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Labor Law 1

Atty. Ronic Treptor


Introduction, General Principles
and Concepts
Module 1
General Concepts
• Definition of Labor
• “Labor” can be defined in two ways:
• Exertion by human beings of physical or mental efforts, or both, towards the
production of goods and services. (as an act)

• That sector or group in a society, which derives its livelihood chiefly from
rendition of work or services in exchange for compensation under managerial
direction. (as a sector of society)
General Concepts
• Labor law
• The law governing the rights and duties of the employer and employees with
respect to:
• The terms and conditions of employment and
• Labor disputes arising from collective bargaining respecting such terms and conditions.
General Concepts
• Labor Standards Law
• Labor standards refers to the minimum requirements prescribed by existing
laws, rules and regulations relating to wages, hours of work, cost of living
allowance and other monetary and welfare benefits, including occupational,
safety and health standards (Batong Buhay Gold Mines, Inc., vs. Dela Serna,
et. al., G.R. No. 86963, August 6, 1999)They are covered by Books I to IV of
the Labor Code.
• BOOK I – Pre-Employment
• BOOK II – Human Resources Development Program
• BOOK III – Conditions of Employment
• BOOK IV – Health, Safety and Social Welfare
General Concepts
• Labor Relations Law
• Labor relations laws are the laws, rules and regulations which govern the
relationship between employees and their employers, promote the right of
the employees to self-organization and collective bargaining, penalize unfair
labor practice, and provide modes for the settlement of labor disputes such
as conciliation, mediation, grievance machinery, voluntary arbitration and
compulsory arbitration. They are covered by Books V – VII of the Labor Code.
• BOOK V – Labor Relations
• BOOK VI – Post Employment (Note that we will cover this topic in this subject)
• BOOK VII – Transitory Final Provisions
General Concepts
• Social Legislations
• Social legislations are laws, rules, and regulations that promote welfare of all
sectors of society. Social Legislation includes laws that provide particular kinds
of protection or benefits to the society, in furtherance of social justice.

• Note that not all social legislations are labor laws. Labor laws directly affect
employment and directly govern the effects of employment. All labor laws are
social legislations. But not all social legislations are labor laws.
• NOTE: all labor laws are social legislations, but not all social legislations are considered
labor legislations. Social legislation is broader in scope and will include social security
laws and agrarian reform laws.
Why the need for State regulation?
• Why does the State regulate labor?
• Because an absolute free market capitalism may lead to exploitation of the
work force. Thus as a policy of the State, it uses its police power to regulate
the use of labor by capital.

• In the past, workers do not have rights. But due to the labor movement that
happened during the industrial revolution, workers started forming unions
and demanded minimum standards to be observed by their employers. Soon
after, concepts like minimum wage, maximum number of working hours, and
prohibitions against child labor, were introduced and observed.

• In the present, it is still true that Capital is superior than Labor, and to balance
this relationship, the State comes in to regulate.
Constitutional Provisions
• There are multiple provisions contained in our constitution that
covers labor law, but the most important labor provision under our
constitution is Sec. 3, Art. XIII also known as the “Protection to Labor
Clause.”

• Note: Memorize Sec. 3, Art. XIII.


Constitutional Provisions
Sec. 3, Art. XIII – 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.
Constitutional Provisions; Sec. 3, Art. XIII
• Protection to labor clause: Sec. 3, Art. XIII of 1987 Constitution
• Afford full protection to labor
• Promote full employment
• Ensure equal employment opportunities for all
• Assure the rights of workers to
• Self-organization
• Security of tenure
• Just and humane conditions of work
• Participate in policy and decision making process affecting their right and benefits
• Regulate the relations between workers and employers
Constitutional Provisions; Sec. 3, Art. XIII
• Rights under Sec. 3, Art. XIII
• Under Labor Standards
• Security of tenure
• Living wage
• Share in the fruits of production
• Humane conditions of work
• Under Labor Relations
• Self-organization
• Collective bargaining and negotiations
• Peaceful concerted activities, including the right to strike
• Participation in policy and decision-making processes affecting their rights and
benefits
Constitutional Provisions; Sec. 3, Art. XIII
• What does “full employment” mean?
• This term does not mean that every person in the state is working. This means
that those who want to work at the prevailing rates of pay can find work
without undue difficulty.

• Why does the Constitution require the state to promote full


employment? What are the benefits of this policy?
• Full employment provide social and economic stability. If every person who
wants to work can find work at the prevailing rates of pay, then every person
can be secured economically that can lead to the prosperity of the entire
country.
Constitutional Provisions
• Other constitutional provisions
• Sec. 9, Art. II
• Sec. 10, Art. II
• Sec. 11, Art. II
• Sec. 13, Art. II
• Sec. 14, Art. II
• Sec. 18, Art. II
• Sec. 20, Art. II
• Sec. 1, Art. III
• Sec. 4, Art. III
• Sec. 8, Art. III
• Sec. 1, Art. XIII
• Sec. 2, Art. XIII
• Sec. 14, Art. XIII
Constitutional Provisions
• Sec. 9, Art. II
• State shall promote full employment, a rising standard of living,…

• Sec. 10, Art. II


• Promote social justice in all phases of national development
Social Justice
• NOTE: Definition of Social Justice (Social justice is “neither communism,
nor despotism, nor atomism, nor anarchy,” but the humanization of 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. Social justice means the promotion of the welfare of all the
people, the adoption by the Government of measures calculated to insure
economic stability of all the competent elements of society, through the
maintenance of a proper economic and social equilibrium in the
interrelations of the members of the community, constitutionally, through
the adoption of measures legally justifiable, or extra-constitutionally,
through the exercise of powers underlying the existence of all governments
on the time-honored principles of salus populi est suprema lex.” (Calalang
v. Williams, G.R. No. 47800, December 2, 1940)
Social Justice
• Note that the promotion of social justice does not imply oppression
of capital.
• Limitation to invoking the principle:
1. Social justice does not champion division of property or equality of economic status
(Guido v. Rural Progress Adm, L-2089, October 31, 1949). It should not tolerate
usurpation of property, public or private.
2. May only protect the laborers who come to court with clean hands (Phil. Long
Distance Telephone Co. v. NLRC, G.R. No. 80609, August 23, 1988) and their motives
blameless (Gustilo v. Wyeth Phils., G.R. No. 149629, October 4, 2004).
3. Never result in an injustice or oppression of the employer (Phil. Geothermal Inc. v.
NLRC, G.R. No. 106370, September 8, 1994).
4. If it is used to shield wrongdoings, it cannot be permitted to be the refuge of
scoundrels (PNCC v. NLRC, G.R. No. 83320, Feb. 9, 1989).
Social Justice
• Note: Political Law; Principle of Balancing of Interest (equal protection
clause; constitutional rights colliding)
• Rule in favor of labor. The State is bound under the Constitution to afford full
protection to Labor and when conflicting interests collide and they are to be
weighed on the scales of social justice, the law should accord more sympathy
and compassion to the less privileged workingman (Fuentes v. NLRC, G.R. No.
110017, January 2, 1997).

• BUT STILL, it cannot be used to shield wrongdoing.


Constitutional Provisions
• Sec. 11, Art. II
• State values dignity of every human person and guarantees full respect for
human rights
• NOTE Universal Declaration on Human Rights
• Article 23.
(1) Everyone has the right to work, to free choice of employment, to just and favourable
conditions of work and to protection against unemployment.
(2) Everyone, without any discrimination, has the right to equal pay for equal work.
(3) Everyone who works has the right to just and favourable remuneration ensuring for
himself and his family an existence worthy of human dignity, and supplemented, if necessary,
by other means of social protection.
(4) Everyone has the right to form and to join trade unions for the protection of his interests.
Constitutional Provisions
• Sec. 11, Art. II
• State values dignity of every human person and guarantees full respect for
human rights
• NOTE Universal Declaration on Human Rights
• Article 24. Everyone has the right to rest and leisure, including reasonable limitation of
working hours and periodic holidays with pay.

• Article 4. No one shall be held in slavery or servitude; slavery and the slave trade shall be
prohibited in all their forms.

• Article 20.
(1) Everyone has the right to freedom of peaceful assembly and association.
(2) No one may be compelled to belong to an association
Constitutional Provisions
• Sec. 13, Art. II
• Vital role of youth in nation building

• Sec. 14, Art. II


• Role of women in nation-building… ensure fundamental equality before the
law

• Sec. 18, Art. II


• State affirms labor as a primary social economic force. It shall protect the
rights of workers and promote their welfare
Constitutional Provisions
• Sec. 20, Art. II
• Recognize role of private sector… encourage private enterprise

• Sec. 1, Art. III


• No person shall be deprived of property without due process of law… equal
protection clause
Constitutional Provisions
• NOTE: employment, profession, trade or calling is a property right
• Ones employment, profession, trade or calling is a property right, and the
wrongful interference therewith is an actionable wrong. The right is
considered to be property within the protection of a constitutional guaranty
of due process of law. Clearly then, when one is arbitrarily and unjustly
deprived of his job or means of livelihood, the action instituted to contest the
legality of ones dismissal from employment constitutes, in essence, an action
predicated upon an injury to the rights of the plaintiff, as contemplated under
Art. 1146 of the New Civil Code, which must be brought within four years.
(Callanta v. Carnation Philippines, 1986; reiterated in recent decisions)
• NOTE: money claims involving Employer-Employee relations must be brought within
three years from accrual of cause of action. Note the distinction of prescription based on
the ground for the action.
Constitutional Provisions
• Sec. 4, Art. III
• No law shall be passed abridging… the right of the people to peaceably
assemble and petition the government for redress of grievances.

• Sec. 8, Art. III


• The right of the people, including those employed in the public and private
sectors, to form unions, associations, or societies for purposes not contrary to
law shall not be abridged.
• NOTE: persons employed in the public sector are allowed to join labor organizations or
workers associations. (but no right to strike)
Constitutional Provisions; Right to strike of
public employees
• “…any collective activity undertaken by government employees with
the intent of effecting work stoppage or service disruption in order to
realize their demands or force concessions, economic or otherwise, is
a prohibited concerted mass action and doubtless actionable
administratively. (GSIS v. Kapisanan ng mga Manggagawasa GSIS, G.R.
No. 170132, December 6, 2006)

• “In the absence of statute, public employees do not have the right to
engage in concerted work stoppages for any purpose.” (Bangalisan v.
Court of Appeals, G.R. No. 124678, July 31, 1997)
Constitutional Provisions
• Sec. 1, Art. XIII
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 inequities 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.
Constitutional Provisions
• Sec. 2, Art. XIII
• The promotion of social justice shall include the commitment to create
economic opportunities based on freedom of initiative and self‐reliance.

• Sec. 14, Art. XIII


• The State shall protect working women by providing safe and healthful
working conditions, taking into account their maternal functions, and such
facilities and opportunities that will enhance their welfare and enable them
to realize their full potential in the service of the nation.
Civil Code Provisions on Labor
• 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.
Civil Code Provisions on Labor
• Art. 1701. Neither capital nor labor shall act oppressively against the
other, or impair the interest or convenience of the public.
• NOTE: known as the “principle of non-oppression”
• The protection to labor clause in the Constitution is not designed to oppress or destroy
capital.

• Art. 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.
Civil Code Provisions on Labor
• Art. 1703. No contract which practically amounts to involuntary
servitude, under any guise whatsoever, shall be valid.
The Labor Code of the Philippines
PRESIDENTIAL DECREE No. 442
IMPORTANT NOTE
• The Article numbers in the Labor Code are constantly changing due to
amendments. Thus, if the article number is erroneous in this course,
then please forgive me.
The Labor Code
• ARTICLE 1. Name of Decree. - This Decree shall be known as the
"Labor Code of the Philippines".

• ART. 2. Date of effectivity. - This Code shall take effect six (6) months
after its promulgation.
• The Labor Code took effect on November 1, 1974.
The Labor Code
• 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.
Declaration of basic policy (Art. 3.)
• The State shall:
1. Afford full protection to labor;
2. Promote full employment;
3. Ensure equal work opportunities regardless of sex, race, or creed;
4. Regulate the relations between workers and Employer; and
5. Assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions of work
Declaration of basic policy (Art. 3.)
• BUT NOTE: Protection to labor should not equate to oppression of
capital

• The law recognizes management rights. The Eer has the right to:
• Conduct business
• Prescribe rules
• Select and hire Employees
• Transfer or discharge Employees
• Discipline of Employees
• Return of investment and expansion of business
Declaration of basic policy (Art. 3.)
• Concept of Management Prerogatives
• Under the doctrine of management prerogative, every employer has the
inherent right to regulate, according to his own discretion and judgment, all
aspects of employment, including hiring, work assignments, working
methods, the time, place and manner of work, work supervision, transfer of
employees, lay-off of workers, and discipline, dismissal, and recall of
employees (Rural Bank of Cantilan. v. Julve, GR No. 169750, February 27,
2007).
Declaration of basic policy (Art. 3.)
• Management prerogatives are subject to limitations provided by:
• Law
• Contract or Collective Bargaining Agreement
• General principles of fair play and justice

(Mendoza v. Rural Bank of Lucban, GR No. 155421, July 7, 2004).


Construction in Favor of Labor (Art. 4)
• Art. 4. 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.

• NOTE also Art. 1702 of the Civil Code.


Construction in Favor of Labor (Art. 4)
• Under Art. 4 of the Labor Code, it provides that doubts in the
interpretation of the provisions of the Labor Code, including its
implementing rules and regulations, shall be resolved in favor of
labor. What about doubts contained in labor contracts? What is the
rule regarding interpretation of doubts contained in an employment
contract?
• 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. (Art. 1702 of the Civil
Code)
Construction in Favor of Labor (Art. 4)
• Note however that the principle of construction in favor of labor is
only applicable if there is doubt.

• If the provision is clear, it must be applied according to its express


terms. (Meralco v. NLRC, GR No. 78763, July 12, 1989).
Enforcing Agency
• ART. 5. Rules and regulations. - The Department of Labor and other
government agencies charged with the administration and
enforcement of this Code or any of its parts shall promulgate the
necessary implementing rules and regulations. Such rules and
regulations shall become effective fifteen (15) days after
announcement of their adoption in newspapers of general circulation.

• This simply gives the DOLE the duty to enforce the Labor Code.
Applicability of the Labor Code (Art. 6)
• ART. 6. Applicability. - All rights and benefits granted to workers under
this Code shall, except as may otherwise be provided herein, apply
alike to all workers, whether agricultural or non-agricultural.
Applicability of the Labor Code (Art. 6)
• Applicability of the Labor Code – the Labor Code applies to all workers
whether agricultural or non-agricultural
• Exceptions:
1. Government employees (covered by the Civil Service Law)
2. Employees of government owned and controlled corporations created by
special or original charter.
3. Foreign governments
4. International agencies
• NOTE: International organizations and intergovernmental bodies are not covered by the
Philippines Labor Laws. The remedy of the aggrieved employee is to file a complaint
before the Department of Foreign Affairs.
Applicability of the Labor Code (Art. 6)
• Applicability of the Labor Code – the Labor Code applies to all workers
whether agricultural or non-agricultural
• Exceptions:
4. Corporate officers/ intra-corporate disputes which fall under P.D. 902-A and
now fall under the jurisdiction of the regular courts pursuant to the
Securities Regulation Code.
5. Local water district except where NLRC’s jurisdiction is invoked.
6. As may otherwise be provided by the Labor Code. (Ex: Applicability of Book
III)
Applicability of the Labor Code (Art. 6)
• Rule on GOCCs
• If created by special or original charter – Labor Code does not apply to its
employees (Civil Service Law will govern)

• If created under the Corporation Code – Labor Code applies.


Applicability of the Labor Code (Art. 6)
• Rule on Corporate officers
Section 25 of the Corporation Code plainly states that the corporate officers are
the President, Secretary, Treasurer and such other officers as may be provided
for in the By-Laws. Whoever are the corporate officers enumerated in the by-
laws are the exclusive Officers of the corporation and the Board has no power
to create other Offices without amending first the corporate By-laws.(Matling
Industrial Corporation vs. Coros, October 13, 2010)

• Corporate officers: those enumerated in the Corporation Code or provided in


the by-laws.
Applicability of the Labor Code (Art. 6)
• Note: Prudential Bank and Trust Company v. Reyes, 2001

• Corporate officer who started as a rank and file employee was


terminated. She filed an action for illegal dismissal before the labor
arbiter. The Bank questioned the jurisdiction of the labor arbiter,
considering that the party concerned is a corporate officer. The Bank
argues that it is the SEC (now RTC) and not the NLRC who has
jurisdiction.
Applicability of the Labor Code (Art. 6)
• Held: Labor Arbiter has jurisdiction. It has been stated that the primary
standard of determining regular employment is the reasonable connection
between the particular activity performed by the employee in relation to
the usual trade or business of the employer. Additionally, an employee is
regular because of the nature of work and the length of service, not
because of the mode or even the reason for hiring them.

• as Assistant Vice-President of the Foreign Department of the Bank she


performs tasks integral to the operations of the bank and her length of
service with the bank totaling 28 years speaks volumes of her status as a
regular employee of the bank. In fine, as a regular employee, she is entitled
to security of tenure; that is, her services may be terminated only for a just
or authorized cause.

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