LABlab Flashcards
Maria Antoniette Cudal Lee was hired by Fil-Expat Placement Agency, Inc. as an orthodontist for Thanaya Al-Yaqoot Medical Specialist in the Kingdom of Saudi Arabia for a contract period of two years. She signed an employment contract duly approved by the POEA. After 5 months of employment, the employer asked Maria Antoniette to execute a new employment contract for the purpose of insurance and to comply with the KSA’s Ministry of Health requirement of securing a signed contract. According to the employer, the new contract was only for uniformity and was not intended to alter the terms of the original contract. Maria Antoniette refused to sign the new contract. Due to hostile experiences, she left her job and was repatriated. She then filed a labor case against her employer and the agency for contract substitution. Did her employer commit contract substitution?
Yes. The substitution or alteration of employment contracts is a prohibited practice under the Labor Code. To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the 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 is considered an act of “illegal recruitment” under Section 6(i) of Republic Act No. 8042. It is illogical to require Maria Antoniette to sign a second contract if it would only restate the contents of the POEA-approved employment contract. It is also illogical that Maria was allowed to work at the clinic for five months without the foreign employer having a copy of the POEA-approved employment contract. Even assuming that Maria Antoniette failed to provide her foreign employer with a copy of the POEA-approved contract, the latter could just easily request a copy of the same from the recruitment agency, Fil-Expat. (Fil-Expat Placement Agency, Inc., v. Maria Antoniette Cudal Lee, G.R. No. 250439, September 22, 2020)
Distinguish between legitimate job contracting and labor-only contracting.
(1) As to nature of employer/principal
LJC: The employer or principal is merely an indirect employer, by operation of law, of his contractor’s employees
LOC: The employer/principal is treated as direct employer of the contractor’s employees in all instances (contractor is deemed agent of the employer)
(2) As to existence of EER
LJC: The law creates an employer-employee relationship for a limited purpose, i.e., to ensure that the employees are paid their wages.
LOC: The law creates an employer-employee relationship for a comprehensive purpose i.e. to prevent a circumvention of the law. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer.
(3) As to liability
LJC: The principal employer becomes jointly and severally liable with the job contractor only for the payment of the employees’ wages whenever the contractor fails to pay the same. Other than that, the principal employer is not responsible for any claim made by the employees.
LOC: The principal employer becomes solidarity liable with the labor-only contractor for all the rightful claims of the employees.
In 2002, PPI Holdings, Inc., hired Rico Palic Conjusta as a messenger for its human resources department, and later on, for its accounting department. Eventually, Conjusta’s employment was transferred to a manpower agency, a certain Human Resources, Inc., and subsequently, to Consolidated Buildings Maintenance, Inc. (CBMI). Despite such transfer, nothing changed with Conjusta’s employment — he continued to be PPI’s messenger in its accounting department until CBMI sent him, along with other coworkers, a Letter in 2016 terminating his services with PPI. Conjusta then filed an illegal dismissal case with money claims against PPI and CBMI arguing that he was PPI’s regular employee for having worked with it for 14 years. Is CBMI a legitimate job contractor and, consequently, Conjusta’s direct employer?
No. PPI and CBMI were engaged in the proscribed labor-only contracting. The following must be considered in determining whether CBMI is a legitimate job contractor or is engaged in labor-only contracting: (1) registration with the proper government agencies; (2) existence of substantial capital or investment; (3) service agreement that ensures compliance with all the rights and benefits under labor laws; (4) nature of the activities performed by the employees, i.e., if they are usually necessary or desirable to the operation of the principal ‘s company or directly related to the main business of the principal within a definite predetermined period; and (5) the exercise of the right to control the performance of the employees’ work. There is want of evidence that it was CBMI who hired Conjusta. There was no contract of employment showing that Conjusta was an employee of CBMI. As a messenger, Conjusta had been performing his tasks at PPI’s premises for about 14 years. All those times, all the tools and equipment which he used in the performance of his work are owned by PPI and the latter’s managers and supervisors controlled his work inside the company premises. (Rico Palic Conjusta v. Ppi Holdings, Inc., G.R. No. 252720, August 22, 2022)
Freddie B. Laurente initiated a complaint for Illegal Dismissal with Money Claims against Helenar Construction and its owner Joel Argarin. He claimed to doing work that is necessary and desirable for respondents’ construction business. He performed painting jobs from April 2012 until his termination in November 2014 across various projects. He claimed that he was asked to sign a labor contract for a period of three (3) months with a clause stating that his employment would be renewable “depending on the evaluation of the site engineer and foreman”, which he refused to sign because it would violate his security of tenure. Subsequently, he was barred from entering the construction site. The respondents contested, stating that Freddie is not their regular employee and that it was their subcontractor who recruited him as a painter for the project. Is Freddie a regular employee of Helenar Construction?
Yes. What determines regular employment is not the employment contract, written or otherwise, but the nature of the job. The applicable test is the reasonable connection between the particular activity performed by the employee in relation to the usual business of the employer or whether the work undertaken is necessary or desirable in the usual business or trade of the employer. This can be assessed by looking into the nature of the services rendered and its relation to the general scheme under which the business is pursued in the usual course. In this case, respondents are principally engaged in the construction business. Freddie, as a painter, is tasked with preparing, sanding and painting various construction works. Inarguably, the nature of Freddie’s job required him to perform activities, which were deemed necessary in the usual business of respondents. Freddie’s continuous rehiring to different construction projects of respondents from April 2012 until his termination in November 2014 attests to the desirability of his services. (Freddie B. Laurente v. Helenar Construction and Joel Argarin, G.R. No. 243812. July 07, 2021)
Simbajon and other employees filed a complaint against Q.S.O. Disco Pub & Restaurant, Abelardo Salazar, Quirino Ortega, and Lucia Bayang for unfair labor practices, illegal dismissal, underpayment of salaries, and non-payment of benefits. They claimed to have been employed in various roles at the restaurant and alleged harassment after forming a union. Abelardo, in response, denied any employment relationship with Simbajon, et al. He asserted that Lucia and Quirino were the restaurant owners, and he was only the lessor of the building. As supporting evidence, Abelardo submitted Contracts of Lease and Tax Returns showing his income solely on building rentals. Abelardo likewise presented the Certificate of Registration of Business Name, Mayor’s Permit, and Certificate of Registration with the Bureau of Internal Revenue which were all issued in Lucia’s name. Will the case for illegal dismissal prosper against Abelardo?
No. Applying the four-fold test of employment relationship, namely: (1) the selection and engagement of the employee or the power to hire; (2) the payment of wages; (3) the power to dismiss; and (4) the power to control the employee, would disclose that Abelardo is not the employer of Simbajon, et al. The evidence showed that Abelardo did not participate in the selection of employees, did not directly pay their wages, did not have the power to dismiss them, and did not exercise control over their work. Instead, Abelardo presented documents proving that he is the lessor of the restaurant, providing lease contracts, tax returns, and other certifications in Lucia’s name as the business owner. (Abelardo Salazar v. Albina Simbajon, et.al, G.R. No. 202374, June 30, 2021)
Pedro and Maricel Dusol worked in Ralco Beach owned by Emmarck Lazo. Pedro handled maintenance and security, while Maricel managed the store. They were compensated with weekly allowances and monthly payments, respectively. In July 2008, due to unprofitability, Emmarck decided to lease out the beach, ending their services. Pedro and Maricel claimed illegal dismissal, but Emmarck denied an employment relationship, stating they were industrial partners. Are Pedro and Maricel employees of Emmarck?
Yes. To determine whether an employment relationship exists, the following elements are considered: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employer’s power to control the employee’s conduct. The most important element is the employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. The records show that all the elements of an employer-employee relationship are present. First, Ralco Beach engaged the services of Pedro as caretaker and Maricel as a storekeeper. Second, Emmarck paid their wages in the form of allowances and commissions. Third, Emmarck terminated their employment when he notified them that he will be leasing the beach Resort, and that their services were no longer needed. Finally, Emmarck had the power to control their conduct in the performance of their duties. (Pedro D. Dusol and Maricel M. Dusol v. Emmarck A. Lazo, G.R. No. 200555, January 20, 2021)
What is contracting?
Contracting or subcontracting refers to an arrangement whereby a principal agrees to farm out to a contractor the performance or completion of a specific job or work within a definite or predetermined period, regardless of whether such job or work is to be performed or completed within or outside the premises of the principal.
What are the elements of a legitimate contracting or subcontracting?
The contracting or subcontracting shall only be allowed if all of the following circumstances concur:
- The contractor or subcontractor is engaged in a distinct and independent business and undertakes to perform the job or work on its own responsibility according to its own method
- The contractor or subcontractor has substantial capital to carry out the job farmed out by the principal on his account, manner and method, investment in the form of tools, equipment, machinery, and supervision
- In performing the work farmed out, the contractor or subcontractor is free from control and/or discretion of the principal in all matters connected with the performance of the work except as to the result thereto
- The service agreement ensures compliance with all the rights and benefits for all the employees of the contractor or subcontractor under the labor laws
What is considered “substantial capital” for the purpose of compliance in legitimate contracting?
Substantial capital refers to paid-up capital stocks/shares of at least P5,000,000 in case of corporations, partnerships and cooperatives; or net worth of at least P5,000,000 in the case of single proprietorship.
Is the registration of a contractor conclusive proof of the contractor’s legitimacy?
No. While the existence of registration in favor of a contractor is a strong badge of legitimacy, the elements of substantial capital, or investment and control over the workers may be examined to rebut the presumption of regularity to prove that a contractor is not a legitimate one.
Tri-lateral relationship
It refers to the relationship in a contracting or subcontracting arrangement where there is contract for a specific job, work, or service between the principal and the contractor, and a contract of employment between the contractor and its workers.
Who are the parties involved in a trilateral relationship?
The parties involved in a trilateral relationship:
- Principal: any natural or juridical entity, whether an employer or not, who puts out or farms out a job or work to a contractor
- Contractor: any person or entity engaged in a legitimate contracting or subcontracting arrangement providing services for a specific job or undertaking farmed out by principal under a service agreement
- Contractor’s employee: employee of the contractor hired to perform or complete a job or work farmed out by the principal pursuant to a service agreement with the latter
What are the contracts required in a trilateral relationship?
- Employment contract between the contractor/subcontractor and its employees
- Service Agreement between the principal and the contractor
What is labor-only contracting?
Labor-only contracting refers to an arrangement where the contractor or subcontractor recruits, supplies, or places workers to perform a job or work for a principal, any of the two elements hereunder is present:
- The contractor or subcontractor:
a. Does not have either substantial capital OR investments in the form of tools, equipment, machineries, supervision, work premises, among others; AND
b. The employees recruited and placed are performing activities which are directly related to the main business operation of the principal; or - The contractor or subcontractor does not exercise the right to control over the performance of the work of the employee
*There is labor-only contracting even if only one of the two elements above is present. Labor-only contracting is legally wrong and prohibited because it is an attempt to evade the obligations of an employer.
Oscar Ortiz, who was claiming to be a regular employee was allegedly illegally terminated after refusing to sign a new employment contract. Forever Richardson claimed, on the other hand, that Ortiz should be reporting to Workpool Manpower as its labor-only contractor. It further argued that Workpool Manpower should be impleaded in this case. Is an employee, who was allegedly hired through labor-only contracting, required to implead such contractor in an illegal dismissal case?
No. In labor-only contracting, the party who would have been the principal in a legitimate job contracting relationship, and who has no direct relationship with the contractor’s employees, simply becomes the employer in the situation with direct supervision and control over the contracted employees. Strictly speaking, in labor-contracting, there is no contracting, and no contractor; there is only the employer’s representative who gathers and supplies people for the employer. Considering that the respondents and Workpool Manpower’s contracting relationship is a prohibited form of contracting, it is no longer necessary to implead Workpool Manpower as a party to the case. It is a consequence of labor-only contracting that the personality of the principal and the contractor is merged into one. Thus, Workpool Manpower becomes a mere representative of the respondents, who is the employer of Oscar. (Ortiz v. Forever Richardson et. al, GR No. 238289, January 20, 2021)
The Social Housing Finance Corporation (SHFC), a government-owned entity, and its rank-and-file employees’ union, Social Housing Employees Association, Inc. (SOHEAI), entered into a Collective Bargaining Agreement (CBA) where they renegotiated its economic provisions, leading to agreed-upon benefits enhancements. However, the Governance Commission for GOCCs stated that SHFC had no authority for such enhancements due to existing laws and executive orders thus nullifying the new benefits and increases. SOHEAI claimed it as a diminution of benefits. Is the contention correct?
No. The SOHEAI and SHFC may establish in their CBAs such terms and conditions that are not contrary to law. However, there are existing and subsequent laws prohibiting GOCCs like SHFC from negotiating the CBAs’ economic provisions. EO No. 203 expressly disallowed the governing boards of GOCCs, whether chartered or non-chartered, to negotiate the economic terms of their CBAs. Further, the grant of allowances and other benefits to GOCCs must have the approval of the President upon the recommendation of the Budget Commissioner. Therefore, the SHFC’s revocation of the CBAs’ economic provisions can hardly amount to diminution of benefits. Suffice it to say that SOHEAI is not entitled to the new benefits and increases which yield neither legal nor binding effect. (Social Housing Employees Association, Inc. v. Social Housing Finance Corporation, G.R. No. 237729, October 14, 2020)
LBP Service Corporation had a manpower services agreement with Land Bank of the Philippines, deploying workers like Tuppil and Borja, et al. in Metro Manila. When the contract expired in 2014, the workers were recalled. Tuppil resigned, and Borja filed a complaint for illegal dismissal, claiming they were regular employees performing services necessary and desirable to LBP Service’s business. The Labor Arbiter dismissed the complaint, stating they were fixed-term contractual employees with no evidence of contract termination by LBPSC. Are the fixed term employment contracts of Tuppil, et al. and Borja, et al. unlawful?
No. Article 280 of the Labor Code does not proscribe or prohibit an employment contract with a fixed period provided the same is entered into by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstance vitiating consent.
The criteria of a valid fixed-term employment are:
(1) the fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or
(2) it satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter.
In an administrative charge involving sexual harrasment under RA 7877 or the Anti-Sexual Harassment Act of 1995, what quantum of evidence is required?
The employee’s liability for an administrative offense of sexual harassment should not be determined solely based on Section 3 of RA No. 7877. Substantial evidence to support the administrative charge is sufficient. Thus, the “demand, request, or requirement of a sexual favor” requirement in Section 3 is not essential before an act can be qualified as sexual harassment in an administrative charge. It is enough that the respondent’s actions created an intimidating, hostile, or offensive environment for the employee. (Philippine Airlines v. Frederick Yañez, G.R. No. 214662, March 02, 2022)
Atty. Panga-Vega availed the 15 days of special leave benefit under RA No. 9710 (Magna Carta of Women), underwent total hysterectomy on February 7, 2011, and decided to return to work on March 7, 2011. She sought to resume her duties and presented a medical certificate of her fitness to return to work. HRET, however, directed her to consume her 2-month special leave given her need for prolonged rest. Does RA No. 9710 require that the entire duration of the special leave applied for be consumed before an employee is allowed to return to work?
No. While RA No. 9710 and the CSC Guidelines do not require that the entire special leave applied for be consumed, certain conditions must be satisfied for its propriety. Under the CSC Guidelines, a total hysterectomy is classified as a major surgical procedure. requiring a minimum period of recuperation of three weeks to a maximum period of two months. Aside from observing this time frame, the employee, before she can return to work, shall present a medical certificate signed by her attending surgeon that she is physically fit to assume the duties of her position. As it appears, she was already able to observe a period of recuperation of four weeks. As to the requirement for a medical certificate, she already presented a medical certificate signed by her attending obstetrician/gynecologist attesting her physical fitness to report back for work. Based on these facts, Panga-Vega sufficiently complied with the CSC Guidelines warranting her return to work. (House of Representatives Electoral Tribunal v. Panga-Vega, G.R. No. 228236, January 27, 2021)
When does a benefit provided by an employer to an employee, ripen into a company practice?
To be considered a company practice, the benefit must be consistently and deliberately granted by the employer over a long period of time. It requires an indubitable showing that the employer agreed to continue giving the benefit knowing fully well that the employee is not covered by any provision of law or agreement for its payment. The burden to establish that the benefit has ripened into a company practice rests with the employee. (Home Credit Mutual Building and Loan Association et.al v. Ma. Roulette Prudente, G.R. No. 200010, August 27, 2020)
In 1997, Home Credit Mutual Building and Loan Association gave its employee Rollette Prudente her first service vehicle. Later, Rollete purchased the vehicle from Home Credit at its depreciated value. In 2003, Home Credit granted Rollete’s request for a second service vehicle. However, Home Credit required Rollete to pay for additional equity. In 2008, Rollete again purchased the vehicle at its depreciated value. In 2009, Rollette applied for a third service vehicle. This time, Home Credit adopted a cost sharing scheme where Rollette must shoulder 40% of the acquisition price. Aggrieved, Rollette filed a complaint against Home Credit for violation of Article 100 of the Labor Code on non-diminution of benefits before the Labor Arbiter (LA). Did the provision of a service vehicle starting from 1997 already ripened into a company practice?
No. The non-diminution rule applies only if the benefit is based on an express policy, a written contract, or has ripened into a practice. To be considered as company practice requires an indubitable showing that the employer agreed to continue giving the benefit knowing fully well that the employee is not covered by any provision of law or agreement for its payment. In this case, Home Credit had no existing car plan at the time Rollette was hired. There was no substantial evidence to prove that the car plan at full company cost had ripened into company practice. Notably, the only time Rollette was given a service vehicle fully paid for by the company was for her first car. For the second vehicle, the company already imposed a limit but Rollette never questioned this. She willingly paid for the equity in excess of said limit. The elements of consistency and deliberateness are not present. (Home Credit Mutual Building and Loan Association et.al v. Ma. Roulette Prudente, G.R. No. 200010, August 27, 2020)
Mutia, hired as an assistant cook by C.F. Sharp for Norwegian Cruise Lines (NCL), was found fit to work despite mild hearing loss. He suffered two accidents causing lower back pain and was diagnosed with “Multiple Sclerosis” and “Blurring of Vision”. Despite undergoing treatments, his condition worsened. After repatriation to the Philippines, his treatment payments were stopped by C.F. Sharp and NCL. He was certified for permanent total disability benefits by OWWA’s physician. However, C.F. Sharp and NCL denied his claim for benefits, alleging that he concealed a pre-existing condition of acute otitis media (ear illness). Is the defense of concealment tenable despite the facts that the prior illness is unrelated to his present claim for disability benefits?
No. A seafarer who knowingly conceals a pre-existing illness or condition in the Pre-Employment Medical Examination (PEME) shall be liable for misrepresentation and shall be disqualified from any compensation and benefits. An illness shall be considered as pre-existing if prior to the processing of the POEA contract, any of the following conditions are present: a. The advice of a medical doctor on treatment was given for such continuing illness or condition; or b. The seafarer had been diagnosed and has knowledge of such an illness or condition but failed to disclose the same during pre-employment medical examination (PEME), and such cannot be diagnosed during the PEME. Mutia’s acute otitis media does not fall under any of the conditions mentioned constituting a pre-existing illness. Mutia’s prior ear illness is also unrelated to his present medical conditions. There is no proof that the ear condition caused or aggravated Mutia’s “Multiple Sclerosis,” “Blurring of Vision,” and “Neuromyelitis optica.” (Loue B. Mutia v. C.F. Sharp Crew Mgt., Inc., G.R. No. 242928, June 27, 2022)
What is fraudulent concealment?
A finding of fraudulent concealment means that a person failed to disclose the truth and that the non-disclosure is deliberate and for a malicious purpose. The fraudulent concealment must be coupled with an intent to deceive and profit from that deception. (Loue B. Mutia v. C.F. Sharp Crew Mgt., Inc., G.R. No. 242928, June 27, 2022)
When is Section 20 (E) of the 2010 POEA-SEC which provides that a seafarer who knowingly conceals a pre-existing illness or condition in the Pre-Employment Medical Examination (PEME) shall be liable for misrepresentation and shall be disqualified from any compensation and benefits applicable?
Section 20(E) of the 2010 POEA-SEC is applicable if the following conditions are met: (1) the seafarer is suffering from a pre-existing illness or injury as defined under Item 11 (b) of the 2010 POEA-SEC, (2) the seafarer intentionally concealed the illness or injury, (3) the concealed pre-existing illness or injury has a causal or reasonable connection with the illness or injury suffered during the seafarer’s contract. Under the last condition, it is enough that the concealed illness or injury contributed to the seafarer’s disability. In the absence of these conditions, the employers remain liable for work-related injury or illness consistent with their duties to provide a seaworthy ship and to take precautions to avoid the seafarer’s accident, injury, or sickness. (Loue B. Mutia v. C.F. Sharp Crew Mgt., Inc., G.R. No. 242928, June 27, 2022)