Art.

1 – Name of the Decree: Labor Code of the Philippines

Art. 2 – Date of Effectivity: 6 months after its promulgation

I. LABOR LEGISLATION, defined

Labor Legislation – consists of statutes, regulations and jurisprudence governing the relations between
capital and labor, by providing certain employment standards and a legal framework for negotiating,
adjusting and administering those standards and other incidents of employment.

Division of Labor Legislation:

1. Labor Standards - that which provide the least terms and conditions of employment that
employers must comply with and to which the employees are entitled as a matter of legal right.
-the minimum requirements prescribed by existing laws, rules and regulations
relating to wages, hours of work, cola and other monetary and welfare benefits, including
occupational, safety and health standards.

2. Labor Relations - defines the status, rights, and duties, and the institutional mechanisms that
govern the individual and collective interactions, of employers, employees or their representatives

Difference of Labor Standards from Relations

Figuratively, one may think of labor standards as the material or substance to be processed while
labor relations is the mechanism that processes the substance.

Labor – physical toil although it does not necessarily exclude the application of skill, thus there is skilled
and unskilled labor.

Skill – the familiar knowledge of any art or science, united with readiness and dexterity in execution or
performance or in application of the art or science to practical purposes.

Work – broader than labor as work covers all forms of physical or mental exertion or both combined, for
the attainment of some object other than recreation or amusement per se.

Workers – broader than employee; may refer to self-employed people, and those working in the service
and under the control of another, regardless of rank, title, or nature of work.

Employee – a salaried person working for another who controls or supervise the means, manner or
method of doing the work.

II. LABOR LAW AND SOCIAL LEGISLATION

Social Legislation – those laws that provide particular kinds of protection or benefits to society or
segments thereof in furtherance of social justice.

*Labor laws are necessarily social legislation but not all social legislations are labor laws
III. SOCIAL JUSTICE as the aim of Labor Laws

Social Justice - the promotion of the welfare of all the people, the adoption by the Government of
measures calculated to insure economic stability of all the component elements of society through the
maintenance of 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 principle of salus populi est suprema lex.
- in essence, both a juridical principle and a societal goal

As a juridical principle, it prescribes equality of the people, rich or poor, before the law.
As a goal, it means the attainment of decent quality of life of the masses through humane
productive efforts.
IV. CONSTITUTIONAL RIGHTS AND MANDATES

If there should be conflict between constitutional provisions and those of the Labor Code, the
Constitution shall prevail as it is the highest law of the land.

Guaranteed basic rights of workers in the Constitution:

(1) to organize themselves;
(2) to conduct collective bargaining or negotiation with management;
(3) to engage in peaceful concerted activities, including to strike in accordance with law;
(4) to enjoy security of tenure;
(5) to work under humane conditions;
(6) to receive a living wage; and
(7) to participate in policy and decision-making processes affecting their rights and benefits as
may be provided by law.1

V. BALANCING OF RIGHTS IN PRIVATE ENTERPRISE SYSTEM

The State is mandated to regulate the relations between workers and employers.

“Private enterprises,” Section 4 of the TESDA Law says, is an “economic system under which property of
all kinds can be privately owned and in which individuals, alone or in association with another, can embark
on a business activity.
This includes industrial, agricultural, or agro-industrial establishments engaged in the production,
manufacturing, processing, repacking or assembly of goods, including service-oriented enterprises.”

labor is called a primary social economic force. Because one is “indispensable” and the other is
“primary,”

5.1 Shared Responsibility

The Constitution commands the State to promote the principle of shared responsibility between
workers and employers and the preferential use of voluntary modes of settling disputes, including
conciliation, and (to) enforce their mutual compliance therewith to foster industrial peace.

VI. POLICE POWER AS THE BASIS

While social justice is the raison d’etre of labor laws, their basis or foundation is the police power of the
State.

POLICE POWER-It is the power of Government to enact laws, within constitutional limits, to promote the
order, safety, health, morals and general welfare of society.

And yet, police power itself has to respect the Constitution

VII. BIRTH OF THE LABOR CODE

The writing of a labor code began in 1968 under the leadership of the then Minister of Labor, Mr. Blas F.
Ople, who deserves being regarded as the “Father of the Labor Code.”

The objective was not merely to consolidate the then existing pieces of labor legislation — of which there
were about sixty scattered in laws passed before, during and after the Commonwealth — but also to
reorient them to the needs of economic development and justice.

After about seven times of drafting and redrafting, the Code was ratified, albeit quickly, by a National
Tripartite Congress on April 28, 1973 and submitted to the President on May 1, 1973. In between Labor
Days, it underwent further revisions. On May 1, 1974, it was signed into law as P.D. No. 442.
But at the same time, the Dictator-President announced that the Code would take effect after six months.
Months of silence followed. When the Code resurfaced, it was loaded with extensive changes through
P.D. No. 570-A. This decree was made public, signed, and declared to take effect on one and the same
day – November 1, 1974. No prior announcement, no prior publication. That was an instance of dictatorial
lawmaking during the Dictator’s twenty-year rule.

VIII. PRINCIPLES UNDERLYING THE CODE

Seven innovative principles permeated the entire composition of the Labor Code, namely:

1) Labor relations must be made both responsive and responsible to national development.
2) Labor laws or labor relations during a period of national emergency must substitute rationality for
confrontation; therefore, strikes or lockouts give away to a rational process which is arbitration.
3) Laggard justice in the labor field is injurious to the workers, the employers and the public; labor justice
can be made expeditious without sacrificing due process.
4) Manpower development and employment must be regarded as a major dimension of labor policy, for
there can be no real equality of bargaining power under conditions of severe mass unemployment.
5) There is a global labor market available to qualified Filipinos, especially those who are unemployed or
whose employment is tantamount to unemployment because of their very little earnings.
6) Labor laws must command adequate resources and acquire a capable machinery for effective and
sustained implementation; otherwise, they merely breed resentment not only of the workers but also of
the employers. When labor laws cannot be enforced, both the employers and the workers are penalized,
and only a corrupt few — those who are in charge of implementation — may get the reward they do not
deserve.
7) There should be popular participation in national policy-making through what is now called tripartism.

IX. SOME LABOR LAWS BEFORE THE PASSAGE OF THE CODE

It should be remembered in this regard that “judicial decisions applying or interpreting the laws or the
Constitution (shall) form part of the legal system of the Philippines.”

X. WHAT IS THE LABOR CODE?

The Labor Code (P.D. No. 442, as amended) is a set of substantive and procedural laws that prescribe the
principal rights and responsibilities of employers, employees and other industrial participants, as well
as the role of Government, in employment and related activities, so as to institute social justice.

“Labor” in “Labor Code” is better viewed in its broad ordinary sense as work and work relationship,
referring to any economically productive application of physical, mental and material resources.

In this sense, the term “labor” simply means work and does not exclude the work of business owners and
managers.

Thus, the Labor Code speaks of myriad concepts such as employment relationship, collective bargaining,
and employment termination.

The context of the Labor Code is societal: the problems arising from inequality and scarcity in natural or
processed resources. Although the Code’s language is legal, in terms of prescriptions, prohibitions, and
exceptions, its objective is socio-economic: the well-being of the people.

XI. RELATED LAWS

XI.1 The Civil Code

The Civil Code, not the Labor Code, describes basically the nature of labor-management relations.
It states: “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.
 XI.2 The Revised Penal Code
XI.3 Special Laws

XII. INTERNATIONAL ASPECT

Not to be overlooked is the international aspect of our labor laws, considering that the Philippines is a
member of the ILO.

The International Labour Organization (ILO) is the UN specialized agency which seeks the promotion of
social justice and internationally recognized human and labour rights.
- formulates international labour standards in the form of Conventions and Recommendations
setting minimum standards of basic labour rights: freedom of association, the right to organize, collective
bargaining, abolition of forced labour, equality of opportunity and treatment, and other standards
regulating conditions across the entire spectrum of work-related issues

12.3 Ratification Generally Needed; Exception

As a rule, ILO conventions are binding only for those member-states that ratify them. In 1999, however,
the ILO adopted a Declaration on Fundamental Principles and Rights at Work concerning an obligation of
all ILO members to respect and promote the fundamental rights even if they have not ratified the
conventions.

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.

-Article 3 is not a statement of goals but a statement of policy directions towards the goals.

1. LABOR LAWS AND SOCIAL-ECONOMIC GOALS

Social issues- employment, protection to labor, labor-management relations

The goals of the national economy, says the Constitution, are a more equitable distribution of
opportunities, income, and wealth; a sustained increase in the amount of goods and services produced
by the nation for the benefit of the people.
- Those goals are the route to social justice, a route directed by laws, especially those about labor
and employment.

2. INTERDEPENDENCE
The plain reality is that both sectors need each other. They are interdependent — one is inutile
without the other.

ART. 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.

1. INTERPRETATION AND CONSTRUCTION

1.1 Laborer’s Welfare; Liberal Approach
In carrying out and interpreting the Labor Code’s provisions and its implementing regulations, the
working man’s welfare should be the primordial and paramount consideration.

In interpreting the Constitution’s protection to labor and social justice provisions and the labor
laws and rules and regulations implementing the constitutional mandate, the Supreme Court adopts the
liberal approach which favors the exercise of labor rights.
 1.2 Concern for Lowly Worker
1.3 Reason for According Greater Protection to Employees
Consequently, the law must protect labor, at least, to the extent of raising him to equal footing in
bargaining relations with capital and to shield him from abuses brought about by the necessity for survival.

1.4 Justice, the Intention of the Law

Justice, not expediency, is the higher end of law. And law does not favor favoritism amounting
to injustice.

2. MANAGEMENT RIGHTS, BROADLY

Management also has its own rights which, as such, are entitled to respect and enforcement in the
interest of simple fair play.
Management prerogatives, however, are subject to limitations provided by (1) law, (2) contract or
collective bargaining agreements, and (3) general principles of fair play and justice.

2.1 Right to ROI

The employer has the right to return of investments and to make profit.
The Constitution provides: “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 on investments, and to expansion and growth.”

2.2 Right to Prescribe Rules

Employers have the right to make reasonable rules and regulations for the government of their
employees, and when employees, with knowledge of an established rule, enter the service, the rule
becomes a part of the contract of employment. Company policies and regulations are, unless shown to
be grossly oppressive or contrary to law, generally binding and valid on the parties.

2.3 Right to Select Employees

An employer has a right to select his employees and to decide when to engage them. On the one
hand, he may refuse to employ whomever he may wish, irrespective of his motive, and on the other hand,
he has the right to prescribe the terms upon which he will consent to the relationship, and to have them
fairly understood and expressed in advance.

The state has no right to interfere in a private employment and stipulate the terms of the services
to be rendered; it cannot interfere with the liberty of contract with respect to labor except in the exercise
of the police power.

The employer and the employee have thus an equality of right guaranteed by the Constitution. If
the employer can compel the employee to work against the latter’s will, this is servitude. If the employee
can compel the employer to give him work against the employer’s will, this is oppression.”

2.4 Right to Transfer or Discharge Employees

An employer has the perfect right to transfer, reduce or lay off personnel in order to minimize
expenses and to insure the stability of the business, and even to close the business.
-provided the transfer or dismissal is not abused but is done in good faith and is due to causes
beyond control.

ART. 5. RULES AND REGULATIONS

The Department of Labor and Employment 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.

1. RULES AND REGULATIONS TO IMPLEMENT THE CODE

Under Article 5, the Department of Labor and Employment shall make rules and regulations to
implement the Code.
The Labor Code itself in Article 5 vests the Department of Labor and Employment with rule-making
powers in the enforcement thereof.

1.1 When Invalid

A rule or regulation promulgated by an administrative body, such as the Department of Labor,
to implement a law, in excess of its rule-making authority, is void.

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.

1. APPLICABILITY TO GOVERNMENT CORPORATIONS

Labor Code applies to a government corporation incorporated under the Corporation Code.

1987 Constitution, which provides: “The Civil Service embraces all branches, subdivisions,
instrumentalities and agencies of the Government, including government-owned or controlled
corporations with original charters.”

The government-owned and controlled corporations “with original charter” -refer to

corporations chartered by special law from Congress as distinguished from corporations organized
under our general incorporation statute, the Corporation Code.

Thus, under the present state of the law, the test in determining whether a government-owned
or controlled corporation is subject to the Civil Service Law is the manner of its creation.

Government corporations created by Congress are subject to Civil Service rules,

while those incorporated under the general Corporation Law are covered by the Labor Code.

2. NON-APPLICABILITY TO GOVERNMENT AGENCIES

The terms governmental “agency” or “instrumentality” are synonymous in the sense that either
of them is a means by which a government acts, or by which a certain government act or function is
performed. The word “instrumentality,” with respect to the state, contemplates an authority to which
the state delegates government power for the performance of a state function.

3. APPLICABILITY WITHOUT EMPLOYER-EMPLOYEE RELATIONSHIP

The Labor Code may apply even if the parties are not employers and employees of each other.

In other words, it is not correct to say that employment relationship is a pre-condition to the
applicability of the Code.

the Labor Code applies with or without employment relationship between the disputants,
depending on the kind of issue involved.