ruled that Peñaranda is a managerial employee and as such he is not entitled to overtime and premium pay as stated under the Labor Code. Peñaranda appealed. He said that he is not a managerial employee. Issue: Whether or not Peñaranda is entitled to overtime and premium pay. Held: No. Though there is an error made by the NLRC in finding Peñaranda as a managerial employee, the Supreme Court still ruled that Peñaranda is not entitled to overtime and premium pay. Peñaranda is not a managerial employee. Under the Implementing Rules and Regulations of the Labor Code, managerial employees are those that perform the following:

“(1) their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof; “(2) They customarily and regularly direct the work of two or more employees therein; “(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees are given particular weight.” Peñaranda does not meet the above requirements. Peñaranda is instead considered as a managerial staff. Under the Implementing Rules and Regulations of the Labor Code, managerial staffs are those that perform the following: “(1) the primary duty consists of the performance of work directly related to management policies of the employer; “(2) customarily and regularly exercise discretion and independent judgment; “(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii) execute under general supervision special assignments and tasks; and “(4) who do not devote more than 20 percent of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and (3) above.” Peñaranda’s function as a shift engineer illustrates that he was a member of the managerial staff. His duties and responsibilities conform to the definition of a member of a managerial staff under the Implementing Rules. Peñaranda supervised the engineering section of the steam plant boiler. His work involved overseeing the operation of the machines and the performance of the workers in the engineering section. This work necessarily required the use of discretion and independent judgment to ensure the proper functioning of the steam plant boiler. Further, Peñaranda in his position paper admitted that he was a supervisor for BPC. As supervisor, petitioner is deemed a member of the managerial staff. Asia Pacific Chartering, Inc. v. Farolan, G.R. No.151370, December 4, 2002, 393 SCRA 454 (2002)

Facts: Respondent Maria Linda R. Farolan was hired as Sales Manager of petitioner for its passenger and cargo GSA operations for Scandinavian Airline System (SAS). Soon after respondent assumed her post, she participated in a number of meetings/seminars (technical aspects all geared towards improving her marketing and sales skills) Respondent, upon instruction of Bondoc (VP/Comptroller), submitted a report. As reflected in respondent’s report, there was a drop in SAS’ sales revenues which to her was attributable to market forces beyond her control. Petitioner directed its high ranking officer Roberto Zozobrado to conduct an investigation on the matter and identify the problem/s and implement possible solutions. Zozobrado thus informally took over some of respondent’s marketing and sales responsibilities, albeit respondent retained her title as Sales Manager and continued to receive her salary as such. Soren Jespersen, General Manager of SAS, came to the Philippines to assess the statistics on SAS’ sales revenues and SAS was convinced that respondent was not fit for the job of Sales Manager; and in view of the changes introduced by Zozobrado, SAS-GSA sales operations drew positive results. Respondent Farolan nevertheless, received letter from Jespersen congratulating him for exceeding sale results in April and a number of recommendations for improvement. However, on even date, Petitioner terminated the employment of respondent on ground of loss of trust and confidence Thus, respondent filed a complaint for illegal dismissal with prayer for damages and attorney’s fees. Respondents version: alleged that Bondoc and Zozobrado had asked her to tender her resignation as she was not the person whom SAS was looking for to handle the position of Sales Manager 9 but that she refused, hence, she was terminated Labor Arbiter: ruled in favor of respondent; NLRC: reversed the ruling of the LA CA: Set aside the decision of NLRC Issue: WON, APC, AS EMPLOYER, HAS THE MANAGEMENT PREROGATIVE TO REPLACE A SALES MANAGER WHOM IT HAS REASONABLE GROUNDS TO BELIEVE CANNOT EFFECTIVELY DISCHARGE THE DUTIES DEMANDED BY SUCH POSITION. Held: Recent decisions of this Court distinguish the treatment of managerial employees from that of rank and file personnel insofar as the application of the doctrine of loss of trust and confidence is concerned. MANAGERIAL EMPLOYEES; CONDITIONS THAT MUST BE MET BEFORE ONE MAY BE CONSIDERED A MANAGERIAL EMPLOYEE. — As enunciated in Samson v. NLRC, 330 SCRA 460, “Before one may be properly considered a managerial employee, all the following conditions must be met: (1) Their primary duty consists of the management of the establishment

in which they are employed or of a department or subdivision thereof; (2) They customarily and regularly direct the work of two or more employees therein; (3) They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees are given particular weight. (Section 2(b), Rule I, Book III of the Omnibus Rules Implementing the Labor Code, italics supplied). It is not disputed that her job description, and the terms and conditions of her employment, with the exception of her salary and allowances, were never reduced to writing. By respondent’s claim, her function, as verbally explained to her by Murray, dealt mainly with servicing of existing clientele. Bondoc, however, described respondent’s functions and duties as critical DISMISSAL; LOSS OF TRUST AND CONFIDENCE; MUST BE BASED ON A WILLFUL BREACH AND FOUNDED ON CLEARLY ESTABLISHED FACTS; BREACH OF DUTIES; WHEN CONSIDERED WILLFUL; CASE AT BAR. — Even assuming, however, that respondent was a managerial employee, the stated ground (in the letter of termination) for her dismissal, “loss of confidence,” should have a basis and determination thereof cannot be left entirely to the employer. Loss of trust and confidence to be a valid ground for an employee’s dismissal must be based on a willful breach and founded on clearly established facts. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Respondent’s detailed REPORT dated September 8, 1993, relative to SAS profit and loss for 1993, which was closely examined and analyzed by the LA contains an explanation of what brought about the decline in sales revenues. And it contains too a number of recommended measures on improvement of sales for the remainder of 1993 and for 1994. As did the Labor Arbiter and the Court of Appeals, this Court finds respondent’s explanation in her Report behind the decline in sales revenues as due to market forces beyond respondent’s control plausible. In any event, there is no showing that the decline is reflective of any willful breach of duties by respondent.