LABOR STANDARDS
I.
Fundamental Principles and
Policies
A. LABOR LAW
That body of statutes, rules and doctrines that defines State policies on labor and employment, and governs the rights and duties of workers and employers respecting terms and conditions of employment by prescribing certain standards therefore, or by establishing a legal framework within which better terms and conditions of work could be obtained through collective bargaining or other concerted activity.
Labor Law, defined
Law governing the rights and duties of employer and employees respecting term and conditions of
employment by:
1. Prescribing certain standards, or
2. By establishing a legal framework within which better terms and conditions of work could be obtained through:
a. Collective Bargaining or b. Other concerted activity Elements of labor law
1. Labor Standards law
Labor Standards is that branch of Labor Law that establishes the minimum terms and conditions of employment that an employer must provide to the workers.1
2. Labor relations
Regulates the institutional relationship between the workers organized into a union and the employers.
3. Social Legislation
Includes laws that provide particular kinds of protection or benefits to society or segments thereof in furtherance of social justice.
1 Abad, Jr, Antonio H. (2008). The Law on Labor Standards. Rex Printing Company, Inc.
B. LEGAL BASIS
i. 1987 Philippine Constitution
a. Social Justice
Social Justice, defined
It is neither communism, nor despotism nor atomism nor anarchy, but the humanization or laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated.2 Sec 5, Art II, 1987 Constitution:
Declaration of Principles
The maintenance of peace and order, the protection of life, liberty, and property, and the promotion of the general welfare are essential for the enjoyment by all the people of the blessings of democracy.
Sec 10, Art II, 1987 Constitution: Declaration of State Policies
The State shall promote social justice in all phases of national development.
Sec 1, Art XIII, 1987 Constitution: Social Justice and Human Rights
The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequalities by equitably diffusing wealth and political power for the common good.
To this end, the State shall regulate the acquisition, ownership, use and, disposition of property and its increments.
Sec 2, Art XIII, 1987 Constitution
The promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance.
b. Protection of Labor
Sec 1, Art XIII, 1987 Constitution: Social Justice and Human Rights
The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequalities by equitably diffusing wealth and political power for the common good.
To this end, the State shall regulate the acquisition, ownership, use and, disposition of property and its increments.
Sec 2, Art XIII, 1987 Constitution
The promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance.
ii. Civil Code
Article 1700, Book IV, New Civil Code The relations 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, Book IV, New Civil Code Neither capital nor labor shall act oppressively against the other, or impair the interest or convenience of the public.
Contracts
• Under the Civil Code, contracts of labor are explicitly subject to the police power of the state because they are not ordinary contracts but are impressed with public interest. Inasmuch as in this particular instance the contract in question would have been deemed in violation of pertinent labor laws, the provisions of said laws would prevail over the terms of the contract, and private respondent would still be entitled to overtime pay. (PAL Employees Savings And
Loan Assn., Inc. vs. NLRC, 1996)
Liberal Construction
• 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. (Cirtek Employees Labor
Union-FFW v Cirtek Electronics, 2010)
Fair treatment
• The right of an employer to dismiss an employee differs from and should not be confused with the manner in which such right is exercised. It must not be oppressive and abusive since it affects one's person and property. (General Bank and
Trust Co. vs. CA, 1985)
Mutual obligation
• The employer's obligation to give his workers just compensation and treatment carries with it the corollary right to expect from the workers adequate work, diligence and good conduct.
(Firestone Tire And Rubber Co. vs. Lariosa, 1987)
Compliance with law
• It is also important to emphasize that the return-to-work order not so much confers a right as it imposes a duty; and while as a right it may be waived, it must be discharged as a duty even against the worker's will. (Sarmiento vs. Tuico,
1988)
Employee's compliance and obedience to employer's orders
• The lack of a written or formal designation should not be an excuse to disclaim any responsibility for any damage suffered by the employer due to his negligence. The measure of the responsibility of an employee is that if he performed his assigned task efficiently and according to the usual standards, then he may not be held personally liable for any damage arising there from. Failing in this, the employee must suffer the consequences of his negligence if not lack of due care in the performance of his duties. (PCIB vs. Jacinto, 1991)
Art. 3. Declaration of basic policy.
The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work.
Art. 211. Declaration of Policy. A. It is the policy of the State:
(a) To promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes;
(b) To promote free trade unionism as an instrument for the enhancement of democracy and the promotion of social justice and development;
(c) To foster the free and voluntary organization of a strong and united labor movement;
(d) To promote the enlightenment of workers concerning their rights and obligations as union members and as employees;
(e) To provide an adequate administrative machinery for the expeditious settlement of labor or industrial disputes;
(f) To ensure a stable but dynamic and just industrial peace; and
(g) To ensure the participation of workers in decision and policy-making processes affecting their rights, duties and welfare.
To encourage a truly democratic method of regulating the relations between the employers and employees by means of agreements freely entered into through collective bargaining, no court or administrative agency or official shall have the power to set or fix wages, rates of pay, hours of work or other terms and conditions of employment, except as otherwise provided under this Code. (As amended by Section 3, Republic Act No. 6715, March 21, 1989)
Art. 212. Definitions.
Relations Commission or any of its divisions, as the case may be, as provided under this Code. (b) "Bureau" means the Bureau of Labor Relations and/or the Labor Relations Divisions in the regional offices established under Presidential Decree No. 1, in the Department of Labor.
(c) "Board" means the National Conciliation and Mediation Board established under Executive Order No. 126.
(d) "Council" means the Tripartite Voluntary Arbitration Advisory Council established under Executive Order No. 126, as amended.
(e) "Employer" includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer.
(f) "Employee" includes any person in the employ of an employer. The term shall not be limited to the employees of a particular employer, unless the Code so explicitly states. It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment.
(g) "Labor organization" means any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment.
(h) "Legitimate labor organization" means any labor organization duly registered with the Department of Labor and Employment, and includes any branch or local thereof.
(i) "Company union" means any labor organization whose formation, function or administration has been assisted by any act defined as unfair labor practice by this Code. (j) "Bargaining representative" means a legitimate labor organization whether or not employed by the employer.
(l) "Labor dispute" includes any controversy or matter concerning terms and conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee.
(m) "Managerial employee" is one who is vested with the powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book.
(n) "Voluntary Arbitrator" means any person accredited by the Board as such or any person named or designated in the Collective Bargaining Agreement by the parties to act as their Voluntary Arbitrator, or one chosen with or without the assistance of the National Conciliation and Mediation Board, pursuant to a selection procedure agreed upon in the Collective Bargaining Agreement, or any official that may be authorized by the Secretary of Labor and Employment to act as Voluntary
Arbitrator upon the written request and agreement of the parties to a labor dispute. (o) "Strike" means any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute.
(p) "Lockout" means any temporary refusal of an employer to furnish work as a result of an industrial or labor dispute.
(q) "Internal union dispute" includes all disputes or grievances arising from any violation of or disagreement over any provision of the constitution and by laws of a union, including any violation of the rights and conditions of union membership provided for in this Code. (r) "Strike-breaker" means any person who obstructs, impedes, or interferes with by force, violence, coercion, threats, or intimidation any
peaceful picketing affecting wages, hours or conditions of work or in the exercise of the right of self-organization or collective bargaining. (s) "Strike area" means the establishment, warehouses, depots, plants or offices, including the sites or premises used as runaway shops, of the employer struck against, as well as the immediate vicinity actually used by picketing strikers in moving to and fro before all points of entrance to and exit from said establishment. Art. 255. Exclusive bargaining representation and workers’ participation in policy and decision-making.
The labor organization designated or selected by the majority of the employees in an appropriate collective bargaining unit shall be the exclusive representative of the employees in such unit for the purpose of collective bargaining. However, an individual employee or group of employees shall have the right at any time to present grievances to their employer.
Any provision of law to the contrary notwithstanding, workers shall have the right, subject to such rules and regulations as the Secretary of Labor and Employment may promulgate, to participate in policy and decision-making processes of the establishment where they are employed insofar as said processes will directly affect their rights, benefits and welfare. For this purpose, workers and employers may form labor-management councils: Provided, That the representatives of the workers in such labor-management councils shall be elected by at least the majority of all employees in said establishment. (As amended by Section 22, Republic Act No. 6715, March 21, 1989)
C. WORK RELATIONSHIP
Employer and employee, defined
Person, defined
Art 97. Definitions, (a) Person
The relation between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to
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
Employer, defined
Art 97. Definitions, (b) Employer
Any person acting directly or indirectly in the interest of an employer in relation to an
employee and shall include government and all its branches, subdivisions and instrumentalities, all government-owned or controlled corporations and institutions, non-profit private institutions, or organizations.3
Employee, defined
Art 97. Definitions, (c) Employee Any individual employed by an employer Art 167. Definitions, (c) Employee
Any person compulsorily covered by the GSIS under Commonwealth Act no. 186 as amended, including the members of the Armed Forces of the Philippines, and any person employed as casual, emergency, temporary, substitute or contractual, or any person compulsory covered by the SSS under RA 1161, as amended.4
Art 212. Definitions, (f) Employee
The term shall not be limited to the employees of a particular employer, unless the code so explicitly states. It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment.5
i. Employer-employee relationship
3 Art 97. Definitions, (a) Employer4 Art 167. Definitions, (c) Employee, Title II: Employee’s compensation and State Insurance Fund, Book 4: Health, Safety and Social Welfare Benefits, Labor Code
5 Art 212. Definitions, (f) Employee, Title I: Policy and Definitions. Book 5: Labor Relations, Labor Code
Concept of Employer-Employee relationship Art 1700, Civil Code
The relation between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to 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
Existence of Employer-Employee relationship as condition sine quo non.
The law on labor standards is predicated upon the existence of an employer-employee relationship. Absent employer-employee relation, the law on labor standards will not apply.6
Four-Fold Test: The four elements must be considered to determine the existence of employer-employee relationship:
1. Selection and engagement of the employees
2. Payment of wages 3. Power of dismissal
4. Power to control the employees conduct in relation to his work,
• The control test is the most crucial indication of the existence of an employer-employee relationship.7
• Power of control refers to the existence of the
power and not necessarily to the actual exercise
thereof.
• The most important is the employer’s control of the employee’s conduct, not only as to the
results of the work to be done, but also as to the means and methods to accomplish.
ii. Independent contractor and
labor-only contractor
Independent contractor, defined
The independent contractor is tasked to do work according to his own methods and without the control of the sub-contractor only as to the results. 6 Abad, Jr, Antonio H. (2008). The Law on Labor Standards. Rex Printing Company, Inc.
7 The Manila Hotel Corp v. NLRC, 343 SCRA 1 (2000); Jo v. NLRC 324 SCRA 437 (2000); Canlubang Security Agency v. NLRC, et al., 216 SCRA 280 (1992).
They must have:
1. Substantial Capital
2. Assure that the contractual employees are entitled to all labor and occupational safety and health standards, free to exercise right to self-organization, security of tenure and social and welfare benefits.
Labor only contractor, defined
This happens when the contractors merely supply, recruit, or place workers to perform job, work/ service for the principal and any of the following are present:
1. Does not have substantial capital and 2. Does not have substantial Investment 3. The service to be rendered by the employee
is directly related to the main business 4. The recruiter does not exercise control
over the performance of the contractual employees
iii. Liability of indirect employer
Liability of indirect employer
Article 106: Trilateral Relationship in Contracting Arrangements, Labor Code In legitimate contracting, there exists a trilateral relationship under which there is a contract for a specific job, work or service between the principal and the contractor or subcontractor, and a contract of employment between the contractor or subcontractor and its workers. Hence, there are three parties involved in these arrangements, the principal which decides to farm out a job or service to a contractor or subcontractor, the contractor or subcontractor which has the capacity to independently undertake the performance of the job, work or service, and the contractual workers engaged by the contractor or subcontractor to accomplish the job work or service.
• An employer who enters into a contract with a contract for the performance of work for the employer does not create an employee employer relationship between himself and the contractor. However, when a contractor fails to pay the wages and benefits of the worker they will be jointly and severally liable.8
8 Phil. Bank Communications vs. NLRC 146 SCRA 347 (1986)
• This trilateral relationship is limited only to ensure that the employee get paid what is due them.
II.
Recruitment and Placement
A. Definition of Terms
License, defined
Article 13 (d) and (f), Labor Code
A license is a document issued by the Department of Labor and Employment (DOLE) authorizing a person or entity to operate a private employment agency, while an authority is a document issued by the DOLE authorizing a person or association to engage in recruitment and placement activities as a private recruitment agency.
Private Employment Agency and Private Recruitment Agency, distinguished
Type Definition Requires
Private Employment Agency Any person or entity engaged in recruitment and placement of workers for a fee
License Private Recruitment Agency Any person or association engaged in the recruitment and placement of workers, locally or overseas, without charging, directly or indirectly, any fee Authority
Recruitment and placement, defined Article 13 (b), Labor Code
“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, which in any manner offers or promises for a fee employment to two or more persons shall be deemed engaged in recruitment and placement.
• The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of workers.9
• Any of the acts mentioned in Art 13(b) will constitute recruitment and placement even if only prospective worker is involved. The proviso merely lays down a rule of evidence that when a fee is collected in consideration of a promise or offer of employment to two or more prospective workers, the individual or entity dealing with them shall be deemed to be engaged in the act of recruitment and placement. 10
B. EMPLOYMENT POLICIES
Art 2, Section 9, 1987 Constitution
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.
Art 12, Labor Code It is the policy of the State:
a) To promote and maintain a state of full employment through improved manpower training, allocation and utilization;
b) To protect every citizen desiring to work locally or overseas by securing for him the best possible terms and conditions of employment;
c) To facilitate a free choice of available employment by persons seeking work in conformity with the national interest;
d) To facilitate and regulate the movement of workers in conformity with the national interest; e) To regulate the employment of aliens,
9 People v Panis, 142 SCRA 667 (1986)
10 People v Panis, 142 SCRA 667 (1986)
including the establishment of a registration and/or work permit system;
f) To strengthen the network of public employment offices and rationalize the participation of the private sector in the recruitment and placement of workers, locally and overseas, to serve national development objectives;
g) To insure careful selection of Filipino workers for overseas employment in order to protect the good name of the Philippines abroad.
• RA 8042 redefines the policy of overseas employment and establishes a higher standard of protection and promotion of the welfare of migrant worker, their families, and of overseas Filipinos in distress. It declares that the State does not promote overseas employment as a means to sustain economic growth and national development. It conveys that, instead, the State shall continuously create local employment opportunities and promote the equitable distribution of wealth and the benefits of development. The ultimate aim is local instead of foreign employment.11
• The Act further requires certain guarantee of protection for the overseas workers before they are deployed. For instance, the receiving country should have signed a multi-nation document affording protection to migrant workers or an agreement with the Philippine government protecting the rights of overseas Filipino workers.12
• Selective employment and seasonal bans are two governmental policies in order to protect the migrant and overseas employees.
C.
EMPLOYMENT AGENCIES/
ENTITIES
Art 12 (f), Labor Code
a. Allowed Entities
11 Azucena
It is the policy of the State to strengthen the network of public employment offices and rationalize the participation of the private sector in the recruitment and placement of workers, locally and overseas, to serve national development objective.
Art 16, Labor Code
Except as provided in Chapter II of this Title, no person or entity other than the public employment offices, shall engage in the recruitment and placement of workers.
Art 18. Ban on Direct Hiring, Labor Code No employer may hire a Filipino worker for overseas employment except through the Boards and entities authorized by the Secretary of Labor. Direct hiring by members of the diplomatic corps, international organizations and such other employers as may be allowed by the Secretary of Labor is exempted from this provision.
• As a general rule, only public employment offices are allowed to engage in recruitment and placement of workers. The foregoing provisions show that the law distrusts private entities in recruiting and placing workers because the legislators believe that it is in the better interest of the workers if the State handles this.
Art 25, Labor Code
Pursuant to national development objectives and in order to harness and maximize the use of private sector resources and initiative in the development and implementation of a comprehensive employment program, the private employment sector shall participate in the recruitment and placement of workers, locally and overseas, under such guidelines, rules and regulations as may be issued by the Secretary of Labor.
• This article seems to be in contrast to Articles 16 & 18 but instead it allows private sectors to create a partnership with the State in recruitment and placement of workers.
Qualifications
Only those who possess the following qualifications may be permitted to engage in the business of
recruitment and placement of Filipino workers for overseas employment:13
1. Filipino citizens, partnerships or corporations at least seventy-five percent (75%) of the authorized and voting capital stock of which is owned and controlled by Filipino citizens; 2. A minimum capitalization of Two Million Pesos
(P2,000,000.00) in case of a single proprietorship or partnership and a minimum paid-up capital of Two Million Pesos (P2,000,000.00) in case of a corporation; Provided that those with existing licenses shall, within four years from effectivity hereof, increase their capitalization or paid up capital, as the case may be, to Two Million Pesos (P2,000,000.00) at the rate of Two Hundred Fifty Thousand (P250,000.00) every year; and
3. Those not otherwise disqualified by law or other government regulations to engage in the recruitment and placement of workers for overseas employment [seafarers].
i. Private Employment Agency
Private fee-charging employment agency, defined
Art 13 (c), Labor Code
"Private fee-charging employment agency" means any person or entity engaged in recruitment and placement of workers for a fee which is charged, directly or indirectly, from the workers or employers or both.
License, defined
Art 13 (d), Labor Code
"License" means a document issued by the Department of Labor authorizing a person or entity to operate a private employment agency.
ii. Private Recruitment Entity
Private recruitment entity, defined Art 13 (e), Labor Code
"Private recruitment entity" means any person or association engaged in the recruitment and placement of workers, locally or overseas, without charging, directly or indirectly, any fee from the workers or employers.
13 POEA Rules and Regulations Governing the Recruitment and Employment of Land-based Overseas Workers (Sec. 1, Part II, Rule I, 2002 POEA Rules)
Authority, defined Article (f), Labor Code
"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.
iii. Public Employment Offices
Article 14, Labor Code
The Secretary of Labor shall have the power and authority:
a. To organize and establish new employment offices in addition to the existing employment offices under the Department of Labor as the need arises;
b. To organize and establish a nationwide job clearance and information system to inform applicants registering with a particular employment office of job opportunities in other parts of the country as well as job opportunities abroad;
c. To develop and organize a program that will facilitate occupational, industrial and geographical mobility of labor and provide assistance in the relocation of workers from one area to another; and
d. To require any person, establishment, organization or institution to submit such employment information as may be prescribed by the Secretary of Labor.
Sec. 3(f) Powers and Functions, EO No. 247 (1986) Reorganizing the Philippines Overseas Employment Administration and For Other Purposes
The POEA shall recruit and place workers to service the requirement for trained and competent Filipino workers by foreign governments and their instrumentalities and such other employers as public interest may require.
iv. Prohibited Entity
Article 26, Labor Code
Travel agencies and sales agencies of airline companies are prohibited from engaging in the business of recruitment and placement of workers for overseas employment whether for profit or not.
Disqualifications
The following are not qualified to engage in the business of recruitment and placement of Filipino workers overseas:14
1. Travel agencies and sales agencies of airline companies;
2. Officers or members of the Board of any corporation or members in a partnership engaged in the business of a travel agency; 3. Corporations and partnerships, when any of its
officers, members of the board or partners, is also an officer, member of the board or partner of a corporation or partnership engaged in the business of a travel agency;
4. Persons, partnerships or corporations which have derogatory records, such as but not limited to the following:
a. Those certified to have derogatory record or information by the National Bureau of Investigation or by the Anti-Illegal Recruitment Branch of the POEA;
b. Those against whom probable cause or prima facie finding of guilt for illegal recruitment or other related cases exists; c. Those convicted for illegal recruitment or
other related cases and/or crimes involving moral turpitude; and
d. Those agencies whose licenses have been previously revoked or cancelled by the Administration for violation of RA 8042, PD 442 as amended and their implementing rules and regulations as well as these rules and regulations.
All applicants for issuance/renewal of license shall be required to submit clearances from the National Bureau of Investigation and Anti-illegal Recruitment Branch, POEA, including clearances for their respective officers and employees. 5. Any official or employee of the DOLE, POEA,
OWWA, DFA and other government agencies directly involved in the implementation of R.A. 8042, otherwise known as Migrant Workers and Overseas Filipino Act of 1995 and/or any of his/her relatives within the fourth civil degree of consanguinity or affinity; and
6. Persons or partners, officers and Directors of corporations whose licenses have been previously cancelled or revoked for violation of recruitment laws.
14 POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers (Sec. 2, Part II, Rule I, 2003 POEA Rules)
D. GOVERNMENT TECHNIQUES OF
REGULATION
– PRIVATE RECRUITMENT
i. Issuance of License
Art 27. Citizenship Requirement, POEA Rules
Only Filipino citizens or corporations, partnerships or entities at least seventy-five percent (75%) of the authorized and voting capital stock of which is owned and controlled by Filipino citizens shall be permitted to participate in the recruitment and placement of workers, locally or overseas.
Art 28. Capitalization, POEA Rules
All applicants for authority to hire or renewal of license to recruit are required to have such substantial capitalization as determined by the Secretary of Labor.
• The minimum paid-up capital for single proprietorship must be at least 2 million pesos. Art 29. Non-transferability of license or authority, POEA Rules
Non-transferability of license or authority. - No license or authority shall be used directly or indirectly by any person other than the one in whose favor it was issued or at any place other than that stated in the license or authority be transferred, conveyed or assigned to any other person or entity. Any transfer of business address, appointment or designation of any agent or representative including the establishment of additional offices anywhere shall be subject to the prior approval of the Department of Labor.
Licenses are non-transferrable because 1. It can only be used by the person issued to 2. It can only be used at the place designated
therein.
Art 30. Registration fees, POEA Rules The Secretary of Labor shall promulgate a schedule of fees for the registration of all applicants for license or authority.
Art 31. Bonds, POEA Rules
All applicants for license or authority shall post such cash and surety bonds as determined by the Secretary of Labor to guarantee compliance with prescribed recruitment procedures, rules and regulations, and terms and conditions of employment as may be appropriate.
Every applicant for license to operate a private employment agency shall submit a written application together with the following requirements:15
1. A certified copy of the Articles of Incorporation or of Partnership duly registered with the Securities and Exchange Commission (SEC), in the case of corporation or partnership or Certificate of Registration of the firm or business name with the Department of Trade and Industry (DTI), in the case of a single proprietorship;
2. Proof of financial capacity: In the case of a single proprietorship or partnership, verified income tax returns of the proprietors or partners for the past two (2) years and a savings account certificate showing a maintaining balance of not less than P500,000.00, provided that the applicant should submit an authority to examine such bank deposit.
3. In the case of a newly organized corporation, savings account certificate showing a maintaining balance of not less than P500,000.00 with authority to examine the same. For an existing corporation, submission of a verified financial statement, corporate tax returns for the past two (2) years and savings account certificate showing a maintaining balance of not less than P500,000.00 with the corresponding authority to examine such deposit.
4. Proof of marketing capability
a. A duly executed Special Power of Attorney and/or a duly concluded Recruitment/Service Agreement;
b. Manpower request(s) or visa
certification from new
employer(s)/principal(s) for not less than one hundred (100) workers; and c. Certification from Pre-Employment
Services Office of POEA on the existence of new market.
15 POEA Rules and Regulations Governing the Recruitment and Employment of Land-based Overseas Workers (Part II, Rule II, 2002 POEA Rules)
5. Clearance of all members of the Board of Directors, partner, or proprietor of the applicant agency from the National Bureau of Investigation (NBI) and other government agencies as may be required; appropriate clearance in case of persons with criminal cases; provided that where the member or partner concerned is a foreigner, clearance from his country of origin shall be required.
6. A verified undertaking stating that the applicant: a. Shall select only medically and
technically qualified recruits;
b. Shall assume full and complete responsibility for all claims and liabilities which may arise in connection with the use of the license;
c. Shall assume joint and solidary liability with the employer for all claims and liabilities which may arise in connection with the implementation of the contract, including but not limited to payment of wages, death and disability compensation and repatriations;
d. Shall guarantee compliance with the existing labor and social legislations of the Philippines and of the country of employment of the recruited workers; e. Shall assume full and complete
responsibility for all acts of its officials, employees and representatives done in connection with recruitment and placement;
f. Shall negotiate for the best terms and conditions of employment;
g. Shall disclose the full terms and conditions of employment to the applicant workers;
h. Shall deploy at least 100 workers to its new markets within one (1) year from the issuance of its license;
i. Shall provide orientation on recruitment procedures, terms and conditions and other relevant information to its workers and provide facilities therefor; and j. Shall repatriate the deployed workers
and his personal belongings when the need arises.
k. For the purpose of compliance with item (1), the agency may require the worker to undergo trade testing and medical examination only after the worker has been pre-qualified for employment. 7. In case of corporation or partnership, verified
undertaking by its officers, directors, partners that they will be jointly and severally liable with
the company over claims arising from employer-employee relationship.
8. Individual income tax return of the proprietor, partners, stockholders/ incorporators, as the case may be, for the past two (2) years.
9. Proof of possession by the sole proprietor, partner or chief executive officer, as the case may be, of a bachelor's degree and three years business experience.
10. List of all officials and personnel involved in the recruitment and placement, together with their appointment, bio-data and two (2) copies of their passport-size pictures as well as their clearances from the National Bureau of Investigation and the Anti-illegal Recruitment Branch of the Administration.
11. Copy of contract of lease or proof of building ownership, indicating the office address, providing for an office space of at least one hundred (100) square meters.
12. Proof of publication of notice of the application with the names of the proprietor, partners, incorporators and officers.
13. Certificate of attendance of owner and/or chief executive officer in a preapplication seminar conducted by the Administration.
Only applications with complete supporting documents shall be processed.
Sec 4. Payment of Fees and Posting of Bonds, Rule II, Part II, POEA Rules
Upon approval of the application, the applicant shall pay a license fee of P50,000.00. It shall submit an Escrow Agreement in the amount of P1,000,000.00, confirmation of escrow deposit with an accredited reputable bank and a surety bond of P100,000.00 from a bonding company acceptable to the Administration and accredited with the Insurance Commission.
Agencies with existing licenses shall, within four years from effectivity hereof, increase their Escrow Deposit to One Million Pesos.
Validity of the License. — Except in case of a provisional license, every license shall be valid for four (4) years from the date of issuance unless sooner cancelled, revoked or suspended for violation of applicable Philippine law, these rules and other pertinent issuances. Such license shall be valid only at the place/s stated therein and when used by the licensed person, partnership or corporation.
Non-Transferability of License. — No license shall be transferred, conveyed or assigned to any person, partnership or corporation. It shall not be used directly or indirectly by any person, partnership or corporation other than the one in whose favor it was issued.
In case of death of the sole proprietor and to prevent disruption of operation to the prejudice of the interest of legitimate heirs, the license may be extended upon request of the heirs, to continue only for the purpose of winding up business operations. ii. Workers’ Fee
Art 32, Labor Code
Any person applying with a private fee-charging employment agency for employment assistance shall not be charged any fee until he has obtained employment through its efforts or has actually commenced employment. Such fee shall be always covered with the appropriate receipt clearly showing the amount paid. The Secretary of Labor shall promulgate a schedule of allowable fees.
iii. Reports/Employment Information Art 33, Labor Code
Whenever the public interest requires, the Secretary of Labor may direct all persons or entities within the coverage of this Title to submit a report on the status of employment, including job vacancies, details of job requisitions, separation from jobs, wages, other terms and conditions and other employment data.
Failure to comply with this requirement will be deemed an illegal recruitment.
(Anonuevo)
iv. Prohibited Practices
Under the Labor Code, these are grounds for suspension and disqualification of
license. (Anonuevo) Article 34, Labor Code
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 loan or advance; (i.e. over charging of fees)
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 this Code.
d. To induce or attempt to induce a worker already employed to quit his employment in order to offer him to another unless the transfer is designed to liberate the worker from oppressive terms and conditions of employment;
e. To influence 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 reports on the status of employment, placement vacancies, remittance 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
applicant workers before departure for monetary or financial considerations other than those authorized under this Code and its implementing rules and regulations.
Under Sec. 6 of RA 8042 consider these grounds for illegal recruitment. With the addition of two instances: (Anonuevo)
1. Failure to actually deploy without valid reasons as determined by the Department of Labor and Employment; and
2. 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.
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.
v . Illegal Recruitment (Art. 38, LC)
Section 6, RA 8042 Migrant Workers and Overseas Filipinos Act of 1995
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. a. Illegal Recruitment w/o license
Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-holders of authority, shall be deemed illegal and punishable under Article 39 of this Code.
The Department of Labor and Employment or any law enforcement officer may initiate complaints under this Article. All you need to prove is that the non-licensee is practicing recruitment. (Anonuevo)
b. Illegal Recruitment w/ license Sec. 6 of RA 8042 enumerated grounds for illegal recruitment done by those
who have license. (Id.)
c. Large Scale Illegal Recruitment
Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group.
d. Syndicated Illegal Recruitment Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under the first paragraph hereof.
Definition of Illegal Recruitment under Article 38 is impliedly repealed by RA 8042. (Anonuevo)
Elements of illegal recruitment: (1) the person charged with the crime must have undertaken recruitment activities; and (2) the said person does not have a license or authority to do so. (Boneng vs. People and People vs. Gallo)
Illegal recruitment only becomes large scale when the two elements concur with the addition of a third element – the recruiter committed the same against three or more persons, individually or as group. (People v. Hu)
Failure of the prosecution to prove the guilt of the accused beyond reasonable doubt does not absolve the civil obligation to return the money collected. (Id.)
Illegal recruitment is a crime that is mala prohibita. (People v. Chua)
vi. Enforcement and Sanctions
Suspension and/or cancellation of license or authority. (Art. 35, LC)
The Secretary 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 regulations 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 Letters of Instructions. Regulatory Power (Art. 36, LC)
The Secretary of Labor shall have the power to restrict and regulate the recruitment and placement activities of all agencies within the coverage of this Title and is hereby authorized to issue orders and promulgate rules and
implement the provisions of this Title.
Secretary of Labor has the power and authority 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. Implicit in these
powers is the award of appropriate relief to the
victims of the offenses committed by the faulting
agency or contractor. (Eastern Assurance and Surety Corp. v. Secretary of Labor)
Visitorial Power (Art. 37, LC)
The Secretary of Labor or his duly authorized representatives may, at any time, inspect the premises, books of accounts and records of any person or entity covered by this Title, require it to submit reports regularly on prescribed forms, and act on violation of any provisions of this Title.
Close Down Power (Art. 38(c), LC)
The Secretary of Labor shall close companies, establishments and entities found to be engaged in the recruitment of workers for overseas employment, without having been licensed or authorized to do so.
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, Article 38(c) of the Labor Code is unconstitutional and of no force and effect. (Salazar v. Achacoso)
Only the power to issue search or arrests warrants were stripped from the Secretary of Labor. (Anonuevo)
Article 39 (d). Penalties, Labor Code If the offender is a corporation, partnership, association or entity, the penalty shall be imposed upon the officer or officers of the corporation, partnership, association or entity responsible for violation; and if such officer is an alien, he shall, in addition to the penalties herein prescribed, be deported without further proceedings.
Article 39 (e). Penalties, Labor Code In every case, conviction shall cause and carry the automatic revocation of the license or authority and all the permits and privileges granted to such person or entity under this Title, and the forfeiture of the cash and surety bonds in favor of the Overseas Employment Development Board or the National Seamen Board, as the case may be, both of which are authorized to use the same exclusively to promote their objectives.
Penalties for Illegal Recruitment under Article 39 and RA 8042 Article 39
Was repealed by implication by RA 8042. (Anonuevo)
RA 8042
Illegal Recruitment w/o License
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.
Any person found guilty of illegal recruitment shall suffer the penalty of imprisonment of not less than six (6) years and one (1) day but not more than twelve (12) years and a fine not less than two hundred thousand pesos (P200,000.00) nor more than five hundred thousand pesos
(P500,000.00).
Provided, however, that the maximum penalty shall be imposed if the person illegally recruited is less than eighteen (18) years of age or committed by a non-licensee or non-holder of authority. Illegal Recruitment
w/ License Imprisonment of not less than two yearsnor more than five years or a fine of not less than P10,000 nor more than P50,000, or both such imprisonment and fine, at the discretion of the court
Large Scale Illegal
Recruitment Illegal recruitment when committed by asyndicate or in large scale shall be considered an offense involving economic sabotage and shall be
The penalty of life imprisonment and a fine of not less than five hundred thousand pesos (P500,000.00) nor more than one million pesos
penalized in accordance with Article 39 hereof. (Art. 38(b), LC) The penalty of life imprisonment and a fine of One
Hundred Thousand Pesos
(P1000,000.00) shall be imposed if illegal recruitment constitutes economic sabotage as defined herein
(P1,000,000.00) shall be imposed if illegal recruitment constitutes economic sabotage as
defined herein.
Money Claims Under Sec. 10 of RA 8042 Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages under this section shall be paid within four (4) months from the approval of the settlement by the appropriate authority.
In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.
Non-compliance with the mandatory periods for resolutions of cases provided under this section shall subject the responsible officials to any or all of the following penalties:
a. The salary of any such official who fails to render his decision or resolutions within the prescribed period shall be, or caused to be, withheld until the said official complies therewith;
b. Suspension for not more than ninety (90) days; or
c. Dismissal from the service with disqualifications to hold any appointive public office for five (5) years.
Provided, however, that the penalties herein provided shall be without prejudice to any liability which any such official may have incurred under other existing laws or rules and regulations as a consequence of violating the provisions of this paragraph.
• A plain reading of the above-mentioned provision clearly reveals that the choice of which amount to award an illegally dismissed overseas contract worker comes into play when the
or more. In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at 12% per annum, plus his salaries for the unexpired portion of his employment contract or for 3 months every year of the unexpired term, whichever is less.16 • The choice of which amount to award an illegally
dismissed overseas contract worker, i.e., whether his salaries for the unexpired portion of his employment contract, or 3 month’s salary for every year of the unexpired term, whichever is less, comes into play only when the employment contract concerns has a term of at least 1 year or more.17
• This clause reiterated above was declared unconstitutional because there is discrimination and disparity. There is no more choice and the illegally terminated overseas employee will be fully paid his unexpired term of his contract.18
E. JOINT AND SEVERAL LIABILITY
OF PRIVATE EMPLOYMENT
AGENCY/ MANNING AGENTAND
EMPLOYER
Section 10 (2 and 3), RA 8042
The liability of the principal/employer and the
16 Olarte vs. Navona
17 Flourish Maritime Shipping v. Almanzor
18 Serrano v. Gallant Maritime Services, GR No. 167614, March 24,
recruitment/placement agency for any and all claims under this section shall be joint and several. These provisions shall be incorporated in the contract for overseas employment and shall be a condition precedent for its approval. The performance bond to be filed by the recruitment/placement agency, as provided by law, shall be answerable for all money claims or damages that may be awarded to the workers. If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages. Such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any substitution, amendment or modification made locally or in a foreign country of the said contract.
Sec. 1(f)(3), Rule II, Part II, 2002 POEA Rules The applicant for license to operate a private employment agency shall assume joint and solidary liability with the employer for all claims and liabilities which may arise in connection with the implementation of the contract, including but not limited to payment of wages, death and disability compensation and repatriations.
Sec. 1(e)(8), Rule II, Part II, 2003 POEA Rules The applicant for license to operate a manning agency shall assume joint and solidary liability with the employer for all claims and liabilities which may arise in connection with the implementation of the employment contract, including but not limited to wages, death and disability compensation and their repatriation. • The liability extends to the expiration of the
contract.19
F. JURISDICTION
i. Regional Trial Court, for Criminal Action for Illegal Recruitment
19 OSM Shipping Philippines, Inc. v. NLRC
A criminal action arising from illegal recruitment as defined herein shall be filed with the Regional Trial Court of the province or city where the offense was committed or where the offended party actually resides at the same time of the commission of the offense: Provided, That the court where the criminal action is first filed shall acquire jurisdiction to the exclusion of other courts. Provided, however, That the aforestated provisions shall also apply to those criminal actions that have already been filed in court at the time of the effectivity of this Act. (Sec. 9, RA 8042)
ii. NLRC, for Money Claims Arising from Employer-Employee Relations
Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. iii. POEA, for Administrative and Disciplinary Actions
Section 28, RA 8042
The POEA shall exercise original and exclusive jurisdiction to hear and decide:
(a) all cases, which are administrative in character, involving or arising out of violations of rules and regulations relating to licensing and registration of
recruitment and employment agencies or entities; and
(b) disciplinary action cases and other special cases, which are administrative in character, involving employers, principals, contracting partners and Filipino migrant workers.
G. ALIEN EMPLOYMENT
REGULATION
Art. XII, Sec. 12, 1987 Constitution
The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods, and adopt measures that help make them competitive.
The ownership and management of mass media shall be limited to citizens of the Philippines, or to corporations, cooperatives or associations, wholly-owned and managed by such citizens.
The Congress shall regulate or prohibit monopolies in commercial mass media when the public interest so requires. No combinations in restraint of trade or unfair competition therein shall be allowed. (Art. XVI, Sec. 11(1),
Constitution)
Art. XVI, Sec. 11(2), 1987 Constitution The advertising industry is impressed with public interest, and shall be regulated by law for the protection of consumers and the promotion of the general welfare.
Only Filipino citizens or corporations or associations at least seventy per centum of the capital of which is owned by such citizens shall be allowed to engage in the advertising industry. The participation of foreign investors in the governing body of entities in such industry shall be limited to their proportionate share in the capital thereof, and all the executive and managing officers of such entities must be citizens of the Philippines.
Art. XII, Sec. 11, 1987 Constitution
No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens; nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires.
The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines.
Employment permit of non-resident aliens, Article 40 of the Labor Code
for employment purposes and any domestic or foreign employer who desires to engage an alien for employment in the Philippines shall obtain an employment permit from the Department of Labor.
The employment permit may be issued to a non-resident alien or to the applicant employer after a determination of the non-availability of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired. For an enterprise registered in preferred areas of investments, said employment permit may be issued upon recommendation of the government agency charged with the supervision of said registered enterprise.
Article 41 of the Labor Code
Prohibition against transfer of employment. a. After the issuance of an employment permit,
the alien shall not transfer to another job or change his employer without prior approval of the Secretary of Labor.
b. Any non-resident alien who shall take up employment in violation of the provision of this Title and its implementing rules and regulations shall be punished in accordance with the provisions of Articles 289 and 290 of the Labor Code.
In addition, the alien worker shall be subject to deportation after service of his sentence.
Submission of List, Article 42 of the Labor Code
Any employer employing non-resident foreign nationals on the effective date of this Code shall submit a list of such nationals to the Secretary of Labor within thirty (30) days after such date indicating their names, citizenship, foreign and local addresses, nature of employment and status of stay in the country. The Secretary of Labor shall then determine if they are entitled to an employment permit.
i. Coverage
Section 1, D.O. 97-09, The Revised Rules for the Issuance of Employment Permits to Foreign Nationals
All foreign nationals who intend to engage in gainful employment in the Philippines shall