ART.
1 – Name of Decree
HISTORY OF LABOR CODE
1968 – Drafting of the Labor Code
1973 – National Tripartite Conference on the Labor Code
May 1, 1973 – Executive Committee submitted the daft to Pre.
Marcos
Nov. 1, 1974 – Labor Code took effect after final revision
LABOR STANDARDS PROVISIONS OF THE LABOR CODE
Book 1 – Pre-employment
Book 2 – Human Resources Development Program
Book 3 – Conditions of Employment
Book 4 – Healthy, Safety and Social Welfare Benefits
LABOR REALTIONS PROVISIONS OF THE LABOR CODE
Book 5 – Labor Relations
Book 6 – Post-employment
Book 7 – Transitory and Final Provisions
Labor law – body of laws, rules and regulations enacted or issued by
the State to promote the welfare of the employees and regulate their
relations with their employers
– Also includes judicial decisions interpreting such laws,
rules and regulations
Labor legislation –statutes, regulations and jurisprudence governing
labor relations between capital and labor by providing for
employment standards and a legal framework for negotiating,
adjusting and administering those standards and other incidents of
employment
Social legislations –laws that provide particular kinds of protection or
benefits to society or segments thereof in furtherance of social
justice
PURPOSE OF LABOR LEGISLATION – To implement the state
policies in the Labor Code and the Constitution
GENERAL CLASSIFICATION OF LABOR STATUTES
1. Labor Standards Law – refer to the minimum requirements
prescribe by existing laws, rules and regulations and other
issuances relating to wages, hours of work, cost of living,
allowances and other monetary and welfare benefits, including those
set by occupational safety and health standards.
2. Social Security law – laws that provide for income security and/or
medical care for contingencies such as:
a. sickness e. death of breadwinner; unemployment
b. maternity f. emergency expenses
c. invalidity g. employment injuries
d. old age
3. Labor Relations law – defines the status, rights and duties and the
institutional mechanisms that govern the individual and collective
interactions of employers, employees or their representatives
JMM PROMOTION vs. CA – Assailed is the gov’t’s power to control
deployment of female entertainers in Japan by requiring an Artist
Record Book as a precondition to the processing by the POEA of
any contract for overseas employment.
SC: The Artist Record Book requirement and the Order related
to its issuance is a valid exercise of police power.
BASIS OF LABOR LAWS
CIVIL CODE PROVISIONS
Art. 1700 Art. 1707
Art. 1701 Art. 1708
Art. 1702 Art. 1709
Art. 1703 Art. 1710
Art. 1704 Art. 1711
Art. 1705 Art. 1712
Art. 1706
CONSTITUTIONAL PROVISIONS
Art. II, Sec. 9 Art. IX-B, Sec. 2[5]
Art. II, Sec. 10 Art. IX-B, Sec. 2[6]
Art. II, Sec. 11 Art. IX-B, Sec. 5
Art. II, Sec. 13 Art. XII, Sec. 6
Art. II, Sec. 14 Art. XII, Sec. 12
Art. II, Sec. 18 Art. XII, Sec. 14
Art. II, Sec. 20 Art. XII, Sec. 16
Art. III, Sec. 1 Art. XIII, Sec. 1
Art. III, Sec. 4 Art. XIII, Sec. 2
Art. III, Sec. 8 Art. XIII, Sec. 3
Art. IX-B, Sec. 2[1] Art. XIII, Sec. 14
Art. IX-B, Sec. 2[3]
CONSTITUTIONAL PRINCIPLES ON LABOR
Constitutional dues process protects the individual from the
government and assures him of his rights in criminal, civil or
administrative proceedings
Statutory dues process found in the Labor Code and IR protects the
employees from being unjustly terminated without just cause after
notice and hearing
SERRANO vs. NLRC – Violation by employer of the notice
requirement cannot be considered a denial of due process clause
under the Constitution.
SERRANO vs. GALLANT SERVICE – Whether the clause found in
Par. 5, Sec. 10 of RA 8042 violate Sec. 10, Art. III of the Consti on
non-impairment of contracts.
SC: The prohibition is aligned with the general principle that
laws newly enacted have only a prospective operation, however as
to laws already in existence, their provisions are read into contracts
and deemed part thereof. Thus, the non-impairment clause under
Sec. 10 Art. III is limited in application to laws about to be enacted
that would in any way derogate from existing acts or contracts by
enlarging, abridging or in any manner changing the intention of the
parties thereto.
SAMEER AGENCY vs. CABILES –The law passed incorporates
the exact clause already declared unconstitutional, without any
perceived substantial change in the circumstances.
SC: Reiterated the ruling that limiting wages that should be
recovered by an illegally dismissed overseas worker to three months
is both a violation of due process and the equal protection clauses.
 Art. XIII expressly recognizes the vital role of labor, hand in hand
with management, in the advancement of national economy and
welfare of the people in general.
 The categorical mandates in the Constitution for the improvement
of the lot of the workers are more than sufficient basis to justify the
award of separation pay in proper cases even if the dismissal be
for cause.
CALALANG vs. WILLIAMS – 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 principle of salus populi est suprema lex. Social justice,
therefore, must be founded on the recognition of the necessity of
interdependence among divers and diverse units of a society and of
the protection that should be equally and evenly extended to all
groups as a combined force in our social and economic life,
consistent with the fundamental and paramount objective of the
state of promoting the health, comfort, and quiet of all persons, and
of bringing about "the greatest good to the greatest number."
FUENTES vs. NLRC – State is bound under the Constitution to
afford full protection to labor and when conflicting interests of labor
and capital are to be weighed on the scales of social justice the
heavier the influence of the latter should be counterbalanced with
the sympathy and compassion the law accords the less privileged
workingman.
ART. XIII, SEC. 3, 1987 CONSTI – Clause on protection to labor
guarantees the following:
1. Extent and coverage of protection – Full protection to labor,
local and overseas, organized and unorganized
2. Policy on employment – Promote full employment and equality
of employment opportunities for all
3. Unionism and Methods of Determination, Conditions of
Employment – The rights of all workers to self-organization,
collective bargaining and negotiations
4. Concerted Activities – Peaceful concerted activities, including
the right to strike in accordance with law.
5. Working conditions – Security of tenure, humance conditiond of
work, and a living wage
6. Codetermination – Participation in policy and decision-making
processes affecting their rights and benefits as may be provided
by law
7. Shared responsibility – Promote the principle of shared
responsibility between workers and employers
8. Policy on dispute resolution – Preferential use of voluntary
modes in settling disputes, including conciliation, and shall
enforce their mutual compliance therewith to foster industrial
peace
9. Right of labor and of enterprise – 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.
Co-determination – pertains to the participation of the workers in
corporate planning, the chartering of corporate business, modes and
procedures of corporate management and acquisition of property
PAL v NLRC – Whether management may be compelled to share
with the union or its employees its prerogative of formulating a code
of discipline
SC: It was only in March 1989, with the approval of RA 6715,
amending Art. 211 of the Labor Code, that the law explicitly
considered it a State policy “to ensure the participation of workers in
decision and policy-making processes affecting their rights, duties
and welfare.” However, even in the absence of the said clear
provision of law, the exercise of management prerogatives was
never considered boundless. Thus in Cruz v. Medina, it was held
that management prerogatives must be without abuse of discretion.
SAN MIGUEL UNION vs. OPLE – So long as a company’s
management prerogatives are exercised in good faith for the
advancement of the employer’s interest and not for the purpose of
defeating or circumventing the rights of the employees under special
laws or under valid agreements, this Court will uphold them.
AGABON v NLRC – Art. 13, Sec. 3 is described to be not self-
actuating.
The constitutional mandates of protection and labor security of
tenure may be deemed as self-executing in the sense that these are
automatically acknowledged and observed without need for enabling
legislation. However, to declare that the consti provisions are
enough to guarantee the full exercise of the rights embodies therein
and the realization of the ideals therein express would be
impractical, if not unrealistic.
Subsequent legislation is still needed to define the parameters
of these guaranteed rights to ensure the protection and promotion,
not only the rights of the labor sectors, but of the employer’s as well.
Without specific and pertinent legislation, judicial bodies will be at
loss, formulating their own conclusion to approximate at least the
aims of the Consti.
Such provision cannot be treated as a principal source of direct
enforceable rights, for the violation of which the questioned clause
may be declared unconstitutional.
ART. 2 – Date of effectivity
ART. 3 – Declaration of basic policy
1. Afford 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 employers
5. Assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions
of work.
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.
MANAYA vs. ALABANG COUNTRY CLUB – It is a basic and
irrefragable rule that in carrying out and in interpreting the provisions
of the Labor Code and its implementing regulations, the
workingman’s welfare should be the primordial and paramount
consideration.
ART. 1702, NCC – 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.
JURISPRUDENTIAL DOCTRINES ON THE APPLICATION OF
ARTICLE 4
KAISAHAN vs. MANILA WATER – Article 111 of the Labor Code,
as amended, contemplates the extraordinary concept of attorney’s
fees and that Article 111 is an exception to the declared policy of
strict construction in the award of attorney’s fees. Although an
express finding of facts and law is still necessary to prove the merit
of the award, there need not be any showing that the employer
acted maliciously or in bad faith when it withheld the wages
PEÑAFLOR v OURDOOR CLOTHING –Application of Art. 4 of the
Labor Code regarding doubts on respondent’s evidence on the
voluntariness of petitioner’s resignation
SC: In such contest of evidence, the cited Art. 4 compels us to
rule in favor of Peñaflor’s favor. Thus, we find that Peñaflor was
constructively dismissed given the hostile and discriminatory
working environment he found himself in, particularly evidenced by
the escalating acts of unfairness against him that culminated in the
appointment of another HRD manager without prior notice to him.
Where no less than the company’ chief corporate officer was against
him, Peñaflor had no alternative but to resign from his employment.
SAN MIGUEL FOODS vs SAN MIGUEL UNION – Article 4 of the
Labor Code provides that "All doubts in the implementation and
interpretation of the provisions of this Code, including implementing
rules and regulations, shall be resolved in favor of labor." Since the
seniority rule in the promotion of employees has a bearing on salary
and benefits, it may, following a liberal construction of Article 261 of
the Labor Code, be considered an "economic provision" of the CBA.
PNCC vs. NLRC – Under the separation program, an employee
may qualify if he has rendered "at least one year of continuous
service." As public respondent has stated, the plain language of the
program did not require that continuous service be immediately prior
to the employee's separation. Thus, private respondent's other stints
at PNCC prior to his last service in 1989 can properly be considered
in order to qualify him under the program. That the duration of
private respondent's last stint was less than one year does not
militate against his qualification under the program. We grant this
liberality in favor of private respondent in the light of the rule in labor
law that "when a conflicting interest of labor and capital are weighed
on the scales of social justice, the heavier influence of the latter
must be counter-balanced by the sympathy and compassion the law
must accord the under-privileged worker."
JURISPRUDENTIAL DOCTRINES WHEN ARTICLE 4 OF THE
LABOR CODE IS NOT APPLICABLE
MARCROPPER MINING vs. NLRC – Assuming arguendo that the
provision is not really clear, Article 4 of the Labor Code should not
have been resorted to as this applies only in case of doubt in the
interpretation and implementation of the provisions of the Labor
Code and its implementing rules and regulations. The CBA being a
contract, the rules embodied in the Civil Code on interpretation of
contracts should govern. The intent of the parties should be
ascertained by considering relevant provisions of the CBA on the
retirement plan, the group life insurance, and bereavement
assistance together with Section 1 in the light of Article 1374 of the
Civil Code.
PLASTIC TOWN vs. NLRC – The subject for interpretation in this
petition for review is not the Labor Code or its implementing rules
and regulations but the provisions of the collective bargaining
agreement entered into by management and the labor union. As a
contract, it constitutes the law between the parties and in
interpreting contracts, the rules on contract must govern.
CONCEPT OF MANAGEMENT PREROGATIVES
Management Prerogatives – the right of the employee to regulate all
aspects of employment, such as the freedom to prescribe work
assignments, working methods, processes to be followed, regulation
regarding transfer of employees, supervision of their work, lay-off
and discipline , and dismissal and recall of work. (SHS Perforated
Materials Inc v. Diaz)
GERMINA vs. BANKWISE – An employer has a free reign and
enjoys wide latitude of discretion to regulate all aspects of
employment and the only criterion to guide the exercise of its MPs is
that the policies, rules and regulations on work-related activities of
the employees must always be fair and reasonable.
The SC upholds these MPs so long as they are exercised in good
faith for the advancement of the employer’s interest and not for the
purpose of defeating or circumventing the rights of the employees
under special laws and valid agreements.
ASPECTS OF MANAGEMENT PREROGATIVES
1. Employee selection 5. Grant of bonuses
2. Discipline 6. Change of working hours
3. Transfer/promote employees 7. Post-employment
4. Productivity standards 8. Marital discrimination
reasonable returns on investments. Such that, we recognize that
management has a wide latitude to regulate, according to his own
discretion and judgment, all aspects of employment.
 The right of employees to security of tenure does not give them
the vested rights to their positions to the extent of depriving
management its prerogative to change their assignments or to
transfer them.
To dismiss an employee
 The law, however, in protecting the rights of the laborers,
authorizes neither oppression nor self-destruction of employer.
The workers right on tenure us not an absolute right, for the law
provides that he may be dismissed for cause. The power of
dismissal is a measure of self-protection.
Transfer and promotion of employees
 Management has prerogative to transfer or assign employees
from one office or area of operation to another – provided there is
no demotion in rank or diminution of salary, benefits, and other
privileges; and the action is not motivated by discrimination, made
in bad faith, or effected as a form of punishment or demotion
without sufficient cause.
Transfer – movement from one position to another which is of
equivalent rank, level or salary, without break in service
Promotion – the advancement from one position to another with an
increase in duties and responsibilities as authorized by law, and
usually accompanied by an increase in salary
Demotion – where employee us relegated to subordinate or less
important position constituting a reduction to a lower grade or rank,
with a corresponding decrease in duties and responsibilities, and
usually accompanied by a decrease in salary
Outsourcing business activities
 The Court held that it is management prerogative to farm out any
activities regardless of whether such activity is peripheral or core
in nature.
 What is of primordial importance is that the service agreement
does not violate the employee’s right to security of tenure and
payment of benefits to which he is entitled under the law.
 The outsourcing must not squarely fall under labor-only
contracting where the contractor or sub-contractor merely recruits,
supplies or places workers to perform a job, work or service for a
principal.

Employee Selection
 The employer cannot be compelled to hire somebody against its
will. The employer is generally responsible for the damages
caused by his employees it is logical and just that he be the one
exclusively entitled to freely select them.
 The SC remarked that to compel an employer to hire employees
from a specific source to the exclusion of others coming from
another source not only would tend to promote sectionalism and
disunity but also would interfere with the citizen’s right to freedom
of contract.

To discipline
 Management has the prerogative to discipline its employees and
to impose appropriate penalties on erring workers pursuant to
company rules and regulations.

Security of tenure
 It should be remembered that the entitlement of workers to
security of tenure is correlative to the right of enterprises to