General Principles of the Labor Code Presidential Decree No. 442, “A Decree Instituting a Labor Code and Consolidating Labor and Social Laws to Afford Protectlon to Labor, Promote Employment and Human Resources Develop ment and Insure Industrial Peace Based on Social Justice,” otherwise known as the “Labor Code of the Philippines” was promulgated on 1 May 1974. It took effect six months from its promulgation, or on 1 November 1974." Under Article 5 of the Labor Code, the Department of Labor and Employment (DOLE) and other government agencies charged With the administration and enforcement of the Labor Code or any of its parts shall promulgate the necessary implementing rules and regulations. The rules and regulations shall become effective fifteen days after the announcement of thelr adoption, in newspapers of general circulation MAXIMUM AID AND PROTECTION TO LABOR ‘The Labor Code is a social legislation primarily intended to help the employees in conformity with the social justice guaran- tee of the Constitution? ‘The policy of the State to give maximum aid and protection to labor is embodied in Article 3 of the Labor Code as follows: Art, 3, Declaration of Basic Policy: The State shall af- {ford protection to labor, promote full employment, ensure ‘equal werk opportunities regardless of sex, race or creed ‘and regulate the relations between workers and employ. cers, The State shall assure the rights of workers to self-organization, collective bargaining, security of ten lure, and just and humane conditions of work. While the Constitution Is committed to the policy of secial justice and the protection of the working class, it should not be supposed that every dispute will be automatically decided in favor of labor. The employer, or management, also has rights which are entitled to respect and enforcement in the interest of simple fair play. Although the Supreme Court has been more often inclined toward the employee and has upheld his cause in his conflicts with the employer, such favoritism has not blinded the Supreme Court to rule that justice is in every case for the deserving, to be dispensed in the light of the established facts ‘and the applicable law and dectrine.” IM, A LIBERAL INTERPRETATION OF THE LABOR CODE ‘AND ITS IMPLEMENTING RULES Under the policy of social justice, the law bends aver backwards to accommodate the interests of the working class on the hu- mane justification that those with less privileges in life should have more privileges in law.* Thus, when conflicting interests of labor and capital are weighed on the scales of social justice, the heavier influence of the employer should be counter-balanced by the law which must accord sympathy and compassion to the underprivileged employee.” ‘As such, any doubt concerning the rights of labor should be resolved in favor of lator, pursuant to the social justice policy.* ‘A. liberal Interpretation Only in Case of Doubt ‘The mandate of the law is that all doubts in the implementation and interpretation of the provisions of the Labor Code and its Implementing Rules and Regulations should be resolved in favor of labor. For example, although the New Rules of Procedure of the National Labor Relations Commission (NLRC) provides that the submission of position papers of the employer and the employee shall be simultaneous, the delay of the employee in the submis- sion of his position paper is not a ground for the dismissal of his complaint. This stance is in accord with the pelicy of the Labor Code, which resolves all doubts in the interpretation of the law and its implementing rules and regulations in favor of labor. B. Where the Law is Clear, the Law Is to be Applied to the Facts of the Case ‘The doctrine of liberal construction cannot be applied where the law invaked is clear, unequivocal and leaves no room for interpretation or construction. Where the law is clear. it should be applied to the facts of the case. Otherwise, it will contravene the purpose for which the law was enacted, and will defeat the tends which it seeks to attain.® For example, where the law expressly excluded services ren- dered on a per diem basis in crediting the length of service for retirement purpeses, the said services cannot be included in the computation of retirement benefits on the ground that laws should be construed in favor of employees.*° Burthermore, to disregard the employer's own rights and interests solely on the basis of concer and solicitude for labor is unjust and unacceptable." Justice is not fully served by sus- taining the contention of the poor simply because he is poor Justice is done by properly applying the law regardless of the station in life of the contending parties."* IIL, PRINCIPLE OF NON-DIMINUTION OF BENEFITS In order to further protect the interest of employees and pro- mote social justice, the principle of nomliminution of benefits ‘embodied in Article 100 of the Laber Code. ‘The principle of non-diminution of benefits prohibits the elimination of supplements or other benefits already enjoyed by the employees under existing laws, decrees, executive orders, company policy oF practice, or any agreement or contract be- ‘owen the employer and employees."* In other words, supplements or benefits enjoyed by employ. ces by virtue of: 1. laws 2. an agreement between the employer and the employee; and. 9. those which have ripened into company practice can no longer be unilaterally withdraven, reduced, diminished, discontinued or eliminated by the employer. A. Meaning of Supplements or Benefits Supplements or benefits constitute extra remuneration. They are special privileges given to or received by the employees over and above their ordinary earnings or wages."* Supplements or benefits include, but are not restricted to: pay for vacation and special holidays not worked; paid sick leave; overtime rate in excess of what is required by law; profit-sharing; family allowances; Christmas and cost-of living bonuses; or bonuses other than those paid as a reward for extra output or time spent on the job. aoghene B. Indicators that Benefits have Ripened into Company Practice In order that benefits may be deemed to have ripened into company practice, the following indicators are considered:"* 1. the employer's knowledge that he is not required to extend such benefit to his employees;2. the granting of the benefits is consistent and deliberate; and 3. the employer continues to grant his employees the ben- efit for several years ‘The considerable length of time that benefits have been granted by the employer to the employees indicates a unilateral and voluntary act on its part, sufficient in itself to negate any claim of a mistake.” For example, where the employer, for a period of six years, freely, voluntarily and continuously included in the computation of his employees’ 13th-month pay, the payments for sick, vaca tion and maternity leaves, premiums for work done on rest days and special holidays, and pay for regular holidays, while the ““13th-Month Pay Law” requires only a month's basic salary as 13th-month pay, the considerable length of time that the pay- ‘ment for leaves and premiums for rest days and holidays was included by the employer in the computation of the 13th-month pay indicates a unilateral and voluntary act on the part of the employer, sufficient in itself to negate any claim of mistake. As such, a company practice favorable to the employees has been established and has ripened into a benefit enjoyed by them. Under the principle of non-diminution of henefits, this benefit cannot be reduced, diminished, discontinued or eliminated by the employer."* IV, PREROGATIVE OF MANAGEMENT TO REGULATE ALL ASPECTS OF EMPLOYMENT [AND THE CONDUCT OF ITS BUSINESS ven as the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. This is also known as the free will of the employer to conduct his own business affairs to achieve his purpose."” ‘An employer is free to regulate, according to his own discre- and judgment, all aspects of employment, including: hiring: work assignments; working methods; time, place and manner of work: tools to be used; processes to be follows supervision of employees; working regulations; 9. transfer of employees; 10.wark supervision; 11.the lay-off of employees; and 12.the discipline, dismissal and recall of work. Management prerogative is based on the established rule that the labor law does not authorize the substitution of the judgment of the employer in the conduct of his business. very business enterprise endeavors to increase its profits. In the pro- cess, the employer may adopt or devise means designed toward ‘that goal Management prerogative may be availed of without fear of, any liability so long as the following conditions are met:*" 1, Its exercised in good faith for the advancement of the ‘employer's interest and not for the purpose of defeating oF circumventing the rights of employees under special laws or a valid agreement; and 2. It is not exercised in a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite. |A. Management Prerogative to Hire and Fire Personnel ‘The hiring and firing of personnel is a management prerogative However, it is not without limitation. The limitation is embod Jed in the constitutional requirement for the protection of labor and the promotion of social justice, which tilts the scales of justice, whenever there is doubt, in favor of the employee. Moreover, with regard to the dismissal of employees, cer tain mandatory requirements laid down by the law must be ‘complied with to ensure that this management prerogative is exercised without arbitrariness or abuse of discretion. Hence, both the reason for dismissal and the manner of dismissing an employee must be appropriate. Otherwise, the termination itself is gravely defective and may be declared unlawful. This is be- cause an employec's job is considered a property right and is therefore within the constitutional mantle of protection that “no person shall be deprived of life, Uberty or property without due process of law; nor shall any person be denied the equal protec- tion of the laws."® . Management Prerogative to Transfer Personnel It is the employer’s prerogative, based on his assessment of his employees’ qualifications, aptitudes, and competence, to move the employees around in the various areas of his business opera- UUons so that they will function with maximum benefit to the ‘company. An employee's right to security of tenure does not give him such a vested right in his position as would deprive the ‘employer of his prerogative to change his assignment or transfer ‘him where he will be most useful. When his transfer is not unreasonable, inconvenient, or prejudicial to him, and if it does rot involve a demotion in rank or a diminution of his salaries, benefits, and other privileges, the employee may not complain that the transfer amounts to a constructive dismissal. ‘However, like all ether rights, there are limits. The manage- prerogative to transfer personnel must be exercised without grave abuse of discretion, but by putting to mind the basic clements of justice and fair play. This is because having the right should not be confused with the manner in which that right must be exercised. Thus, the transfer of employees cannot be used as a subterfuge by the employer to rid himself of an unde- sirable employee or to penalize an employee for his union activities ‘and thereby defeat his right to self-organization.*>