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TitleLabor Standards Final Reviewer by Atty. C.a. Azucena
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Page 1

Labor Law I Atty. C.A. Azucena
Finals Reviewer







Jojo Baetiong, Gel Baniqued, Elvira Castro, Denise Dy, Sheryl Harina, Giselle Remulla Page 1 of 103

3B – 2006-2007



PRELIMINARY TITLE


Chapter I
GENERAL PROVISIONS


Article 1: NAME OF DECREE
Article 2: DATE OF EFFECTIVITY


COMMENTS AND CASES


1. LABOR LEGISLATION; DEFINITIONS

 Broadly divided into labor standards and labor
relations

 Labor standards law is that which sets out the
minimum terms, conditions, and benefits of
employment that employers must provide and
comply with and to which employees are
entitled to as a matter of right.

 Labor relations law is that which defines the
status, rights and duties, and the institutional
mechanisms, that govern the individual and
collective interactions of employers,
employees or their representatives.

 Labor is understood as physical toil, although
it does not necessarily involve the application
of skill. Skill, by dictionary definition, is the
familiar knowledge of any art or science,
united with readiness and dexterity in
execution or performance or in the

application of the science or art to practical
purposes.

 Work is 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.

2. LABOR LAW AND SOCIAL LEGISLATION
 Social legislation includes laws that provide

particular kinds of protection or benefits to
society or segments thereof in furtherance of
social justice. In that sense, labor laws are
necessarily social legislation.

3. SOCIAL JUSTICE AS THE AIM
 The aim, reason, and justification for labor

laws is social justice.
 Section 3 of Article XIII says that “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.”

 This is because “without the improvement of
economic conditions, there can be no real
enhancement of the political rights of the
people.”

4. CONSTITUTIONAL RIGHTS AND MADNESS
 The basic rights of workers guaranteed by the

Constitution are: the rights to organize
themselves, to conduct collective bargaining
or negotiation with management, to engage in

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Labor Law I Atty. C.A. Azucena
Finals Reviewer







Jojo Baetiong, Gel Baniqued, Elvira Castro, Denise Dy, Sheryl Harina, Giselle Remulla Page 2 of 103

3B – 2006-2007



peaceful concerted activities, including to
strike in accordance with law, to enjoy
security of tenure, to work under humane
conditions, to receive a living wage, to
participate in policy and decision making
processes affecting their rights and benefits
as may be provided by law.

4.1. Balancing of Rights; the Constitutional Principle
of Shared Responsibility

 While labor is entitled to a just share in
the fruits of production, the enterprise
has an equally important right not only
to reasonable returns in investment but
also to expansion and growth. The
Constitution commands the State to
promote the principle of shared
responsibility between employers and
workers and the preferential use of
voluntary modes of settling disputes,
including conciliation, and to enforce
their mutual compliance therewith to
foster industrial peace.

 Constitutional outlook suggests a
balanced treatment.

5. POLICE POWER AS THE BASIS
 The right of every person to pursue a

business, occupation or profession is subject
to the paramount right of the government as a
part of its police power to impose such

restrictions and regulations as the protection
of the public may require.

6. BIRTH OF THE LABOR CODE
 Writing began under Blas Ople, Father of the

Labor Code
 The objective was not merely to consolidate

the then existing pieces of social legislation,
but also to reorient them to the needs of
economic development and justice.

7. PRINCIPLES UNDERLYING THE CODE
 Must be both responsive and responsible to

national development
 Must substitute rationality for confrontation in

times of national emergencies
 Must be made expeditious without sacrificing

due process
 Manpower development and employment must

be regarded as a major dimension of labor
policy

 Availability of a global labor market to
qualified Filipinos

 Must command adequate resources and
acquire capable machinery for effective and
sustained implementation

 There should be popular participation in
national policy making through what is now
called tripartism

8. SOME LABOR LAWS BEFORE THE PASSAGE OF THE
CODE

 Act 1874 or the Employer’s Liability Act

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Labor Law I Atty. C.A. Azucena
Finals Reviewer







Jojo Baetiong, Gel Baniqued, Elvira Castro, Denise Dy, Sheryl Harina, Giselle Remulla Page 51 of 103

3B – 2006-2007




1.2 Trilateral relationship
3 parties – principal, contractor and contractual
employees

Bet principal and contractor – Civil code & pertinent
commercial law
Bet contractor & employee – Labor code and special
labor laws


2. 1

st
set of prohibition – Labor only contracting (DO

18-02)

L.o.C = EE + (CE1 or CE2)

EE = essential element  arrangement is merely
to recruit, supply or place workers to perform a
job, work or service for the principal
CE1 = confirming element 1  lack of substantial
capital or investment and performance of
activities directly related to the principal’s main
business
CE2 = confirming element 2  contractor does
not exercise control over the performance of the
employees


L.o.C. by presumption of law  a full-pledged
legitimate labor contractor has to be registered with
DOLE, otherwise he is presumed to be an L.o.C.


Substantial capital or investment – capitalization,
tools, eqpt, implements, machineries and work
premises, actually and directly used by the
contractor or subcon in performance or completion
of the jobm work or service contracted out.

Neri v. NLRC (1993)
Law does not require both substantial capital and
investment in the form of tools, eqpt, machineries,
etc.

Filipinas Synthetic Fiber v. NLRC (1996)
Where the contractor is a going concern duly
registered with the SEC with substantial
capitalization of P1.6M, P400T of which is actually
subscribed, such contractor cannot be considered as
engaged in LoC being a highly capitalized venture.

Control – right reserved to the person for whom the
service of contactual workers are performed, to
determine not only the end to be achieved but also
the manner and means to be used in reaching that
end.

Insular Life v. NLRC (1989)
The fact that the complainant worker was required
to solicit business exclkusively for the alleged
employer could hardly be considered as control in
labor jurisprudence. Under the memo issued by the

Page 52

Labor Law I Atty. C.A. Azucena
Finals Reviewer







Jojo Baetiong, Gel Baniqued, Elvira Castro, Denise Dy, Sheryl Harina, Giselle Remulla Page 52 of 103

3B – 2006-2007



Insurance Commission, insurance agents are barred
from serving more than 1 insurance company.

AFP MBAI v.NLRC (1997)
Exclusive servicing does not necessarily mean being
under the control, or employment of the entity
being served.

2.3 Consequence of LoC – Worker supplied by Agency

becomes employee of client company
PBCOM v. NLRC (1986)
There is of course nothing illegal about hiring
persons to carry out “a specific project or
undertaking the completion or termination of which
(was) determined at the time of the engagement of
the employee, or where the work or service to be
performed is seasonal in nature and the employment
is for the duration of the season.

Given te circumstances of this case, CESI was
engaged in LoC vis-à-vis the petitioner bank. The
bank is liable to the employee as if the employee
had been directly employed not only by CESI but also
by the bank. But the bank may in turn proceed
against CESI to obtain reimbursement of, or some
contribution to, the amounts which the bank will
have to pay to Orpiada.


2.4 Consequence of LoC – Agency hired employee
becomes entitled to benefits under CBA of client
company

Tabas v. California Manufacturing Co (1989)
The existence of an employer-empoyee relation is a
question of law and being such, cannot be made the
subject of agreement.
Employee is reinstated with the full status and rights
of regular employees; all benefits as may be
provided by existing CBA or other relations or by
law.

3. Summary of prohibited labor contracting


4. 2

nd
set of prohibitions – Arrangements that violate

public policy (DO 18-02)
Not LoC but are likewise prohibited because they
contravene public policy:

Prohibitions:
a) Contracting not done in good faith and not

justified by the exigencies of the business and
the same results in the termination of regular
employees and reduction of work hours or
reduction or splitting of the bargaining unit

b) Contracting with cabo
c) Contracting with in house agency
d) Contracting bec of strike or lockout
e) Contracting that constitutes ULP under Art

248

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