A.

THE BIRTH OF LABOR CODE

How the Labor Code came into existence Promulgation and Effectivity of the Labor Code Importance of the effectivity of the Labor Code

Article 1: Name of the Decree. - This Decree shall be known as the Labor Code of the Philippines. Article 2: Date of Effectivity. This Code shall take effect six (6) months after its promulgation. The writing of a labor code began in 1968 under the leadership of the then Minister of Labor, Mr. Blas F. Ople, who deserves be ing 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. This aim was in line with the prescription of the Comprehensive Employment Strategy Mission of the International Labor Organization ( Ranis Report) that the elevation of real wages, incomes and living standards was a function of employment generation and economic expansion. The road to the approval of the Code was long and torturous. The project had to gather invaluable contributions from the different bureaus of the Department of Labor, the Department of Industry and the Board of Investments, the UP Law Center, the Integrated Bar of the Philippines, the Personnel Management Association of the Philippines (PMAP), the National Economic and Development Authority, and the various trade union centers. 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 Presidential Decree No. 442. But as Article 2 says, the Code was to take effect six months after its promulgation, i.e., on November 1, 1974. This was because, according to the Minister of Labor (who was never pawn or clone of the martial law president), the Code was designed to be a dynamic and growing body of laws which will reflect continually the lessons of practical application and experience. The date of the effectivity of the Code, fixed at November 1, 1974, as above stated, was reaffirmed by P.D. No. 570-A. There can thus be no doubt that the Labor Court still has jurisdiction of the case at the time it

rendered its judgment on June 27, 1974. (Asuncion Bros. & Co., Inc., v. Court of Industial Relations, G. R. No. L-39514, July 27, 1988) Art. 290. Offenses. - Offenses penalized under this Code and the rules and regulations issued pursuant thereto shall prescribe in three (3) years. All unfair labor practice arising from Book V shall be filed with the appropriate agency within one (1) year from accrual of such unfair labor practice; otherwise, they shall be forever barred. There are two prescriptive periods for violations of the provisions of the Labor Code under Article 290. For the violations of the Labor Code provisions including the implementing rules and regulations, the prescriptive period is three years from the time of the commission of the offense or from its discovery. On the other hand, as expressly provided by the second paragraph of Article 290, the period for prescription for unfair labor practice (ULP) as defined by Book V of the Labor Code is one (1) year from accrual of such unfair labor practice otherwise such action shall be forever barred. Article 290 offenses penalized under this Code and the rules and regulations issued pursuant thereto shall prescribe in three (3) years. The Labor Code, however, does not contain any provisions on the mode of computation of the three year prescriptive period it established. Prescription shall begin to run from the day of the commission of the violation of the law, and if the same be not known at the time, from the discovery thereof and the institution of judicial proceedings from its investigation and punishment. It is relevant to note that the same result would be reach by giving supplemental effect to provisions of the Revised Penal Code in the application of Article 290 of the Labor Code. Article 91 of the Revised Penal Code reads as follows: Article 91. - Computation of prescription of offenses. The period of prescription shall commence to run from the day to which the crime is discovered by the offended party, the authorities, or their agents, and shall be interrupted by the filing of the complaint or information, and shall commence to run again when such proceedings terminate without the accused being convicted or acquitted, or are unjustifiably stopped for any reason not imputable to him. The term of prescription shall not run when the offender is absent from the Philippine Archipelago. (People v. Duque, G. R. No. 100285, August 13, 1992) Article 291: Money Claims. - All money claims arising from employer-employee relationship accruing during the effectivity of this Code shall be filed within three (3)

years from the time the cause of action accrued; otherwise they shall be forever barred. All money claims accruing prior to the effectivity of this Code shall be filed with the appropriate entities established under this Code within one (1) year from the date of effectivity, and shall be processed or determined in accordance with the implementing rules and regulations of the Code; otherwise, they shall be forever barred. Workmen compensation claims accruing prior to the effectivity of this Code and during the period from November 1, 1974 up to December 31, 1974, shall be filed with the appropriate regional offices of the Department of Labor not later than March 31, 1975; otherwise, they shall forever be barred. The claims shall be processed and adjudicated in accordance with the law and rules at the time their causes of action accrued. There is no doubt that the three-year period within which to file actions involving money claims arising out of an employer-employee relationship fixed by Article 292 (now Art. 291) of P. D. No. 442 (Labor Code), as amended, equally applies to claims for the incremental proceeds arising from tuition fee increases under P. D. No. 451. The claims which give rise to all these cases are clearly money claims arising from an emloyer-employee relationship and thus falls under the coverage of Article 292 of the Labor Code. (University of Pangasinan v. Confesor, G. R. No. 109977, sept. 5, 1997). Our view, neither Art. 1144 nor Art. 1146 of the Civil Code is here p ertinent. What is applicable is Art. 291 of the Labor Code. What rules on prescription should apply in cases like this one has long been decided by this Court. In illegal dismissal, it is settled, that the ten-year prescriptive period fixed in Art. 1144 of the Civil Code may not be invoked by petitioners, for the Civil Code is a law of general application, while the prescriptive period fixed in Art. 292 of the Labor Code (now Art. 291) is a SPECIAL LAW applicable to claims arising from employer-employee relationship. It should be noted further that Art. 291 of the Labor Code is a special law applicable to money claims arising from employer-employee relations; thus, it necessarily prevails over Art. 1144 of the Civil Code, a general law. Basic is the rule in statutory construction that where two statutes are of equal theoretical application to a particular case, the one designed therefore should prevail. (citing Leveriza v. Intermediate Appelate Court, 157 SCRA 282-294.) Prescription for Illegal Dismissal Cases: In the 1986 case of Callanta v. Carnation Philippines, Inc., the Supreme Court ruled that the prescription period for illegal dismissal cases should be four (4) years following the provision of Art. 1146 of the Civil Code, because illegal dismissal is in the

nature of an action for damages due to separation from employment from alleged unjustifiable causes is one for injury to plaintiff and must be brought within four years. The four year prescriptive period under Art. 1146 of the Civil Code applies by way of supplement. The Court ruled that: Verily, the dismissal without just cause of an employee from his employment constitutes a violation of the Labor Code and its implementing rules and regulations. Such violation, however, does not amount to an offense as understood under Art. 291 of the Labor Code. In its broad sense, an offense is an illegal act which does not amount to a crime as defined in the penal law, but which by statute carries with it a penalty similar to those imposed by law for the punishment of a crime. Article 292: Institution of Money Claims. - Money claims specified in the immediately preceding Article shall be filed before the appropriate entity independently of the criminal action that may be instituted in the proper courts. Pending the final determination of the merits of money claims filed with the appropriate entity, no civil action arising from the same cause of action shall be filed with any court. This provision shall not apply to employees compensation case which shall be processed and determined strictly in accordance with the pertinent provisions of this Code. TRANSITORY AND FINAL PROVISIONS Article 293: Application of Law Enacted Prior to this Code All actions or claims accruing prior to the effectivity of this Code shall be determined in accordance with the laws enforce at the time of their accrual. Article 294: Secretary of Labor to Initiate Integration of Maternity Leave Benefits Within six (6) months after this Code takes effect, the secretary of Labor shall initiate such measures as may be necessary for the integration of maternity leave benefits into the Social Security System, in the case of private employment, and the Government Insurance Service System, in the case of public employment. Article 295: Funding of the Overseas Employment Development Board and the National Seamen Board. The Overseas Development Board and the National Seamen Board referred to in Art. 17 and 20, respectively, of this Code shall initially be funded out of the unprogrammed fund of the Department of Labor and the National Manpower and Youth Council. Article 296: Termination of the Workmens Compensation Program

The Bureau of Workmens Compensation, Workmens Compensation Commission, and Workmen Compensation Units in the regional offices of the Department of Labor shall continue to exercise the functions and the respective jurisdictions over workmens compensation cases, vested upon them by Act No. 3428, as amended otherwise known as the Workmens Compensation Act until March 31, 1976. Likewise the term of office of incumbent members of the Workmens Compensation Commission, including its chairman, and any commissioner deemed retired as of December 31, 1975, as well as the present employees and officials of the Bureau of Workmens Compensation, Workmen Compensations Commission, and the Workmens Compensations Units shall continue up to that date. Thereafter, said offices shall be considered abolished and all officials and personnel thereof shall be transferred to and mandatorily absorbed by the Department of Labor, subject to P. D. No. 6, Letters of Instructions No. 14 and 14-A and the Civil service Law and Rules. Such amount as may be necessary to cover the operational expenses of the Bureau of Workmens Compensation and the Workmens Compensation Units, including the salaries of the incumbent personnel for the period up to March 31, 1976 shall be appropriated from the of Labor unprogrammed funds of the Department . Article 297: Continuation of Insurance Policies and Indemnity Bonds All Workmens Compensation Insurance policies and indemnity bonds for self insured employers existing upon the effectivity of this Code shall remain in force and effect until the expiration dates of such policies or the lapse of the period of such bonds, as the case may be, but in no case beyond December 31, 1974. Claims mat be filed against the insurance carriers and or self-insured employers for causes of action which accrued during the existence of said policies or authority to self insure. Article 298: Abolition of the Court of Industrial Relations and the National Labor Relations Commission The Court of Industrial Relations and the National Labor Relations Commission established under P.D. No. 21 are hereby abolished. All unexpended funds, properties, equipment and records of the Court of Industrial Relations, and such of its personnel as may be necessary, are hereby transferred to the Bureau of Labor Relations. Personnel not absorbed by or transferred to the commission shall enjoy benefits granted under existing laws. Article 299: Disposition of Pending Cases All cases pending before the Court of Industrial Relations and the National Labor Relations Commission established under P.D. No. 21 on the date of effectivity of this Code shall be transferred to and processed by the corresponding labor relations divisions or the national Labor Relations Commission created under this Code

having cognizance of the same in accordance with the procedure laid down herein and its implementing rules and regulations. Cases on labor relation on appeal with the Secretary of Labor or the Office of the President of the Philippines as of the date of effectivity of this Code shall remain under their respective jurisdictions and shall be decided in accordance with the rules and regulations in force at the time of appeal. All workmens compensation cases pending before Compensation Unit in the regional offices of the Department of pending before the Workmens Compensation Commission as of shall be pro procedure existing prior to the effectivity of Compensation and State Insurance Fund. the Workmens Labor and those Mar ch 31, 1975, the Employees

B. DECLARATION OF BASIC POLICY 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; and an expanding productivity as the key to raising the quality if life for all, especially the underprivileged. Those goals are the route to social justice, a route directed by laws, especially those about labor and employment. Employment, protection to labor, labor-management relations are social issues. They are concerns of labor laws because labor laws are devices for social equity. Labor laws, depending on their provisions and thrusts, may make the rich richer and the poor poorer. The value of labor laws is in their contribution to national growth in the context of social justice. Labor laws, in other words, are a significant factor in a nations economy. They explain, albeit partly, why a nation is poor or otherwise, why a country is competitive or not in the global market. Thus, the needs, the faults, and the goals of the economy cannot be ignored in formulating the labor laws, otherwise, the labor laws become purposeless, socially irrelevant, or economically damaging pronouncements.

ART. III. 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 selforganization, collective bargaining, security of tenure, and just and humane conditions of work.

This article hardly mentions the employer except in the phrase regulate the relations between workers and employers. All other phrases pertain to rights of workers. But it should not be deduced that the basic policy is to favour labor to prejudice capital. The plain reality is that both sectors need each other. They are interdependent one is inutile without the other. Hence, the better understanding is that the basic policy is to balance or to coordinate the rights and interests of both workers and employers. Article III of the Code, should be viewed in the perspective of the 1987 Constitution which explicitly recognizes shared responsibility of employers and workers and the right of enterprise to reasonable returns on investment and to expansion and growth.

ART. XIII, SEC. 3 OF THE 1987 CONSTITUTION 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.

The protection to labor clause under the 1987 Constitution is more dynamic, specific and extensive in scope than the protection to labor clause under Art. 3 of the Labor Code. While the latter simply provides that The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed,, the former provides 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. Article XIII, Sec. III of the 1987 Constitution also includes new rights granted to labor namely, The right to strike, which is not merely a statutory right but also a constitutional right; The right to participate in policy and decision-making processes affecting their rights and benefits as may be provided by law; and The right to share in the fruits of productions ( also know as the right to profitsharing). The study then of labor law is a study of socio-economic problems affecting the worker, his work life, and his co-players in the work environment. The true task of the student of labor laws is to examine how those laws hinder or help the attainment of the countrys socio-economic goals, how they help or fail to help improve the quality of life of the masses.

E. INTERPRETATION AND CONSTRUCTION ART 4. Labor Code of the Philippines 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 resolve in favor of the labor.

 The working mans welfare should be the primordial and paramount consideration. (Abella vs. NLRC) The law regards him with tenderness and even favor and always with faith and hope in his capacity to help in shaping the nations future. (Cebu Royal Plant. Vs. NLRC) The law must protect labor, at least, to the extent of raising him into equal footing in bargaining relations with the capital and to shield him from abuses brought about by the necessity for survival (Sanchez et al. vs. Harry Lyons Cons. Inc.) In case of doubt in the interpretation or application of laws, it is presumed that the lawmaking body intended the right and justice prevail. (Art. 10 Civil Code) Justice not expediency, is the higher end of law. And law does not favour favouritism amounting to injustice.

Abella Vs. NLRC GR NO. 71812, July 20, 1987 Facts: On June 27, 1960 the petioner, Rosalina Perez Abella leased a farm land known asHacienda Danao-Ramona, for a period of ten (10) years. She opted to extend the leased contract for another ten (10) years. During the existence of the lease, she employed the private respondents Ricardo Dionele, Sr., and Romeo Quitco. Upon the expiration of her lease hold rights, petitioner dismissed private respondents and turned over the hacienda to the owners thereof on October 5, 1981, who continued the management, cultivation and operation of the farm. On November 20, 1981, private respondents filed a complaint against the petitioner at the Ministry of Labor and Employment, Bacolod City District Office, for overtime pay, illegal dismissal and reinstatement with backwages. After the parties had presented their respective evidence, Labor Arbiter Manuel M. Lucas, Jr., in a Decision dated July 16, 1982, ruled that the dismissal is warranted by the cessation of business, but granted the private respondents separation pay. Petitioner appealed, the National Labor Relations Commission, in a Resolution affirmed the decision and dismissed the appeal for lack of merit. Petitioner filed a Motion for Reconsideration, but the same was denied. Hence, the present petition ISSUE: Whether or not private respondents are entitled to separation pay? HELD: The petition is devoid of merit. Article 284 of the Labor Code as amended by BP 130is the law applicable in this case. The purpose of Article 284 as amended is obvious-the protection of the workers whose employment is terminated because of the closure of establishment and reduction of personnel. Without said law, employees like private respondents in the case at bar will lose the benefits to which they are entitled

for the thirty three years of service in the case of Dionele and fourteen years in the case of Quitco. Although they were absorbed by the new management of the hacienda, in the absence of any showing that the latter has assumed the responsibilities of the former employer, they will be considered as new employees and the years of service behind them would amount to nothing.

F. SPECIFIC RIGHTS OF MANAGEMENT (FUNDAMENTAL MANAGEMENT RIGHTS): 1. Right to ROI The employer has the right to return of investments and to make profit. There is nothing dirty about profit per se, it is a profit that creates jobs and improves the workers lot. 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.

Consistent with the policy of the State to bridge the gap between the underprivileged workingman and the more affluent employers, the balance in favor of the workingman should be tilted without being blind to the concomitant right of the employer to the protection of his property.

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. (China Banking Corp. vs. Borromeo, G.R. No. 156515)

Thus in a certain case, the evidence showed that the chauffer of the autocalesas, without the consent of the respondent company, allowed another chauffer to drive the autocalesas which was under his charge. This act was strictly prohibited by the regulations of the company. The Court held that such act of the chauffer constituted a sufficient cause for his summary dismissal as provided for in the regulations of the respondent company. (Manila Chauffers League vs. Bachrach Motor Co. Inc., Off. Gaz., Vol. 40 No. 11)

To cite another example, a bond requirement is an exercise of managements rights to protect its own interests. The refusal of the respondent company to employ guards affiliated with a security or watchmen agency that does not furnish a bond can not constitute an unfair labor practice. Such refusal is merely the exercise of respondents legitimate right to protect its own interests, especially as the members of the petitioner had abandoned a ship they were guarding without previous notice, and exposed the ship to losses due to theft and pilferage. (Associated Watchmen and Security Union vs. Lanting et.al., G.R. No. L-14120)

3. Right to Select Employees An employer has a right to select his employees and to decide when to engage them. He has a right under the law to full freedom in employing any person free to accept employment from him, and this, except as restricted by valid statute or valid contract, at a wage and under conditions agreeable to 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, ant 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.

For instance, the Court of Industrial Relations issued an order directing the employer to recruit from the union, the employees needed to replace union members who may be dismissed. This order, in substance and in effect, compels the company, against its will, to employ preferentially the members of the union.

The Supreme Court held that the Court of Industrial Relations had no authority to issue such compulsory order. The general right to make a contract in relation to ones business is an essential part of the liberty of the citizens protected by the due process clause of the Constitution. The right of a laborer to sell his labor to such person as he may choose is, in its essence, the same as the right of an employer to purchase labor from any person whom it chooses. 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 latters will, this is servitude. If the employee can compel the employer to give him work against the employers will, this is oppression.

4. Right to Transfer of 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, and this right has been consistently upheld even in the present era of multifarious reforms in the relationship of capital and labor, provided the transfer or dismissal is not abused but is done in good faith and is due to causes beyond control. To hold otherwise would be oppressive and inhuman.