LABOR STANDARDS / Midterms
SOURCES: Azucena, various Disini reviewers scattered throughout the internet
Sec. 1 – Labor Law in General
1.01. LABOR LAW DEFINED
 Labor law is the field of law governing
the relationship between employers
and employees.
 Labor law is the law governing the
rights and duties of the employer and
employees:
1. with respect to the terms and
conditions of employment, and
2. with respect to labor disputes
arising from collective bargaining
respecting such terms and
conditions.
1.02. LAW CLASSIFICATION – LABOR
STANDARDS, LABOR RELATIONS, AND
WELFARE LAWS
Philippine labor laws can be classified into
three (3) categories: labor standards, labor
relations, and welfare laws.
 Labor standards: that which sets out
the minimum terms, conditions and
benefits of employment that
employers must provide or comply
with and to which employers are
entitled to as a matter of legal right.
Labor standards are dealt with in the
following books of the Labor Code:
o Book I: Pre-employment (Arts.
12-42)
o Book II: Human Resources
Development Program (Arts.
23-81)
o Book III: Conditions of
Employment (Arts. 82-155)
o Book IV: Health, Safety, and
Social Welfare Benefits (Arts.
156-210)
o Book VI: Post-employment
 Labor relations: that which defines
the status, rights and duties, and the
institutional mechanisms that govern
the individual and collective
interactions of employers, employees
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or their representatives. Labor
relations are dealt with in:
o Book V: Labor Relations (Arts.
211-277)
 Welfare laws: that which is designed
to take care of the contingencies
which may affect the workers (e.g.
where there is loss of income for
reasons beyond control like sickness,
death or accident). Some Philippine
welfare laws are the following:
o Social Security Act of 1997 (RA
8282)
o Philippine Government
Service Insurance System Act
of 1997 (RA 8291)
o Employment Compensation
and State Insurance Fund
o National Health Insurance Act
of 1195 (RA 7875)
Labor Standards
Batong Buhay Goldmines, Inc. v. de la
Serna: Labor standards refers [sic] 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. Labor standards cases are
governed by Article 128(b) of the Labor Code.
Peñaranda v. Baganga Plywood Corp.:
Labor standards provide the working
conditions of employees, including
entitlement to overtime pay and premium pay
for working on rest days.
1.03. BASIS FOR ENACTMENT –
CONSTITUTION (1987)
Art. II, Sec. 18. The State affirms labor as a
primary social economic force. It shall protect
the rights of workers and promote their
welfare.
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Art. XIII, Sec. 1. 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.
Police Power
Police power is the state authority to enact
legislation that may interfere with personal
liberty or property in order to promote the
general welfare.
CMS Estate, Inc. v. Social Security System:
It (compulsory coverage of employers and
employees under the SSS as required by RA
1161) is actually a legal imposition on said
employers and employees, designed to
provide social security to the working men.
Membership in the SSS is therefore in
compliance with the lawful exercise of the
police power of the State.
1.04. SOURCES OF LAW
A. Labor Code and Related Special
Legislation (including IRR)
Mariveles Shipyard Corp. v. CA: Labor laws
are considered written in every contract.
Stipulations in violation thereof are
considered null. Similarly, legislated wage
increases are deemed amendments to the
contract.
B. Contract (Art. 1305 – 1306, NCC)
Art. 1305. A contract is a meeting of minds
between two persons whereby one binds
himself with respect to the other, to give
something or to render some service.
Art. 1306. The contracting parties may
establish such stipulations, clauses, terms
and conditions as they may deem
convenient, provided they are not contrary to
law, morals, good customs, public order, or
public policy.
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Kasapian ng Malayang Manggagawa sa
Coca-Cola v. CA: The MOA, being a contract
freely entered into by the parties, now
constitutes as the law between them, and the
interpretation of its contents purely involves
an evaluation of the law as applied to the
facts herein.
C. Collective Bargaining Agreement – Book
V, Rule I, Sec. 1(j), Omnibus Rules
Rule I, Sec. 1(j). “Collective Bargaining
Agreement” or “CBA” refers to the contract
between a legitimate labor union and the
employer concerning wages, hours of work,
and all other terms and conditions of
employment in a bargaining unit.
DOLE Phils., v. Pawis ng Makabayang
Obrero: The CBA is the norm of conduct
between the parties and compliance
therewith is mandated by the express policy
of the law.
D. Past Practices
To be a source of rights and obligations, the
following requisites must be present:
1. The practice must be freely,
voluntarily and continuously given
within a considerable length of time
(Davao Fruits Corp. v. Associated
Labor Union)
2. The practice must be not just a single
instance; i.e. not granted only once
(Samahang Manggagawa, etc. v.
NLRC)
3. The practice should be done over a
long period of time and must be
shown to have been consistent and
deliberate (American Wire and Cable
Daily Rated Employers Union v.
American Wire and Cable Co., Inc.)
4. The practice must not be by reason of
a strict legal or contractual obligation,
but by reason of an act of liberality on
the part of the employer (Pag-asa
Steel Works, Inc. v. CA)
E. Company Policies
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China Banking Corp. v. Borromeo: Company
policies are generally binding and valid on
the parties and must be complied with until
finally revised or amended unilaterally o
preferably through negotiation by competent
authority, unless shown to be grossly
oppressive or contrary to law.
1.05. LAW AND WORKER
Amkor Technology v. Juangco: While the
Constitution is committed to the policy of
social justice and the protection of the
working class, it should not be expected that
every labor dispute will be automatically
decided in favor of labor. Management also
has its own rights which, as such, are entitled
to respect and enforcement in the interest of
simple fair play.
Cebu Royal Plant v. Deputy Minister of
Labor: We take this opportunity to reaffirm
our concern for the lowly worker who, often
at the mercy of his employers, must look up
to the law for his protection. Fittingly, that law
regards him with tenderness and even favor
and always with faith and hope in his
capacity to help in shaping the nation's future
… If we cherish him as we should, we must
resolve to lighten "the weight of centuries" of
exploitation and disdain that bends his back
but does not bow his head.
1.06. LABOR CASE
To determine whether or not there is a labor
case, two elements must concur:
1. the presence of an employer-
employee relationship; and
2. a violation of the Labor Code – Art.
217 enumerates acts that fall under
the jurisdiction of labor arbiters:
- Unfair labor practices;
- Termination disputes;
- If accompanied with a claim for
reinstatement, those cases that
workers may file involving wages,
rates of pay, hours of work and
other terms and conditions of
employment;
- Claims for actual, moral
exemplary and other form of
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damages arising from employer-
employee relations;
- Cases arising from any violation
of Article 264 of this Code,
including questions involving
legality of strikes and lockouts;
and
- Except claims for Employees
Compensation, Social Security,
Medicare and maternity benefits,
all other claims, arising from
employer-employee relations,
including those of persons in
domestic or household service,
involving an amount exceeding
five thousand pesos (P5,000.00)
regardless of whether
accompanied with a claim for
reinstatement.
Without these two elements, there is no labor
case. (Lapanday Agricultural Development
Corp. v. CA)
1.07. CASE DECISION
Anino v. NLRC: A decision should faithfully
comply with Sec. 14, Art. VIII of the
Constitution. (No decision shall be rendered
by any court [or quasi-judicial body] without
expressing therein clearly and distinctly the
facts of the case and the law on which it is
based.) The factual and legal bases of public
respondent's conclusions were bereft of
substantial evidence — the quantum of proof
in labor cases — its disposition is manifestly a
violation of the constitutional mandate and
an exercise of grave abuse of discretion.
Such decision is a nullity.
1.08. MANAGEMENT FUNCTION
Recognition
Gustilo v. Wyeth: It is the employer’s
prerogative to prescribe reasonable rules and
regulations necessary or proper for the
conduct of its business or concern to provide
certain disciplinary measures to implement
said rules and to assure that the same be
complied with. At the same time, it is one of
the fundamental duties of the employee to
yield obedience to all reasonable rules,
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orders, and instructions of the employer, and

willful or intentional disobedience thereof, as Art. 2028. A compromise is a contract
a general rule, justifies rescission of the whereby the parties, by making reciprocal
contract of service and the preemptory concessions, avoid a litigation or put an end
dismissal of the employee. to one already commenced.

Limitations Art. 2036. A compromise comprises only

those objects which are definitely stated
Phil. Airlines v. Pascua: The exercise of therein, or which by necessary implication
management prerogative is not absolute. from its terms should be deemed to have
While the employer may be conceded that been included in the same.
management is in the best position to know A general renunciation of rights is understood
its operational needs, the exercise of to refer only to those that are connected with
management prerogative cannot be utilized the dispute which was the subject of the
to circumvent the law and public policy on compromise.
labor and social justice. It must always be
exercised with the principles of fair play at  Waivers and compromise are
heart and justice in mind. frowned upon by law because it is
subject to abuse (leading to instances
The limitations to the exercise of when labor may be exploited by
management prerogatives are as follows: capital)
 Even so, not all compromises and
1. Law and public policy on labor on waivers are void or contrary to law –
social justice labor law is not meant to suppress
2. Terms and conditions of the employers; just as it protects
collective bargaining agreement employees, it also protects
(CBA) negotiated between labor and employers. There’s a shared
capital responsibility: employee’s right to the
3. Principles of fair play and justice fruits of his labor, and employer’s right
4. That the exercise of management to the return of his investment.
prerogatives be in good faith to  There are three elements that must
advance its interest and not for the concur to determine the validity of a
purpose of defeating or compromise or waiver:
circumventing the rights of o The amount involved is
employees under the laws or valid reasonable and not
agreements (Valiao v. CA) unconscionable
o It is voluntarily entered into
1.09. COMPROMISE AND WAIVER – Art. 227, o There is proximate equality,
Labor Code; Arts. 2028, 2036, Civil Code no moral ascendancy over the
other
Art. 227. Compromise agreements – Any
compromise settlement, including those
involving labor standard laws, voluntarily Sec. 2 – Labor and the Constitution
agreed upon by the parties with the
assistance of the Bureau or the regional STATUTORY REFERENCE – 1935, 1973, and
office of the Department of Labor, shall be 1987 Constitutions
final and binding upon the parties. The
National Labor Relations Commission or any 2.01. HISTORICAL BACKGROUND AND
court shall not assume jurisdiction over RATIONALE
issues involved therein except in case of non-
compliance thereof or if there is prima facie
Antamoc Goldfields Mining Co., v. CIR: … our
evidence that the settlement was obtained
Constitution was adopted in the midst of
through fraud, misrepresentation, or coercion.

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 LABOR STANDARDS / Midterms
surging unrest and dissatisfaction resulting
from economic and social distress which
was threatening the stability of governments
the world over. Embodying the spirit of the
present epoch, general provisions were
inserted in the Constitution which are
intended to bring about the needed social
and economic equilibrium between
component elements of society … to be
secured through the counterbalancing of
economic and social forces and
opportunities which should be regulated, if
not controlled, by the State or placed, as it
were, in custodia societatis. 'The promotion
of social justice to in sure the well-being and
economic security of all the people' was thus
inserted as vital principle in our Constitution.
(Sec. 5, Art. II, Constitution.) And in order that
this declaration of principle may not just be
an empty medley of words, the Constitution
in various sections thereof has provided the
means towards its realization …
2.02. NATURE OF PROVISION
Phil. Airlines, Inc. v. Santos: The sympathy of
the Court is on the side of the laboring
classes, not only because the Constitution
imposes such sympathy, but because of the
one-sided relation between labor and capital.
The constitutional mandate for the promotion
of labor is as explicit as it is demanding. The
purpose is to place the workingman on an
equal plane with management — with all its
power and influence — in negotiating for the
advancement of his interests and the defense
of his rights. Under the policy of social justice,
the law bends over backward to
accommodate the interests of the working
class on the humane justification that those
with less privileges in life should have more
privileges in law.
 To summarize, the interpretation of
labor laws should be made in favor of
the laborers.
2.03. 1987 CONSTITUTION
A. Labor Sector – Characterized – Art. II, Sec.
18
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Art. II, Sec. 18. The State affirms labor as a
primary social economic force. It shall protect
the rights of workers and promote their
welfare.
B. Protection of Labor – Guarantees – Art.
XIII, Sec. 3 (Compare: 1935 Constitution – Art.
XIV, Sec. 3; 1973 Constitution – Art. II, Sec. 9;
and 1987 Constitution, Art. XIII, Secs. 1, 3; Art.
II, Secs. 10, 18)
Art. XIII, Sec. 3. 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.
C. Social Justice – Art II, Sec. 10; 1973
Constitution; Art. II, Sec. 5, 1935 Constitution;
1987 Constitution, Art. XIII, Secs. 1-2
Art. II, Sec. 10. (1987) The State shall
promote social justice in all phases of
national development.
Art. II, Sec. 6. (1973) The State shall promote
social justice to ensure the dignity, welfare,
and security of all the people. Towards this
end, the State shall regulate the acquisition,
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ownership, use, enjoyment, and disposition of
private property, and equitably diffuse
property ownership and profits.
Art. II, Sec. 5. (1935) The promotion of social
justice to insure the well-being and economic
security of all the people should be the
concern of the State.
Art. XIII, Sec. 1. (1987) 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.
Sec. 2. The promotion of social justice shall
include the commitment to create economic
opportunities based on freedom of initiative
and self-reliance.
Definition – Social Justice
Calalang v. Williams: Social justice is the
humanization of laws and the equalization of
social and economic forces by the State so
that justice in its rational and objective
secular conception may at least be
approximated.
Limits of Use
PLDT v. NLRC: Social justice is not intended
to countenance wrongdoing simply because
it is committed by the underprivileged.
Compassion for the poor is an imperative of
every humane society but only when the
recipient is not a rascal claiming an
underserved privilege.
2.04. CONSTITUTIONAL RIGHTS AND
LABOR LAW
Management of the Constitution
 GR: The Constitution protects and
promotes the welfare of the
employee.
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 EX: The Constitution does not protect
the employee when the employee is
wrong and the employer is right.
Dayan v. BPI: Law, in protecting the rights of
labor, authorized neither oppression nor self-
destruction of an employer company which
itself is possessed of rights that must be
entitled to recognition and respect.
Equal Work Opportunities
Star Paper Corp. v. Simbol: The absence of
a statute expressly prohibiting marital
discrimination in our jurisdiction cannot
benefit the petitioners. The protection given to
labor in our jurisdiction is vast and extensive
that we cannot prudently draw inferences
from the legislature’s silence that married
persons are not protected under our
Constitution and declare valid a policy based
on a prejudice or stereotype. Thus, for failure
of petitioners to present undisputed proof of a
reasonable business necessity, we rule that
the questioned policy is an invalid exercise of
management prerogative.
Labor as Property
Asuncion v. NLRC: A worker’s employment is
property in the constitutional sense. He
cannot be deprived of his work without due
process. In order for the dismissal to be valid,
not only must it be based on just cause
supported by clear and convincing evidence,
the employee must also be given an
opportunity to be heard and defend himself.
It is the employer who has the burden of
proving that the dismissal was with just or
authorized cause. The failure of the employer
to discharge this burden means that the
dismissal is not justified and that the
employee is entitled to reinstatement and
backwages.
Due Process Requirements
Ang Tibay v. CIR: The procedural due
process requirements are:
1. Right to a hearing; includes the right
of a part to present his own case and
submit evidence in support thereof
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2. The tribunal must consider the
evidence presented
3. Decision must be supported by
evidence
4. Evidence must be substantial;
relevant evidence as a reasonable
mind might accept as adequate to
support a conclusion, even if other
minds equally reasonable would
opine otherwise
5. Decision must be rendered on the
evidence presented at the hearing or
at least contained in the record and
disclosed to the parties affected
6. Independent consideration of judge;
must not simply accept views of
subordinate in arriving at a decision
7. Decision rendered in such a manner
as to let the parties know the various
issues involved and the reasons for
the decision rendered.
Air Manila, Inc. v. Balatbat & Agabon v.
NLRC:
8. A tribunal so constituted as to give
him reasonable assurance of honesty
and impartiality, and one of
competent jurisdiction
9. Specifically for termination case: twin
notice rule.
Liberty of Contract/Laissez-faire and State
Interference
Leyte Land Transportation Co. v. Leyte
Farmers and Workers Union: The State still
exercises control/power to interfere where
the parties are not equal in standing.
Welfare State
Alalayan v. NPC: The welfare state concept is
not alien to the philosophy of our
Constitution. It is implicit in quite a few of its
provisions. There is the clause on the
promotion of social justice to ensure the well-
being and economic security of all the
people, as well as the pledge of protection to
labor with the specific authority to regulate
the relations between landowners and
tenants and between labor and capital.
Participation in Decision-Making Process
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Philippine Airlines, Inc. v. NLRC: Industrial
peace cannot be achieved if the employees
are denied their just participation in the
discussion of matters affecting their rights.
The attainment of a harmonious labor-
management relationship and the then
already existing state policy of enlightening
workers concerning their rights as employees
demand no less than the observance of
transparency in managerial moves affecting
employees’ rights.
Unlike management prerogative regarding
business operations, the exercise of
management prerogative regarding matters
which affect the rights of employees should
be made known to employees. They should
be properly informed of the decision and the
modes through which they were arrived at.
Sec. 3 – Labor and the Civil Code
STATUTORY REFERENCE – Civil Code of the
Philippines, R.A. No. 386 as amended
3.01. ROLE OF LAW – Art. 1700
Art. 1700. The relation 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.
Labor Contracts
3.02. EMPLOYER-EMPLOYEE STANDARD
OF CONDUCT – Art. 1701
Art. 1701. Neither capital nor labor shall act
oppressively against the other, or impair the
interest of convenience of the public.
Fair Treatment
Uypitching v. Quiamco: The basic principle
of human relations, embodied in Article 19 of
the Civil Code, provides: [Art. 19. Every person
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must in the exercise of his rights and in the
performance of his duties, act with justice,
give every one his due, and observe honesty
and good faith.] Article 19, also known as the
'principle of abuse of right, prescribes that a
person should not use his right unjustly or
contrary to honesty and good faith, otherwise
he opens himself to liability. It seeks to
preclude the use of, or the tendency to use, a
legal right (or duty) as a means to unjust
ends. There is an abuse of right when it is
exercised solely to prejudice or injure
another. The exercise of a right must be in
accordance with the purpose for which it was
established and must not be excessive or
unduly harsh; there must be no intention to
harm another. Otherwise, liability for
damages to the injured party will attach.
Law Compliance
Sarmiento v. Tuico: It must be stressed that
while one purpose of the return-to-work order
is to protect the workers who might otherwise
be locked out by the employer for threatening
or waging the strike, the more important
reason is to prevent impairment of the
national interest in case the operations of the
company are disrupted by a refusal of the
strikers to return to work as directed. More
particularly, it is the national economy that
will suffer because of the resultant reduction
in our export earnings and our dollar
reserves, not to mention possible
cancellation of the contracts of the company
with foreign importers.
Employee Obedience and Compliance [to]
Employer Orders
PCIB v. Jacinto: Any employee who is
entrusted with responsibility by his employer
should perform the task assigned to him with
care and dedication. The lack of a written or
formal designation should not be an excuse
to disclaim any responsibility for any damage
suffered by the employer due to his
negligence. The measure of the responsibility
of an employee is that if he performed his
assigned task efficiently and according to the
usual standards, then he may not be held
personally liable for any damage arising
therefrom. Failing in this, the employee must
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suffer the consequences of his negligence if
not lack of due care in the performance of his
duties.
Public Policy
Avon Cosmetics, Inc. v. Luna: Public policy is
that principle of the law which holds that no
subject or citizen can lawfully do that which
has a tendency to be injurious to the public or
against the public good. As applied to
contracts, in the absence of express
legislation or constitutional prohibition, a
court, in order to declare a contract void as
against public policy, must find that the
contract as to the consideration or thing to be
done, has a tendency to injure the public, is
against the public good, or contravenes
some established interests of society, or is
inconsistent with sound policy and good
morals, or tends clearly to undermine the
security of individual rights, whether of
personal liability or of private property.
Sec. 4 – Labor and International Covenants
(Labor Standards and Welfare Law)
4.01. UNIVERSAL DECLARATION OF
HUMAN RIGHTS – Arts. 3, 7, 17, 22, 23, 24, 25
Art. 3. Everyone has the right to life, liberty
and security of person.
Art. 7. All are equal before the law and are
entitled without any discrimination to equal
protection of the law. All are entitled to equal
protection against any discrimination in
violation of this Declaration and against any
incitement to such discrimination.
Art. 17. (1) Everyone has the right to own
property alone as well as in association with
others.
(2) No one shall be arbitrarily deprived of his
property.
Art. 22. Everyone, as a member of society,
has the right to social security and is entitled
to realization, through national effort and
international co-operation and in accordance
with the organization and resources of each
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State, of the economic, social and cultural
rights indispensable for his dignity and the
free development of his personality.
Art. 23. (1) Everyone has the right to work, to
free choice of employment, to just and
favorable 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 favorable 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.
Art. 24. Everyone has the right to rest and
leisure, including reasonable limitation of
working hours and periodic holidays with
pay.
Art. 25. (1) Everyone has the right to a
standard of living adequate for the health and
well-being of himself and of his family,
including food, clothing, housing and medical
care and necessary social services, and the
right to security in the event of
unemployment, sickness, disability,
widowhood, old age or other lack of
livelihood in circumstances beyond his
control.
(2) Motherhood and childhood are entitled to
special care and assistance. All children,
whether born in or out of wedlock, shall enjoy
the same social protection.
4.02. INTERNATIONAL COVENANT ON
ECONOMIC, SOCIAL AND CULTURAL
RIGHTS – Part III, Arts. 6, 7, 9, 11
Art. 6. 1. The States Parties to the present
Covenant recognize the right to work, which
includes the right of everyone to the
opportunity to gain his living by work which
he freely chooses or accepts, and will take
appropriate steps to safeguard this right.
2. The steps to be taken by a State Party to
the present Covenant to achieve the full
realization of this right shall include technical
and vocational guidance and training
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programmes, policies and techniques to
achieve steady economic, social and cultural
development and full and productive
employment under conditions safeguarding
fundamental political and economic
freedoms to the individual.
Art. 7. The States Parties to the present
Covenant recognize the right of everyone to
the enjoyment of just and favorable
conditions of work which ensure, in
particular:
(a) Remuneration which provides all workers,
as a minimum, with:
(i) Fair wages and equal remuneration for
work of equal value without distinction of any
kind, in particular women being guaranteed
conditions of work not inferior to those
enjoyed by men, with equal pay for equal
work;
(ii) A decent living for themselves and their
families in accordance with the provisions of
the present Covenant;
(b) Safe and healthy working conditions;
(c) Equal opportunity for everyone to be
promoted in his employment to an
appropriate higher level, subject to no
considerations other than those of seniority
and competence;
(d) Rest, leisure and reasonable limitation of
working hours and periodic holidays with
pay, as well as remuneration for public
holidays
Art. 9. The States Parties to the present
Covenant recognize the right of everyone to
social security, including social insurance.
Art. 11. 1. The States Parties to the present
Covenant recognize the right of everyone to
an adequate standard of living for himself
and his family, including adequate food,
clothing and housing, and to the continuous
improvement of living conditions. The States
Parties will take appropriate steps to ensure
the realization of this right, recognizing to this
effect the essential importance of
international co-operation based on free
consent.
2. The States Parties to the present Covenant,
recognizing the fundamental right of
everyone to be free from hunger, shall take,
individually and through international co-
Page 9
 LABOR STANDARDS / Midterms
operation, the measures, including specific
programmes, which are needed:
(a) To improve methods of production,
conservation and distribution of food by
making full use of technical and scientific
knowledge, by disseminating knowledge of
the principles of nutrition and by developing
or reforming agrarian systems in such a way
as to achieve the most efficient development
and utilization of natural resources;
(b) Taking into account the problems of both
food-importing and food-exporting countries,
to ensure an equitable distribution of world
food supplies in relation to need.
4.03. INTERNATIONAL COVENANT ON CIVIL
AND POLITICAL RIGHTS – Part III, Art. 8
Art. 8. 1. No one shall be held in slavery;
slavery and the slave-trade in all their forms
shall be prohibited.
2. No one shall be held in servitude.
(a) No one shall be required to perform
forced or compulsory labor;
(b) Paragraph 3 (a) shall not be held to
preclude, in countries where imprisonment
with hard labor may be imposed as a
punishment for a crime, the performance of
hard labor in pursuance of a sentence to
such punishment by a competent court;
(c) For the purpose of this paragraph the term
"forced or compulsory labor" shall not
include:
(i) Any work or service, not referred to in
subparagraph (b), normally required of a
person who is under detention in
consequence of a lawful order of a court, or
of a person during conditional release from
such detention;
(ii) Any service of a military character and, in
countries where conscientious objection is
recognized, any national service required by
law of conscientious objectors;
(iii) Any service exacted in cases of
emergency or calamity threatening the life or
well-being of the community;
(iv) Any work or service which forms part of
normal civil obligations.
4.04. CONVENTIONS AND
RECOMMENDATIONS OF THE
INTERNATIONAL LABOR ORGANIZATION
(ILO)
REV 6:15-17
International Conventions
International School Alliance of Educators
v. Quisumbing: The Constitution, Labor Code
and the International Covenant on Economic,
Social, and Cultural Rights impregnably
institutionalize in this jurisdiction the long
honored legal truism of "equal pay for equal
work." Persons who work with substantially
equal qualifications, skill, effort and
responsibility, under similar conditions,
should be paid similar salaries.
Sec. 5 – The Labor Code of the Philippines
5.01. DECREE TITLE
Art. 1. Name of decree – This Decree shall be
known as the “Labor Code of the Philippines.”
5.02. EFFECTIVITY
Art. 2. Date of effectivity – This Code shall
take effect six (6) months after its
promulgation.
 The Labor Code was promulgated on
May 1, 1974 and hence took effect on
November 1, 1974; however, PD No.
607 deferred the effectivity of portions
of Book IV to January 1, 1975.
5.03. POLICY DECLARATION – CF.
CONSTITUTION, ART. XIII, Sec. 3
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 worker
and employers. The State shall assure the
rights of workers to self-organization,
collective bargaining, security of tenure, and
humane conditions of work.
5.04. RATIONALE, SPIRIT, INTENT
Magallanes v. Sun Yat Sen Elem. School:
The Labor Code was promulgated to
promote the welfare and well-being of the
Page 10
 LABOR STANDARDS / Midterms
working man. Its spirit and intent mandate
the speedy administration of justice, with
least attention to technicalities but without
sacrificing the fundamental requisites of due
process.
5.05. APPLICABILITY – 276, Art. IX, B, Sec.
2(1), CONSTITUTION
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.
Art. 276. Government employees – The terms
and conditions of employment of all
government employees, including employees
of government-owned and controlled
corporations, shall be governed by the Civil
Service Law, rules and regulations. Their
salaries shall be standardized by the National
Assembly as provided for in the New
Constitution. However, there shall be no
reduction of existing wages, benefits and
other terms and conditions of employment
being enjoyed by them at the time of the
adoption of the Code.
Sec. 2. (1) The civil service embraces all
branches, subdivisions, instrumentalities, and
agencies of the Government, including
government-owned or controlled
corporations with original charters.
 GR: The Labor Code applies to all
workers, whether agricultural or non-
agricultural (also see Requisite
Relationship below).
 EX: The Labor Code does not apply to
those specified as such therein, such
as government employees and
employees of GOCCs with original
charters.
Requisite Relationship
Uy v. Bueno: The requirement of employer-
employee relationship is jurisdictional for the
provisions of the Labor Code to apply.
Test – GOCC
REV 6:15-17 Page 11
Light Railway Transit Authority v. Venus:
Labor law claims against government-owned
and controlled corporations without original
charter fall within the jurisdiction of the
Department of Labor and Employment and
not the Civil Service Commission.
The manner by which how a GOCC was
created is important in determining which
law applies to it:
 If with original charter: the Civil
Service Law applies (Art. 276, LC; Art.
IX-B, Sec. 2 (1), Consti.)
 If incorporated under the Corporation
Code (no original charter): the Labor
Code applies
However, in terms of wages, the Labor Code
does not distinguish as to the nature of the
GOCC – its provisions on wages apply on
both.
International Agencies/Organizations
Ebro III v. NLRC: The grant of immunity from
local jurisdiction to [an international
organization] is clearly necessitated by their
international character and respective
purposes. The objective is to avoid the
danger of partiality and interference by the
host country in their internal workings. The
exercise of jurisdiction by the Department of
Labor in these instances would defeat the
very purpose of immunity, which is to shield
the affairs of international organizations, in
accordance with international practice, from
political pressure or control by the host
country to the prejudice of the member State
of the organization, and to ensure the
unhampered performance of their functions.
School Teachers
Chiang Kai Shek College v. CA: Under the
Manual of Regulations for Private Schools, for
a private school teacher to acquire a
permanent status of employment and,
therefore, be entitled to a security of tenure,
the following requisites must concur: (a) the
teacher is a full-time teacher; (b) the teacher
must have rendered three consecutive years
 LABOR STANDARDS / Midterms
of service; and (c) such service must have
been satisfactory.
National Mines and Allied Workers Union v.
San Ildefonso College: On the issue of
whether the individual petitioners were
permanent employees, it is the Manual of
Regulations for Private Schools, and not the
Labor Code, which is applicable. This was
settled in University of Sto. Tomas v. NLRC,
where we explicitly ruled that for a private
school teacher to acquire permanent status
in employment and, therefore, be entitled to
security of tenure, the following requisites
must concur: (1) the teacher is a full-time
teacher; (2) the teacher must have rendered
three (3) consecutive years of service; and (3)
such service must have been satisfactory.
 However, the Labor Code is
suppletory to the Manual.
Religious Corporations
Austria v. NLRC: An ecclesiastical affair
involves the relationship between the church
and its members and relate to matters of
faith, religious doctrines, worship and
governance of the congregation. Examples of
this so-called ecclesiastical affairs to which
the State cannot meddle are proceedings for
excommunication, ordinations of religious
ministers, administration of sacraments and
other activities which attached religious
significance.
 If ecclesiastical affairs: Labor Code
does not apply
 If not ecclesiastical affairs: Labor
Code applies
Managerial Employees
Peñaranda v. Baganga Plywood Corp.:
Petitioner’s duties and responsibilities
conform to the definition of a member of a
managerial staff under the Implementing
Rules. Petitioner supervised the engineering
section of the steam plant boiler. His work
involved overseeing the operation of the
machines and the performance of the
workers in the engineering section. This work
REV 6:15-17 Page 12
necessarily required the use of discretion and
independent judgment to ensure the proper
functioning of the steam plant boiler. As
supervisor, petitioner is deemed a member of
the managerial staff.
5.06. RULE-MAKING POWER – 5
Limitation – Rule-Making Power – Policy
Instructions
Sonza v. ABS-CBN: Sonza argues Policy
Instruction No. 40 by Minister of Labor said
the types of employees in broadcast are the
station and program employees. Court said
this instruction is a mere executive issuance
which does not have the force and effect of
law and not binding on the Court.
CBTC Employees Union v. Clave: A labor
regulation which in effect amends the Labor
Code is null and void. An administrative
interpretation which diminishes the benefits
of labor to less than what the statute delimits
or withholds is obviously ultra vires.
5.07. LAW INTERPRETATION – 4; Art. 1702,
NCC
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.
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.
Liberal Construction
Salinas v. NLRC: In carrying out and
interpreting the provisions of the Labor Code
and its implementing regulations, the
workingman’s welfare should be the
primordial and paramount consideration.
Duncan Association v. Glaxo-Wellcome:
Glaxo’s policy prohibiting an employee from
having a relationship with an employee of a
competitor company is a valid exercise of
 LABOR STANDARDS / Midterms
management prerogative. Glaxo has a right
to guard its trade secrets, etc.
The commands of the equal protection
clause are addressed only to the state or
those acting under the color of authority, and
erect no shield against merely private
conduct, however discriminatory or wrongful.
 EX: when the state in any of its
manifestations or actions has been
found to have become entwined or
involved in the wrongful private
conduct
“In favor of labor” – Rationale”
Abella v. NLRC: In any event, it is well-settled
that in the implementation and interpretation
of the provisions of the Labor Code and its
implementing regulations, the workingman's
welfare should be the primordial and
paramount consideration.
The policy is to extend the applicability of the
decree to a greater number of employees
who can avail of the benefits under the law,
which is in consonance with the avowed
policy of the State to give maximum aid and
protection to labor.
It is the kind of interpretation which gives
meaning and substance to the liberal and
compassionate spirit of the law as provided
for in Article 4 of the New Labor Code which
states that “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."
Acuña v. CA: It is a time-honored rule that in
controversies between a worker and his
employer, doubts reasonably arising from the
evidence or in the interpretation of
agreements and writing should be resolved
in the worker's favor. The policy is to extend
the applicability of the decree to a greater
number of employees who can avail of the
benefits under the law, which is in
consonance with the avowed policy of the
State to give maximum aid and protection to
labor.
Doubt
REV 6:15-17
Clemente v. GSIS: Doubts should be
resolved in favor of the claimant-employee.
No Doubt
Bonifacio v. GSIS: While the court does not
dispute petitioner's contention that under the
law, in case of doubt in the implementation
and interpretation of the provisions of the
Labor Code, including its implementing rules
and regulations, the doubt shall be resolved
in favor of the laborer, the court finds that the
same has no application in this case since
the pertinent provisions of the Labor Code
leave no room for doubt either in their
interpretation or application.
Sweeping Interpretation
Bravo v. Employees Compensation
Commission: “We are aware of the mandate
that social legislation should be applied in
consonance with the principles of social
justice and protection to labor. However, we
cannot adopt a sweeping interpretation of the
law in favor of labor lest we engage in judicial
legislation.”
Factual Considerations and Rationality
Phil. Airlines, Inc. v. NLRC: [First, while the
issue of labor-only contracting may involve
some factual considerations] the existence of
an employer-employee relation is
nonetheless a question of law. Thus, it falls
squarely within the ambit of this Court’s
judicial review.
Equity and Moral Consideration
Manning International Corp. V. NLRC:
Considerations of "equity and social justice”
cannot prevail over against the expressed
provision of the labor laws allowing dismissal
of employees for cause and without any
provision for separation pay.
Fairness
Reliance Surety and Insurance Co., Inc. v.
NLRC: The sympathy of the Court is on the
side of the laboring classes, not only because
Page 13
 LABOR STANDARDS / Midterms
the Constitution imposes sympathy but
because of the one-sided relation between
labor and capital. The Court must take care,
however, that in the contest between labor
and capital, the results achieved are fair and
in conformity with the rules.
Balancing Conflicting Claims
Phil. Airlines, Inc. v. NLRC: That there should
be care and solicitude in the protection and
vindication of the rights of workingmen
cannot be gainsaid; but that care and
solicitude cannot justify disregard of relevant
facts or eschewal of rationality in the
construction of the text of applicable rules in
order to arrive at a disposition in favor of an
employee who is perceived as otherwise
deserving of sympathy and commisseration.
Duncan Association v. Glaxo-Wellcome:
Indeed, while our laws endeavor to give life to
the constitutional policy on social justice and
the protection of labor, it does not mean that
eveyr labor dispute will be decided in favor of
the workers. The law also recognizes that
managements has rights which are also
entitled to respect and enforcement in the
interest of fair play.
Sec. 6 – Work Relationship
6.01. WORK RELATIONSHIP
A. Definitions: Employer and Employee
Definition in relation to wages:
Art. 97. As used in this title: (a) “Person”
means an individual, partnership, association,
corporation, business trust, legal
representative, or any organized group of
persons.
(b) “Employer” includes any person acting
directly or indirectly in the interest of an
employer in relation to an employee and shall
include the government and all its branches,
subdivision and instrumentalities, all
government-owned or controlled
corporations and institutions, as well as non-
profit private institutions, or organizations.
REV 6:15-17 Page 14
(c) “Employee” includes any individual
employed by an employer.
Definition in relation to the Employees
Compensation and State Insurance Fund
(now superseded/modified by the GSIS Act of
1997 and the SSS Act of 1996):
Art. 67. … (f) “Employer” means any person,
natural or juridical, employing the services of
the employee.
(g) “Employee” means any person
compulsorily covered by the GSIS under
Commonwealth Act Numbered One hundred
eighty-six, as amended, including the
members of the Armed Forces of the
Philippines, and any person employed as
casual, emergency, temporary, substitute or
contractual, or any person compulsorily
covered by the SSS under Republic Act 1161,
as amended.
Definition as regards labor relations:
Art. 212. … (e) “Employer” includes any person
acting in the interest of an employer, directly
or indirectly. The term shall not include any
labor organization or any of its officers except
when acting as employer.
(f) “Employee” includes any person in the
employ of an employer. The term shall not be
limited to the employees of a particular
employer, unless this Code so explicitly
states. It shall include any individual whose
work has ceased as a result of or in
connection with any current labor dispute or
because of any unfair labor practice if he has
not obtained any labor substantially
equivalent and regular employment.
Employee
B. Employer-Employee Relationship
Factual Test
 The existence of an EE-ER
relationship is a question of fact.
 The elements of an EE-ER
relationship are:
o Selection and engagement of
employee
o Payment of wages
 LABOR STANDARDS / Midterms
o Power of dismissal
o Employer’s power to control
the employee as regards the
means and methods by which
work is accomplished, i.e. the
control test
Established
Miguel v. JCT Group: The test for
determining an employer-employee
relationship hinges on resolving who has the
power to select employees, who pays for
their wages, who has the power to dismiss
them, and who exercises control ... [t]he last
factor, the “control test”, is the most important.
Factors
 see Factual Test
Control Test
R. Transport v. Ejandra: According to the
control test, the power to dismiss an
employee is one of the indications of an
employment relationship.
Economic Test
In general, the “right of control” test has been
used to determine the existence of an EE-ER
relation: whether the person for whom the
services are performed reserves a right to
control not only the end to be achieved, but
also the means to be used in reaching such
end. Also considered are the economic
conditions prevailing between the parties,
e.g. the inclusion of the EE in the payrolls.
Agreement
Lopez v. MWSS: The existence of an EE-ER
relationship cannot be negated by expressly
repudiating it in the agreement and providing
therein that the EE is “not an employee” when
the terms and conditions show otherwise.
The employment status of a person is defined
and prescribed by law and not by what the
parties say it should be.
Broadcast – Talents – Performers
Method of Wage Payment
REV 6:15-17
Lazaro v. SSS: Insurance agents are EE’s of
their insurance company, even though the
agents’ compensation is not paid by the
company but by the investor/person insured.
The relevant factor remains that determined
by the control test.
Hours of Work
Lazaro v. SSS: It doesn’t follow that a person
who does not observe normal hours of work
cannot be deemed an employee. A sales
supervisor, although compensated on
commission basis, [is] exempt from the
observance of normal hours of work for his
compensation in measured by the number of
sales he makes.
Proof
Domasig v. NLRC: In administrative and
quasi-judicial proceedings, substantial
evidence is sufficient as basis for judgment
on the existence of an EE-ER relationship. No
particular form of evidence is required; any
competent and relevant evidence may be
admitted. (Substantial evidence = such
relevant evidence as a reasonable mind
might accept as adequate to support a
conclusion.)
Absence of Relationship
Abante v. Lamadrid: There can be no EE-ER
relationship where thereis no element of
control.
Denial – Negative Pregnant Rule
6.02. INDEPENDENT CONTRACTOR AND
LABOR CONTRACTOR ONLY – 106-107; 109;
DOLE ORDER No. 18-02, series of 2002 –
Azucena, Essentials of Labor Law, pp. 634-
645
Art. 106. Contractor or subcontractor –
Whenever an employer enters into a contract
with another person for the performance of
the former’s work, the employees of the
contractor and of the latter’s subcontractor, if
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 LABOR STANDARDS / Midterms

any, shall be paid in accordance with the determining the extent of their civil liability
provisions of this Code. under this Chapter, they shall be considered
In the event that the contractor or sub- as direct employers.
contractor fails to pay the wages of his
employees in accordance with this Code, the A. Independent Contractor
employer shall be jointly and severally liable
with his contractor or subcontractor to such Recognition
employees to the extent of the work
performed under the contract, in the work Management Function – Determination Need
performed under the contract, in the same
manner and extent that he is liable to MERALCO v. Quisumbing: The company can
employees directly employed by him. determine in its best business judgment
The Secretary of Labor may, by appropriate whether it should contract out the
regulations, restrict or prohibit the contracting performance of some of its work for as long
out of Labor to protect the rights of workers as the employer is motivated by good faith,
established under this Code. In so prohibiting and the contracting out must not have been
or restricting, he may make appropriate resorted to circumvent the law or must not
distinctions between labor-only contracting have been the result of malicious or arbitrary
and job contracting as well as differentiations action.
within these types of contracting and
determine who among the parties involved Trilateral Relationship
shall be considerd the employer for purposes
of this Code, to prevent any violation or Requirements – Independent Contractor
circumvention of any provision of this Code.
There is “labor-only contracting” where the
Manila Water Co. V. Peña: These are what
person supplying workers to an employer
distinguishes an independent (job)
does not have substantial capital or
contractor: a) carries on an indepentend
investment in the form of tools, equipment,
business and undertakes the contract work
machineries, work premises, among others,
on his own account under his own
and the workers recruited and placed by
responsibility according to his own manner
such person are performing acivities which
and method, free from control and direction
are directly related to the principal busines of
of his employer or principal in all matters
such employer. In such cases, the person or
connected with the performance of work
intermediary shall be considered merely as
except as to the results thereof; b) has
an agent of the employer who shall be
substantial capital or investment in the form
responsible to the workers in the same
of tools, equipments, machineries, work
manner and extent as if the latter were
premises and other material swhich are
directly employed by him.
necessary in the conduct of business.

Art. 107. Indirect employer – The privisions of Desirable – Unnecessary

the immediately preceding Article shall
likewise apply to any person, partnership,
Coca-Cola Bottlers Phils. V. NLRC: Although
association or corporation which, not being
janitorial services may be considered directly
an employer, contracts with an independent
related to the principal business of an
contractor for the performance of any work,
employer, the Court deemed them
task, job or project.
unnecessary in the conduct of the employer’s
principal business.
Art. 109. Solidary liability – The provisions of
existing laws to the contrary notwithstanding, Proof
every employer or indirect employer shall be
held responsible with his contractor or Employer-Employee Relationship
subcontractor for any violation of any
provision of this Code. For purposes of

REV 6:15-17 Page 16

 LABOR STANDARDS / Midterms
Philippine Airlines v. NLRC: The private
respondents were doing work which are
directly related to its nature of business.
Hence, they are deemed regular employees
pursuant to Art. 280 of the Labor Code. They
had been employed for a period ranging from
1 – 4 months to 11 years & 10 months. The
continuous employment indicates that their
jobs are directly necessary to the daily
operation of petitioner’s business. The private
respondents were supervised, directed and
controlled by PAL’s regular employees. Thus,
G.C. is a labor-only contractor who acted as
mere supplier of manpower.
Liability
Mariveles Shipyard v. CA: (see Arts. 106, 108
and 109 on preceding page, focus on 109)
The solidary liability of petitioner with that of
Longest Force does not preclude the
application of the CC provision on the right of
reimbursement from his co-debtor by the one
who paid.
B. Labor Contractor Only
Requisites and Prohibition
 Labor-only contracting, a prohibited
act, is an arrangement where the
contractor merely recruits, supplies or
places workers to perform a job for a
principal.
 Permissible job contracting, on the
other hand, is an agreement where a
principal agrees to farm out with a
contractor the performance of a
specific job within a definite or
predetermined period.
Maraguinot v. NLRC: It is settled that the
contracting out of labor is allowed only in
case of job contracting.
As labor-only contracting is prohibited, the
law considers the person or entity engaged in
the same a mere agent or intermediary of the
direct employer. But even by the preceding
standards, the associate producers of VIVA
cannot be considered labor-only contractors
as they did not supply, recruit nor hire the
workers.
REV 6:15-17
 Labor-only contractors: where the
contractor/sub-contractor merely
recruits, supplies or places workers to
peform jobs, works, or services for a
principal.
o Does not have substantial
capital or investment which
relates to the job, work or
service to be performed
o Does not exercise the right to
control over the performance
o f the work of the contractual
employees
C. Effect of Finding
San Miguel Corp. v. Bernardo: SMC played a
large and indispendable part in the hiring of
MAERC’s workers. Majority of the
complainants have also been working for
SMC long before the service contract
between SMC and MAERC was entered into.
SMC also maintained a constant presence in
the workplace thru its own checkers who are
tasked to report on the identity of workers
whose performance was not according to the
rules and standards set by SMC. [An EE-ER
relationship thuse found between SMC and
the compalinants, the former was found
guilty of illegal dismissal.]
Sec. 7 – Employee Classification
STATUTORY REFERENCE: Art. 280; Book VI,
Rule I, Sec. 5, Omnibus Rules
Art. 280. Regular and casual employment –
The provisions of written agreement to the
contrary notwithstanding and regardless of
the oral agreement of the parties, an
employment shall be deemed to be regular
where the employee has been engaged to
perform activities which are usually
necessary or desirable in the usual business
or trade of the employer, except where the
employment has been fixed for a specific
project or undertaking the completion or
termination of which has been determined at
the time of the engagement of the employee
or where the work or services to be
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 LABOR STANDARDS / Midterms
performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed casual if it
is not covered by the preceding paragraph:
provided, that any employee who has
rendered at least one year of service, whether
such service is continuous or broken, shall be
considered a regular employee with respect
to the activity in which he is employed and
his employment shall continue while such
activity exists.
Rule I, Sec. 5. (a) Regular employment – The
provisions of written agreements to the
contrary notwithstanding and regardless of
the oral agreements of the parties,
employment shall be deemed regular for
purposes of Book VI of the Labor Code where
the employee has been engaged to perform
activities which are usually necessary or
desirable in the usual business or trade of the
employer, except where the employment has
been fixed for a specific project or
undertaking the completion or termination of
which has been determined at the time of the
engagement of the employee or where the
job, work or service to be performed is
seasonal in nature and the employment is for
the duration of the season.
(b) Causal employment – There is casual
employment where an employee is engaged
to perform a job, work or service which is
merely incidental to the business of the
employer, and such job, work or service is for
a definite period made known to the
employee at the time of engagement:
provide, that any employee who has
rendered at least one year of service, whether
such service is continuous or not, shall be
considered a regular employee with respect
to the activity in which he is employed and
his employment shall continue while such
activity exists.
Notwithstanding the foregoing distinctions,
every employee shall be entitled to the rights
and privileges, and shall be subject to the
duties and obligations, as may be granted by
law to regular employees during the period of
their actual employment.
7.01. COVERAGE – 278
REV 6:15-17 Page 18
Art. 278. Coverage – The provisions of this
title shall apply to all establishments or
undertakings, whether for profit or not.
7.02. EMPLOYEE CLASSIFICATION – 280-281
Recognition and Types
Pangilinan v. General Mining Corp.: Article
280 of the Labor Code comprehends three
kinds of employees: (a) regular employees or
those whose work is necessary or desirable
to the usual business of the employer; (b)
project employees or those whose
employment has been fixed for a specific
project or undertaking the completion or
termination of which has been determined at
the time of the engagement of the employee
or where the work or services to be
performed is seasonal in nature and the
employment is for the duration of the season;
and, (c) casual employees or those who are
neither regular nor project employees.
A regular employee is one who is engaged to
perform activities which are necessary and
desirable in the usual business or trade of the
employer as against those which are
undertaken for a specific project or are
seasonal.
There are two separate instances whereby it
can be determined that an employment is
regular: (1) if the particular activity performed
by the employee is necessary or desirable in
the usual business or trade of the employer;
and, (2) if the employee has been performing
the job for at least a year.
Nature of Issue
Universal Robina, etc. v. Caballeda: Whether
or not an employee was a seasonal/project
employee or a regular employee is a
question of fact. As such, the Supreme Court
is not at liberty to review the said factual issue
because our jurisdiction is generally limited to
reviewing errors of law that the CA may have
committed. When the findings of the LA, the
NLRC and the CA are in absolute agreement,
the same are accorded not only respect but
even finality as long as they are amply
supported by substantial evidence.
Employer Determination – Effect
 LABOR STANDARDS / Midterms
San Miguel Corp. v. NLRC: Thus, under
Article 280 of the Labor Code, an employment
is deemed regular when the activities
performed by the employee are usually
necessary or desirable in the usual business
or trade of the employer even if the parties
enter into an agreement stating otherwise.
But considered not regular under said Article
(1) the so-called "project employment" the
termination of which is more or less
determinable at the time of employment,
such as those connected, which by its nature
is only for one season of the year and the
employment is limited for the duration of that
season, such as the Christmas holiday
season. Nevertheless, an exception to this
exception is made: any employee who has
rendered at least 1 year of service, whether
continuous or intermittent, with respect to the
activity he performed and while such activity
actually exists, must be deemed regular.
7.03. REGULAR EMPLOYEES – 280, 1st par.;
280, 2nd par.; 281, last sentence and 75(d)
Types – Regular Employees
Philips Semiconductors, etc. v. Fadriquela:
According to Article 280 of the Labor Code,
there are 2 kinds of regular employees: (1)
those engaged to perform activities which
are necessary or desirable in the usual
business or trade of the employer; and (2)
those casual employees who have rendered
at least one year of service, whether
continuous or broken, with respect to the
activities in which they are employed.
Nature of Work
Magsalin v. National Organization, etc.: In
determining whether an employment should
be considered regular or non-regular, the
applicable test is the reasonable connection
between the particular activity performed by
the employee in relation to the usual
business or trade of the employer.
Hacienda Fatima v. National Federation of
Sugarcane Workers Food and General
Trade: The fact that respondents do not work
REV 6:15-17
continuously for one whole year but only for
the duration of the season does not detract
from considering them in regular
employment since in a litany of cases the
Supreme Court has already settled that
seasonal workers who are called to work
from time to time and are temporarily laid off
during off-season are not separated from
service in said period, but merely considered
on leave until re-employed.
Hiring Extend Period
Lopez v. MWSS: Where the employment of
project employees is extended long after the
supposed project has been finished, the
employees are removed from the scope of
project employees and considered regular
employees.
Contract to Contract
Beta Electric v. NLRC: The fact that
employee’s employment has been a
contract-to-contract basis cannot alter the
character of employment, because contracts
cannot override the mandate of law.
Length of Time
Maraguinot v. NLRC: Length of time is not a
controlling factor as to whether the EE is
project-based or regular. Length of time is
merely a badge of employment.
Seafarers
Dela Cruz v. Maersk: Seafarers are not
covered by the term "regular employment",
as defined under Article 280 of the Labor
Code. Instead, they are considered
contractual employees whose rights and
obligations are governed primarily by the
POEA Standard Employment Contract for
Filipino Seamen (POEA Standard
Employment Contract), the Rules and
Regulations Governing Overseas
Employment, and, more importantly, by
Republic Act No. 8042, otherwise known as
The Migrant Workers and Overseas Filipinos
Act of 1995.
Page 19
 LABOR STANDARDS / Midterms
7.04. PROJECT EMPLOYEES – 280, 1st par.
Art. 280. … except where the employment
has been fixed for a specific project or
undertaking the completion or termination of
which has been determined at the time of the
engagement of the employee…
Defined
ALU-TUCP v. NLRC: As evident in Article 280
of the Labor Code, the principal test for
determining whether particular employees
are properly characterized as “project
employees” as distinguished from “regular
employees” is whether or not the “project
employees” were assigned to carry out a
“specific project or undertaking, the duration
(and scope) of which were specified at the
time the employees were engaged for that
project.
In business and industry, “project” could refer
to one or the other of at least two
distinguishable types of activities. Firstly, a
project could refer to a particular job or
undertaking that is within the regular or usual
business of the employer company, but
which is distinct and separate, and
identifiable as such, from the other
undertakings of the company. Such job or
undertaking begins and ends at determined
or determinable times. Secondly, the term
“project” could also refer to a particular job or
undertaking that is not within the regular
business of the corporation. Such job or
undertaking must also be identifiably
separate and distinct from the ordinary or
regular business operations of the employer.
The job or undertaking also begins and ends
at determined or determinable times.
Whichever type of project employment is
found in a particular case, a common basic
requisite is that the designation of named
employees as “project employees” and their
assignment to a specific project, are effected
and implemented in good faith, and not
merely as a means of evading otherwise
applicable requirements of labor laws.
Project Employees
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Sandoval Shipyards v. NLRC: The
completion of their work or project
automatically terminates their employment.
Rationale [re: ruling in Cartagenas case, that
contract workers are not considered regular
employees]
De Ocampo v. NLRC: 'The rationale of this
rule is that if a project has already been
completed, it would be unjust to require the
employer to maintain them in the payroll
while they are doing absolutely nothing
except waiting until another project is begun,
if at all. In effect, these stand-by workers
would be enjoying the status of privileged
retainers, collecting payment for work not
done, to be disbursed by the employer from
profits not earned. This is not fair by any
standard and can only lead to a coddling of
labor at the expense of management.'
Employer Obligation
A, M. Oreta and Co. Inc. v. NLRC: If
dismissal was unjustified and done before
expiration of the term, the project employee
should be paid his salary for the unexpired
portion of his contract.
Specific Period
Purefoods Corp. v. NLRC: Under Art. 280,
“specific period or undertaking” contemplates
an activity which is not commonly or
habitually performed, or such type of work
which is not done on a daily basis, but only
for a specific duration of time or until
completion. In Brent School v. Zamora, the
criteria by which term employment cannot be
said to be a circumvention of the law on
security of tenure are:
(1) a fixed period of employment knowingly
and voluntarily agreed upon without any
force, duress, or improper pressure being
brought to bear upon the employee, absent
any other circumstance vitiating his consent;
and
(2) satisfactory appearance that the ER and
EE dealth with each other on more or less
equal terms, with no moral domonance
exercised by the ER over the EE,
Page 20
 LABOR STANDARDS / Midterms
Continuous Rehiring
Chua v. NLRC: A (project) employment
ceases to be co-terminous with specific
projects when the employee is continuously
rehired and re-engaged for many more
projects without interruption.
Workpool Employees
Maraguinot v. NLRC: Once (1) a project/pool
employee has been continually, as opposed
to intermittently, re-hired by the same
employer for the same tasks, and (2) those
tasks are vital, necessary, and indispensable,
then the employee must be deemed a
regular employee.
Aguilar Corp. v. NLRC: Members of a work
pool from which a construction company
draws its project employees, if considered
employees of the construction company
while in the workpool, are non-project
employees or employees for an indefinite
period. If they are employed in the particular
project, its completion or that of any phase
thereof will not mean severance of the ER-EE
relationship.
Length of Service
Filipinas Pre-Fabricated Building Systems
Inc. v. Puente: The length of service of a
project employee is not the controlling test of
employment tenure but WON “the
employment has been fixed for a specific
project or undertaking the completion or
termination of which has been determined at
the time of the engagement of the employee”.
7.05. CASUAL EMPLOYEES – 280, 2nd par.
Nature of Work
A.M. Oreta & co. V. NLRC: Test: not the
employment contract, but the nature of the
job (if usually necessary or desirable to the
main business of the ER, EE = regular
employee).
REV 6:15-17 Page 21
San Miguel Corp. v. Abella: On janitorial and
messengerial services: may be considered
directly related to business, but are deemed
necessary.
One Year Service
Kimberly v. Drilon: If the casual employee
exceeds one year in service, the status of
regular employment attaches to him on the
day immediately after the end of his first year
of service.
7.06. CONTRACT – FIXED PERIOD
Tests [for] Validity
 Fixed-term employment is valid; (even
as Art. 280 in its strictest interpretation
appears to restrict without reasonable
distinctions the right of an employee
to freely stipulate with his employer
the duration of his engagement,)
nothing in the law really prohibits
fixed-term employment, provided that
it does not intend to circumvent the
law on tenurial security.
 There are two requisites for validity of
fixed-term employment:
o It should be entered
knowingly and voluntarily by
the parties without any force,
duress or improper pressure
o That ER and EE dealt with
each other on more or less
equal terms; no moral
dominance over the other.
Seasonal Employees
Manila Hotel v. CIR: The general rule is that
where the work or service to be performed is
seasonal in character, the employment is
deemed to last only for the duration of the
season, unless when the employee involved
is constantly rehired after every season,
which will garner him the consideration that
he’s merely on LOA with pay, and that the
employment relationship is never severed,
only suspended.
 LABOR STANDARDS / Midterms
Sec. 8 – Probationary Employee
STATUTORY REFERENCE – Probationary
Employees – 281; 61, 2nd sentence, Book VI,
Rule I, Sec. 6, Omnibus Rules
8.01. PROBATIONARY EMPLOYEES – 281;
61, 2nd sentence, Book VI, Rule I, Sec. 6,
Omnibus Rules
Art. 281. Probationary employment –
Probationary employment shall not exceed
six (6) months from the date the employee
started working, unless it is covered by an
apprenticeship agreement stipulating a
longer period. The services of an employee
who has been engaged on a probationary
basis may be terminated for a just cause or
when he fails to qualify as a regular
employee in acordance with reasonable
standards made known by the employer to
the employee at the time of his engagement.
An employee who is allowed to work after a
probationary period shall be considerd a
regular employee.
Rule I, Sec. 6. Probationary employment – (a)
Where the work for which an employee has
been engaged is learnable or apprenticeable
in accordance with the standards prescribed
by the Department of Labor, the probationary
employment period of the employee shall be
limited to the authorized learnership or
apprenticeship period, whichever is
applicable.
(b) Where the work is neither learnable nor
apprenticeable, the probationary
employment period shall not exceed six (6)
months reckoned from the date the
employee actually started working.
(c) The services of an employee who has
been engaged on probationary basis may be
terminated only for a just cause or when
authorized by existin glaws, or when he fails
to qualify as a regular employee in
accordance with reasonable standards
prescribed by the employer.
(d) In all cases involving employees engaged
on probationary basis, the employer shall
make known to the employee the standards
under which he will qualify as a regular
employee at the time of his engagement.
REV 6:15-17 Page 22
Definition
International Catholic Migration
Commission v. NLRC: A probationary
employee is made to afford the employer an
opportunity to observe the fitness of a
probationer while at work, and to ascertain
whether the prospective employee is
qualified for permanent employment.
Duration is immaterial; the nature of the
probationary period lies in the objective
sought to be attained by both the employer
and employee during the said period. Failure
to qualify as a regular employee in
accordance of to reasonable standards of the
employer is reasonable cause for terminating
employment under Art. 281, LC.
Purpose
Dela Cruz v. NLRC: A probationary
employment is made to afford the employer
an opportunity to bserve the fitness, skill,
competence and attitude of a probationer
while at work, and to ascertain whether he
will become a proper and efficient employee.
Employer’s Right [to] Set Period/Obligation
Grand Motors Corp. v. MOLE: The employer
has the right to choose as to who will be
hired and who will be declined. It is within the
exercise of his righ tot select his employees
that the employer may set or fix a
probationary period within which the latter
may test and observe the conduct of the
former before hirihg him permanently.
Duration/Exception
Buiser v. Leogardo, Mariwasa v. Leogardo,
ICMC v. NLRC: see subsequent general rule
and exceptions
GR: shall not exceed 6 months from date the
employee started working
EX: period may be extended if (1) the parties
agree so or (2) a longer period is necessary
to learn the nature of the work to be
performed, provided that:
 There is no indication that the
extension s a mere strategem of ER to
 LABOR STANDARDS / Midterms
avoid legal consequences of probe
period satisfactorily completed
 There is written consent of the EE
 EE wanted the extension him/herself
to improve performance and qualify
for regular employment
Criteria Regularization
Mitsubishi v. Chrysler Labor Union: ER has
obligation to inform EE of the reasonable
standards to qualify as regular EE.
Alcira v. NLRC: Not being able to pass the
standards (e.g. by means of absences,
tardiness, failing to wear proper uniform and
showing inferior skills) justifies ER to end
employment relationship with EE.
Extension of Contract
Mariwasa Manufacturing v. Leogardo:
Agreements stipulating longer probationary
periods are considered lawful exceptions to
the statutory prescription limiting such period
to 6 months ... [in this case, the extension
made was] an act of liberality on the part of
his employer affording him a second chance
to make good after having initially failed to
prove his worth as an employee. By
voluntarily agreeing to an extension of the
probationary period, EE in effect waived any
benefit attaching to the completion of said
period.
Absorbed Employees
 Absorption: merger of companies;
Ees of the absorbed company are
absorbed into the new company.
Cebu Stevedoring v. Regional Director: In
this case, the EE’s cannot be considered as
probationaries because they were already
well-trained in their functions. They were
absorbed as regular employees.
Double Probation
A Prime Security Services v. NLRC: There
can be no double probation: if EE is
probationary then became regular, then was
REV 6:15-17
absorbed to another company, EE remains
regular and cannot be subjected to another
probationary employment.
Termination and Salary
A probationary’s services may be terminated:
1. For just cause
2. When EE fails to qualify as regular EE
in accordance with reasonable
standards made known by ER to EE
at the time of engagement
Dela Cruz v. NLRC: As long as the
temrination was made before the expiration
of the 6-month probationary period, the ER
may decide to sever the relationship [for just
cause].
 Valid termination = EE not entltled to
salary for unexpired portion of
probationary period.
Rule [on] Private School Teachers
 Requisites before a private teacher
may be deemed to have acquired
permanent employment:
o Teacher is a full-time teacher
o Teacher must have rendered
3 consecutive years of service
o Teacher’s service must have
been satisfactory
 In determining the employment status
of private school teachers, the
Manual of Regulations for Private
Schools, not the Labor Code, applies.
(see page 11)
Good luck and God bless you! 
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