Labor Law Review

1. LABOR LAW REVIEW

2. FUNDAMENTAL PRINCIPLES AND POLICIES
A.CONSTITUTIONAL PROVISIONS
 What are the significant constitutional principles related
to Labor Law?
The following principles are noteworthy:
Under Article II (Declaration of Principles and State
Policies):
a. Promotion of full employment, a rising standard of living,
and an improved quality of life for all.
b. Promotion of social justice in all phases of national
development.
c. Full respect for human rights.
d. Vital role of the youth in nation-building.
e. Role of women in nation-building, and fundamental
equality before the law of women and men.
f. Indispensable role of the private sector,
g. Protection-to-labor clause: “Section 18. The State
affirms labor as a primary social economic force. It shall
protect the rights of workers and promote their welfare.

3. Under Article III (Bill of Rights):
a. Due process and equal protection of the law.
b. Freedom of speech, of expression, or of the press, or the right
of the people peaceably to assemble and petition the government
for redress of grievances.
c. Right of the people to information on matters of public
concern. Access to official records, and to documents and papers
pertaining to official acts, transactions, or decisions, as well as
to government research data used as basis for policy
development, shall be afforded the citizen, subject to such
limitations as may be provided by law.
d. Right of public and private sector employees to form unions,
associations, or societies for purposes not contrary to law shall
not be abridged.
e. Non-impairment of obligations of contracts.
f. Right to speedy disposition of cases in judicial, quasi-judicial
or administrative bodies.
g. Prohibitions against involuntary servitude.

4.  Under Article XIII (Social Justice and Human Rights):
a. Protection-to-Labor Clause: VERY IMPORTANT
Section 3. The State shall afford full protection to labor,
local and overseas, organized and unorganized, and promote
full employment and equality of employment opportunities for
all.
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law.
They shall be entitled to security of tenure, humane conditions
of work, and a living wage. They shall also participate in policy
and decision making processes affecting their rights and
benefits as may be provided by law.
The State shall promote the principle of shared responsibility
between workers and employers and the preferential use of
voluntary modes in settling disputes, including conciliation, and
shall enforce their mutual compliance therewith to foster
industrial peace.
The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of
production and the right of enterprises to reasonable returns to
investments, and to expansion and growth.

5.  It shall guarantee the rights of all workers to:
 1. self-organization
 2. collective bargaining and negotiations
 3. peaceful and concerted activities including the right to
strike in accordance with law
 The workers shall be entitled to:
 4. security of tenure
 5. humane conditioned of work
 6. living wage
 The workers shall also:
 7. participate in policy and decision-making process
affecting their rights and benefits as may be provided by
law

6. B.
NEW CIVIL CODE
 What is latest example of a labor case where Article 1700 of the
Civil Code was applied?
 Article 1700 of the Civil Code provides:
“Art. 1700. 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.”

7.  2011 case of Leyte Geothermal Power Progressive Employees Union-
ALU-TUCP v. Philippine National Oil Company-Energy
Development Corporation, involving the issue of whether the
members of petitioner union are project employees or regular
employees.
 It was pronounced that Article 280 of the Labor Code, as worded, establishes
that the nature of the employment is determined by law, regardless of any
contract expressing otherwise. The supremacy of the law over the nomenclature
of the contract and the stipulations contained therein is to bring to life the
policy enshrined in the Constitution to "afford full protection to labor." Thus,
labor contracts are placed on a higher plane than ordinary contracts; these are
imbued with public interest and therefore subject to the police power of the
State.
However, notwithstanding the foregoing iterations, project employment
contracts which fix the employment for a specific project or undertaking
remain valid under the law.
In the case at bar, the records reveal that the officers and the members of
petitioner union signed employment contracts indicating the specific project or
phase of work for which they were hired, with a fixed period of employment. As
clearly shown by petitioner union’s own admission, both parties had executed
the contracts freely and voluntarily without force, duress or acts tending to
vitiate the workers’ consent. Thus, there is no reason not to honor and give
effect to the terms and conditions stipulated therein.

8.  How is Article 1702 of the Civil Code correlated with Article 4 of
the Labor Code?
 Both Article 1702 of the Civil Code and Article 4 of the Labor Code speak of
the rule on interpretation and construction provisions of law and labor
contracts.
 Article 1702 of the Civil Code provides:
“Article 1702. In case of doubt, all labor legislation and all labor contracts
shall be construed in favor of the safety and decent living for the laborer.”
 Article 4 of the Labor Code states:
 “Article 4. Construction in Favor of Labor. – All doubts in the
implementation and interpretation of the provisions of this Code,
including its implementing rules and regulations, shall be resolved in favor
of labor.”
 Both articles above may be applied to doubts and ambiguities in:
(1) labor contracts such as an employment contract or a CBA; or
(2) evidence presented in labor cases.

9. C.
THE LABOR CODE
 What are the distinctions between Labor
Relations and Labor Standards?
 “Labor standards law” is that part of labor law which
prescribes the minimum terms and conditions of
employment which the employer is required to grant to
its employees.
 “Labor relations law” is that part of labor law (Book V
of the Labor Code) which deals with unionism, collective
bargaining, grievance machinery, voluntary arbitration,
strike, picketing and lockout.

10. RECRUITMENT AND PLACEMENT
 ILLEGAL RECRUITMENT (Section 5, R.A. No. 10022)
 Who may commit illegal recruitment?
Broadly, “illegal recruitment” may be committed by any
person, regardless of whether such person is a:
1. Non-licensee;
2. Non-holder of authority;
3. Licensee; or
4. Holder of authority.
Any person, whether a non-licensee, non-holder,
licensee or holder of authority, may be held liable for
illegal recruitment. Under R.A. No, 8042, as
amended by R.A. No. 10022, license or authority of
the illegal recruiter is immaterial.

11.  What constitutes illegal recruitment when
committed by a NON-LICENSEE or NON-
HOLDER OF AUTHORITY?
 Illegal recruitment, when undertaken by non-
licensee or non-holder of authority, shall mean
any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, or procuring
workers and includes referring, contract
services, promising or advertising for
employment abroad, whether for profit or not,
Provided, That any such non-licensee 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.

12.  What constitutes illegal recruitment when
committed by ANY PERSON, whether a NON-
LICENSEE, NONHOLDER OF AUTHORITY or even
by a LICENSEE or HOLDER OF AUTHORITY?
 (a) To charge or accept, directly or indirectly, any amount
greater than that specified in the schedule of allowable fees
prescribed by the Secretary of Labor and Employment, or to
make a worker pay or acknowledge any amount greater than
that actually received by him as a loan or advance;
 (b) To furnish or publish any false notice or information or
document in relation to recruitment or employment;
 (c) To give any false notice, testimony, information or
document or commit any act of misrepresentation for the
purpose of securing a license or authority under the Labor
Code, or for the purpose of documenting hired workers with
the POEA, which include the act of reprocessing workers
through a job order that pertains to non-existent work, work
different from the actual overseas work, or work with a
different employer whether registered or not with the POEA;

13.  (d) To induce or attempt to induce a worker already employed
to quit his employment in order to offer him another unless
the transfer is designed to liberate a worker from oppressive
terms and conditions of employment;
 (e) To influence or attempt to influence any person or entity
not to employ any worker who has not applied for
employment through his agency or who has formed, joined or
supported, or has contacted or is supported by any union or
workers' organization;
(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 fail to submit 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 and Employment;

14.  To substitute or alter to the prejudice of the worker, employment
contracts approved and verified by the Department of Labor and
Employment from the time of actual signing thereof by the parties
up to and including the period of the expiration of the same without
the approval of the Department of Labor and
 Employment;
 (i) For an officer or agent of a recruitment or placement
agency to become an officer or member of the Board of any
corporation engaged in travel agency or to be engaged directly
or indirectly in the management of travel agency;
 (j) To withhold or deny travel documents from applicant workers
before departure for monetary or financial considerations,
or for any other reasons, other than those authorized under the
Labor Code and its implementing rules and regulations;
 (k) Failure to actually deploy a contracted worker without valid
reason as determined by the Department of Labor and
Employment;
 (l) Failure to reimburse expenses incurred by the worker in
connection with his documentation and processing for purposes of
deployment, in cases where the deployment does not actually
take place without the worker's fault. Illegal recruitment
when committed by a syndicate or in large scale shall be
considered an offense involving economic sabotage; and
(m) To allow a non-Filipino citizen to head or manage a licensed
recruitment/manning agency.”

15. PROHIBITED ACTIVITIES
IN RELATION TO ILLEGAL RECRUITMENT
 What are the prohibited activities in connection with recruitment for overseas
employment?
 Besides illegal recruitment, the law additionally provides that it shall also be unlawful for
any person or entity to commit the following prohibited acts:
(1) Grant a LOAN to an overseas Filipino worker with interest exceeding eight
percent (8%) per annum, which will be used for payment of legal and allowable
placement fees and make the migrant worker issue, either personally or through a
guarantor or accommodation party, post-dated checks in relation to the said loan;
 (2) Impose a compulsory and exclusive arrangement whereby an overseas Filipino
worker is required to avail of a LOAN only from specifically designated institutions,
entities or persons;
 (3) Refuse to condone or renegotiate a LOAN incurred by an overseas Filipino worker
after the latter's employment contract has been prematurely terminated through no
fault of his or her own;
 (4) Impose a compulsory and exclusive arrangement whereby an overseas Filipino
worker is required to undergo HEALTH EXAMINATIONS only from specifically
designated medical clinics, institutions, entities or persons, except in the caseof a
seafarer whose medical examination cost is shouldered by the
principal/shipowner;

16.  (5) Impose a compulsory and exclusive arrangement
whereby an overseas Filipino worker is required to
undergo TRAINING, SEMINAR, INSTRUCTION
OR SCHOOLING of any kind only from
specifically designated institutions, entities or
persons, except for recommendatory trainings
mandated by principals/shipowners where the
latter shoulder the cost of such trainings;
 (6) For a SUSPENDED
RECRUITMENT/MANNING AGENCY to engage
in any kind of recruitment activity including the
processing of pending workers' applications; and
 (7) For a recruitment/manning agency or a foreign
principal/employer to pass on the overseas Filipino
worker or deduct from his or her salary the
payment of the cost of INSURANCE fees,
premium or other insurance related charges, as
provided under the compulsory worker's
INSURANCE coverage.

17. LICENSE VS. AUTHORITY
 What is a “license” for overseas recruitment?
 “License” refers to the document issued by the DOLE
Secretary authorizing a person, partnership or
corporation to operate a private recruitment or manning
agency.
 What is an “authority” for overseas employment?
 “Authority” refers to the document issued by the DOLE
Secretary authorizing the officers, personnel, agents or
representatives of a licensed recruitment or manning agency
to conduct recruitment and placement activities in a place
stated in the license or in a specified place.

18. ELEMENTS OF ILLEGAL RECRUITMENT
 What are the elements of illegal recruitment?
The essential elements of illegal recruitment vary in
accordance with the following classifications:
(1) Simple illegal recruitment;
(2) When committed by a syndicate; or
(3) When committed in large scale.
 When illegal recruitment is committed under either Nos.
2 or 3 above or both, it is considered an offense
involvingeconomic sabotage.

19. SIMPLE ILLEGAL RECRUITMENT
 What are the 2 elements of simple illegal
recruitment?
(1) The offender has no valid license or authority
required by law to enable one to lawfully engage in
recruitment and placement of workers; and
(2) He undertakes either any activity within the meaning of
“recruitment and placement” defined under Article
13(b), (see above enumeration) or any prohibited practices
(see above enumeration) under Article 34 of the
Labor Code.
Can a recruiter be a natural or juridical person?
 Yes.

20. ILLEGAL RECRUITMENT AS A FORM OF ECONOMIC SABOTAGE
 When is illegal recruitment considered a crime involving
economic sabotage?
1. when committed by a syndicate; or
2. when committed in large scale.
When is illegal recruitment committed by a syndicate?
 If it is carried out by a group of three (3) or more persons
conspiring or confederating with one another.
Elements of illegal recruitment by a syndicate.
The essential elements of the crime of illegal recruitment committed
by a syndicate are as follows:
1. There are at least three (3) persons who, conspiring and/or
confederating with one another, carried out any unlawful or illegal
recruitment and placement activities as defined under Article 13(b)
or committed any prohibited activities under Article 34 of the Labor
Code; and
2. Said persons are not licensed or authorized to do so, either locally
or overseas.

21.  Note:
The law does not require that the syndicate
should recruit more than one (1) person in
order to constitute the crime of illegal
recruitment by a syndicate. Recruitment of
one (1) person would suffice to qualify the
illegal recruitment act as having been
committed by a syndicate.

22.  When is illegal recruitment considered in large
scale?
 If committed against three (3) or more persons
individually or as a group.
Elements of illegal recruitment in large scale.
The elements of illegal recruitment in large scale, as
distinguished from simple illegal recruitment, are as follows:
1. The accused engages in the recruitment and placement of
workers as defined under Article 13(b) or committed any
prohibited activities under Article 34 of the Labor Code; and
2. The accused commits the same against three (3) or more
persons, individually or as a group.

23.  Distinguished from illegal recruitment by a
syndicate.
 As distinguished from illegal recruitment committed
by a syndicate, illegal recruitment in large scale may
be committed by only one (1) person. What is
important as qualifying element is that there should
be at least three (3) victims of such illegal
recruitment, individually or as a group.

24.  What are some relevant principles on illegal
recruitment involving economic sabotage?
1. The number of persons victimized is determinative of the
crime. A conviction for large scale illegal recruitment
must be based on a finding in each case of illegal
recruitment of three (3) or more persons having been
recruited, whether individually or as a group.
2. Failure to prove at least 3 persons recruited makes the
crime a case of simple illegal recruitment.
3. There is no illegal recruitment in large scale based on
several information filed by only one complainant.
4. The number of offenders is not material in illegal
recruitment in large scale.
5. Recruitment in large scale or by a syndicate is malum
prohibitum and not malum in se.

25. ILLEGAL RECRUITMENT VS. ESTAFA
 Can a person be charged and convicted
separately for illegal recruitment and estafa
involving one and the same act of recruitment?
Yes. It is clear that conviction under the Labor Code
does not preclude conviction for estafa or other crimes
under other laws.
 Some relevant principles:
Same evidence to prove illegal recruitment may be
used to prove estafa.
Conviction for both illegal recruitment and estafa, not
double jeopardy.

26. NATURE OF LIABILITY OF LOCAL RECRUITMENT AGENCY
AND FOREIGN EMPLOYER
 What is the nature of the liability between local recruiter and
its foreign principal?
The nature of their liability is “solidary” or “joint and several”
for any and all claims arising out of the employment contract
of OFWs.
Is the solidary liability of corporate officers with the
recruitment agency “automatic” in character?
No. In order to hold the officers of the agency solidarily
liable, it is required that there must be proof of their
culpability therefor. Thus, it was held in the 2013 case of Gagui
v. Dejero,1 that while it is true that R.A. 8042 and the
Corporation Code provide for solidary liability, this liability must
be so stated in the decision sought to be implemented. Absent
this express statement, a corporate officer may not be impleaded
and made to personally answer for the liability of the corporation.

27. THEORY OF IMPUTED KNOWLEDGE
 What is meant by this theory?
 Knowledge of the agent is deemed knowledge of the
principal but not the other way around.
 The theory of imputed knowledge is a rule that any
information material to the transaction, either possessed
by the agent at the time of the transaction or
acquired by him before its completion, is deemed
to be the knowledge of the principal, at least
insofar as the transaction is concerned, even though the
knowledge, in fact, is not communicated to the principal
at all.

28.  Sunace International Management Services,
Inc. v. NLRC2 - The High Court here has the
opportunity to discuss the application of the
theory of imputed knowledge. The OFW (Divina), a
domestic helper in Taiwan, has extended her 12-
month contract, after its expiration, for two (2) more
years after which she returned to the Philippines. It
was established by evidence that the extension was
without the knowledge of the local recruitment
agency, petitioner Sunace. The Court of Appeals,
however, affirmed the Labor Arbiter’s and NLRC’s
finding that Sunace knew of and impliedly consented
to the extension of Divina’s 2-year contract

29. It went on to state that “It is undisputed that [Sunace] was
continually communicating with [Divina’s] foreign employer.”
 It thus concluded that “[a]s agent of the foreign principal,
‘petitioner cannot profess ignorance of such extension as obviously,
the act of the principal extending complainant (sic) employment
contract necessarily bound it.’”
 In finding that the application by the CA of this theory of imputed
knowledge was misplaced, the High Court ruled that this
theory ascribes the knowledge of the agent, Sunace, to the principal,
employer Xiong, not the other way around. The knowledge of the
principal-foreign employer cannot, therefore, be imputed to its
agent, Sunace. There being no substantial proof that Sunace knew of
and consented to be bound under the 2-year employment contract
extension, it cannot be said to be privy thereto.
 As such, Sunace and its owner cannot be held solidarily liable for
any of Divina’s claims arising from the 2-year employment
extension. As the New Civil Code provides: “Contracts take effect
only between the parties, their assigns, and heirs, except in case
where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of
law.”

30. BAR QUESTION:
(1) During the open forum following your lecture to a
group of managers and HRD personnel, you
were asked the following questions:
What qualifying circumstances will convert
"illegal recruitment" to "economic sabotage,"
thus subjecting its perpetrator or perpetrators
to a penalty of life imprisonment and a fine of
at least P500,000.00? Please explain your
answer briefly.

31. The Labor Code provides that illegal
recruitment shall be considered an offense involving
economic sabotage if any of the following qualifying
circumstances exists:
 When illegal recruitment is committed by a
SYNDICATE, requiring three or more persons
who conspire or confederate with one another in
carrying out any unlawful or illegal transaction,
enterprise or scheme;
 When illegal recruitment is committed in a LARGE
SCALE, as when it is committed against three or
more persons individually or as a group. (People v.
Navarra, G.R. No. 119361, February 19, 2001)