LABOR LAW REVIEW

FUNDAMENTAL PRICIPLES AND POLICIES

A. BASIC POLICY ON LABOR

1. DECLARATION OF BASIC POLICY.

Question:
1. What is the primordial reason for the passage of labor laws?
ANSWER: Social Justice

Question:
2. What are the basic policies of the State on labor as found in the Constitution (Article XIII) and
Labor Code (Article 3)?
ANSWER: a) Full protection to Labor;
b) Promotion of full employment;
c) Promotion of equal work opportunities regardless of sex, race or creed;
d) Regulation of the relations between workers and employers;
e) Protection of the rights of workers to:
i. self-organization;
ii. collective bargaining;
iii. security of tenure; and
iv. just and human conditions of work.
Question:
3. What are the rights of an employer and employee?
ANSWER: Article XIII, Section 3 of the Constitution
Employer:
a) Reasonable return of investment
b) Expansion
c) Growth
Employee:
a) Security of tenure
b) Receive a living wage
c) Humane conditions of work
d) Just share in the fruits of production
e) Right to self-organization
f) Conduct collective bargaining or negotiation
with management
g) Engage in peaceful concerted activities
including strike
h) Participate in policy and decision making
process
2. POLICE POWER OF THE STATE.

Question:
1. What is the inherent power of the State that empowers to enact labor laws and social
legislations, even without the applicable provisions of the Constitution?
ANSWER: Police Power

B. CONSTRUCTION IN FAVOR OF LABOR

1. ARTICLE 1072 OF THE CIVIL CODE IN RELATION TO ARTICLE 4 OF THE

LABOR CODE

Question:
1. In case of doubt, how are Labor Code provisions construed?
ANSWER:
Article 1702 of the Civil Code states: “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.” (Philippine
National Construction Corporation v. NLRC, G.R. No. 101535, Jan. 22, 1993.)

Article 4 of the Labor Code declares: “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.”
Question:
2. Does the foregoing rule enunciated in Article 1702 of CC and Article 4 of Labor Code only
apply to government workers or in the private sector?
ANSWER: Both. The rule enunciated in the foregoing articles applies to all workers- whether in
the government or in the private sector- in order to give flesh and vigor to the pro-poor and pro-
labor provisions of the Constitution. (Land and Housing Development Corp. v. Esquillo, G.R.
No. 152012, 2005)

2. DOUBT OR AMBIGUITY IN LABOR CONTRACTS.

a. Rule in case of employment contracts.

Question:
3. Does the rule on liberal construction also apply to overseas employment contract (POEA
Standard Employment Contract-POEA-SEC)?
ANSWER: Yes, because it is deemed to be so impressed with public interest that the more
beneficial conditions must be endeavored in favor of the laborer. (Philippine Transmarine
Carriers, Inc. v. NLRC, G.R. No. 123891, Feb. 28, 2001.)
 b. Rule in case of collective agreements.
Question:
4. Does the rule on liberal construction also apply to collective agreements?
ANSWER: Yes. The law must protect labor to the extent, at least, of raising him equal footing in
bargaining relations with capital and to shield him from abuses brought about by necessity to
survive. (Sanchez v. Harry Lyons Construction Corporation, G.R. No. L-2799, Oct. 19, 1950)

Yes. Not being an ordinary contract as it it impressed with public interest, a CBA
must be construed liberally rather than narrowly and technically, and the courts must place a
practical and realistic construction upon it, giving due consideration to the context in which it is
negotiated and the purpose for which it is intended to serve. ( Marcopper Mining Corporation v.
NLRC, G.R. No. 103525, March 29, 1996.)

3. DOUBT OR AMBIGUITY IN EVIDENCE.

Question:
5. Does the rule on liberal construction also apply in the appreciation of evidence in labor
proceedings?
ANSWER: Yes. If doubt exists between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of the latter. (Dreamland Hotel Resort v.
Johnson, G.R. No. 191455, March 12, 2014)

4. THE RULE DOES NOT DEPRIVE EMPLOYERS OF FAIR TREATMENT.

Question:
6. An employee who works at the telecommunication company was found guilty for having
demanded and received money from the complainants in consideration of a promise to facilitate
approval of their applications for telephone installation. However, the labor arbiter while
sustaining the company’s decision to dismiss the employee for just cause, awarded the latter
financial assistance for equity and compassion. Further, it has been resolved that the financial
assistance is not intended as a reward for the employee’s offense but merely to help her for the
loss of her employment.

Is the resolution of the Labor Arbiter correct?

No, the resolution is without merit.

The policy of social justice is not intended to countenance wrongdoing simply because it is
committed by the underprivileged. At best it may mitigate the penalty but it certainly will not
condone the offense. Compassion for the poor is an imperative of every humane society but only
when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be
permitted to be refuge of scoundrels any more than can equity be an impediment to the
punishment of the guilty. Those who invoke social justice may do so only if their hands are clean
and their motives blameless and not simply because they happen to be poor. This great policy of
our Constitution is not meant for the protection of those who have proved they are not worthy of
it, like the workers who have tainted the cause of labor with the blemishes of their own character.
(PLDT Co. v. NLRC, G.R. No. L- 80609, Aug. 23, 1988)

C. CONSTITUTIONAL AND CIVIL CODE PROVISIONS RELATING TO LABOR

LAW

1.CONSTITUTIONAL PROVISIONS

Question:
1. What constitutional provisions are relevant to Labor Law?

ANSWER: The following are the relevant constitutional provisions to labor law:

Article II, Sections 9, 10, 11, 13, 14, 18, 20.

SECTION 9 (PROMOTION OF FULL EMPLOYMENT)
SECTION 10 ( SOCIAL JUSTICE)
SECTION 18 (PROTECTION-TO-LABOR CLAUSE)
SECTION 20 ( ROLE OF PRIVATE SECTOR)

Article III, Sections 4, 7, 8, 10, 16, 18(2)

SECTION 4 (FREEDOM OF SPEECH)
SECTION 8 (FREEDOM OF ASSOCIATION)
SECTION 10 (FREEDOM OF CONTRACT)
SECTION 16 (SPEEDY LABOR JUSTICE)
SECTION 18 (2) (INVOLUNTARY SERVITUDE)

ARTICLE XIII, Sections 2, 3, 13, 14

SECTION 2 (SOCIAL JUSTICE)
SECTION 3 (PROTECTION-TO-LABOR CLAUSE)
SECTION 13 ( SPECIAL AGENCY FOR DISABLED PERSON)
SECTION 14 ( PROTECTION OF WOMEN)
(Article II of the Constitution)
1.A DECLARATION OF PRINCIPLES AND STATE POLICIES

PROMOTION OF FULL EMPLOYMENT

Question:
2. What is the purpose of the International Labor Organization (ILO) on Employment Policy
Convention and its relevance to our Constitution?

ANSWER: Section 9 of the Constitution( promotion of full employment) is aligned with the
policy enunciated in Employment Policy Convention of the ILO which aims at ensuring that (a)
there is work for all who are available for and seeking work; (b) such work is as productive as
possible; (c) there is freedom of choice of employment and the fullest possible opportunity for
each worker for a job irrespective of race, color, sex, religion, political opinion, national
extraction or social origin.

SOCIAL JUSTICE
Question:
3. Can a provision of law, initially valid, become subsequently unconstitutional, on the ground
that its continued operation would violate the equal protection of the law? 

ANSWER: Yes. (Central Bank Employees Association, Inc. v. Bangko Sentral ng Pilipinas,
G.R. No. 148208, Dec. 15, 2004)
Question:
4. The Central Bank (now BSP) Employees Association Inc, filed a Petition for Prohibition
against BSP and the Executive Secretary of the Office of the President, to restrain respondents
from further implementing the last proviso in Section 15 (c), Article II of RA No 7653(The New
Central Bank Act), on the ground that it is unconstitutional.
Article II, Section 15 (c) RA 7653: A compensation structure based on job evaluation studies and
wage surveys and subject to the Boards approval, shall be instituted as an integral component of
the Bank Sentral’s human resource development program. Provided that the Monetary Board
shall make its own system conform as closely as possible with the principles provided for under
RA No 6758 (Salary Standardization Act). Provided, however, that compensation and wage
structure of employees whose positions fall under salary grade 19 and below shall be in
accordance with the rates prescribed under RA No 6758.
7 Subsequent Laws were enacted exempting all other rank-and-file employees of Government
Financial Institutions from the SSL. These are: RA No 7907 (1995) – LBP, RA No 8282 (1997)
– SSS, RA No 8289 (1997) – SBGFC, RA No 8291 – GSIS, RA No 8523 (1998) – DBP, RA No
8763 (2000) – HGC, and RA No 9302 (2004) – PDIC.

Is the new Central Bank Act unconstitutional and against the constitutional mandate that “No
person shall be … denied equal protection of the laws”

ANSWER: Yes. In the field of equal protection, the guarantee that “no person shall be denied the
equal protection of the laws” includes the prohibition against enacting laws that allow invidious
discrimination, directly or indirectly.
The equal protection clause does not demand absolute equality but it requires that all persons
shall be treated alike, under like circumstances and conditions both as to privileges conferred and
liabilities enforced. Favoritism and undue preference cannot be allowed. For the principles is that
equal protection and security shall be given to every person under circumstance which, if not
identical are analogous.

Question:
5. May social justice as a guiding principle in labor law be so used by the courts in sympathy
with the working man if it collides with the equal protection clause of the Constitution? Explain.

ANSWER:
YES. The State is bound under the Constitution to afford full protection to Labor and when
conflicting interests collide and they are to be weighed on the scales of social justice, the law
should accord more sympathy and compassion to the less privileged workingman. (Fuentes v.
NLRC, G.R. No. 110017, January 2, 1997)
However it should be borne in mind that social justice ceases to be an effective instrument for
the “equalization of the social and economic forces” by the State when it is used to shield
wrongdoing. (Corazon Jamer v. NLRC, G.R. No. 112630, September 5, 1997)

Question:
6. The National Traffic Commission resolved that animal-drawn vehicles be prohibited from
passing along some major streets such a Rizal Ave. in Manila for a period of one year from the
date of the opening of the Colgante Bridge to traffic. The Secretary of Public Works approved
the resolution. The Mayor of Manila and the Acting Chief of Police of Manila have enforced the
rules and regulation. As a consequence, all animal-drawn vehicles are not allowed to pass and
pick up passengers in the places above mentioned to the detriment not only of their owners but of
the riding public as well.

Does the rule infringe upon the constitutional precept regarding the promotion of social justice?
What is Social Justice?
 
ANSWER: No. The regulation aims to promote safe transit and avoid obstructions on national
roads in the interest and convenience of the public. Persons and property may be subject to all
kinds of restraints and burdens in order to secure the general comfort, health, and prosperity of
the State. To this fundamental aims of the government, the rights of the individual are
subordinated.
Social justice is “neither communism, nor despotism, nor atomism, nor anarchy,” but the
humanization of laws and the equalization of social and economic forces by the State so that
justice in its rational and objectively secular conception may  at least be approximated.

Social justice means the promotion of the welfare of all the people, the adoption by the
Government of measures calculated to insure economic stability of all the competent elements of
society, through the maintenance of a proper economic and social equilibrium in the
interrelations of the members of the community, constitutionally, through the adoption of
measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying
the existence of all governments on the time-honored principles of Salus Populi est Suprema
Lex.( Calalang v. Williams, G.R. No. 47800, Dec. 2, 1940, 70 Phil. 726.

Question:
7.What are the limitations in invoking the principle of social
Justice?

ANSWER:
1. Not to undermine property rights resulting in confiscation. (Guido v. Rural Progress Adm, L-
2089, October 31, 1949) It should not tolerate usurpation of property, public or private.

2. May only protect the laborers who come to court with clean hands (Phil. Long Distance
Telephone Co. v. NLRC, G.R. No. 80609, August 23, 1988) and their motives blameless
(Gustilo v. Wyeth Phils., G.R. No. 149629, October 4, 2004).

3. Never result in an injustice or oppression of the Employer. (Phil. Geothermal Inc. v. NLRC,
G.R. No. 106370, September 8, 1994)

4. If it is used to shield wrongdoings, it cannot be permitted to be the refuge of scoundrels.

(PNCC v. NLRC, G.R. No. 83320, Feb. 9, 1989)

PROTECTION-TO-LABOR CLAUSE
Question:
8. Wesleyan University-Philippines (Petitioner), a non-stock, non-profit educational institution
duly organized and existing under the laws of the Philippines and Wesleyan University-
Philippines Faculty and Staff Association (Respondent), a duly registered labor organization
acting as the sole and exclusive bargaining agent of all rank-and-file faculty and staff employees
of petitioner signed a 5-year CBA9 effective June 1, 2003 until May 31, 2008.

A Memorandum providing guidelines on the implementation of vacation and sick leave credits
as well as vacation leave commutation was issued by petitioner, through its President, Atty.
Guillermo T. Maglaya (Atty. Maglaya). Respondent President, Cynthia L. De Lara (De Lara)
wrote a letter to Atty. Maglaya informing him that respondent is not amenable to the unilateral
changes made by petitioner and questioning the guidelines for being contrary to the existing
practices and the CBA. In the same meeting, the petitioner announced its plan of implementing a
one-retirement policy contrary to the existing and established practice which respondent gets,
one from Private Education Retirement Annuity Association (PERAA) Plan and another from
the CBA Retirement Plan.

Can a memorandum which is contrary to the existing CBA as well as the implementation of
one-retirement policy be unilaterally imposed by the employer?
ANSWER: NO. The Non-Diminution Rule explicitly prohibits employers from eliminating or
reducing the benefits received by their employees if based on express policy, written contract or
has ripened into a practice.
In closing, it may not be amiss to mention that when the provision of the CBA is clear, leaving
no doubt on the intention of the parties, the literal meaning of the stipulation shall govern.
However, if there is doubt in its interpretation, it should be resolved in favor of labor, as this is
mandated by no less than the Constitution.

Question:
9. What are the rights of the workers protected and promoted by the State under the
Constitution? ( PNB v. Padao, G.R. No. 180849 and 187143)
ANSWER: a. The right to full employment
b. Equality of employment opportunities
c. Self- organization
d. Collective bargaining and negotiations
e. Strike and other peaceful concerted activities
f. security of tenure,
g. humane conditions of work
h. a living wage
i. right to participate in policy and decision-making processes affecting the rights

Question:
10. Is the constitutional policy in Section 18 ( Protection-to labor Clause meant to be a sword to
oppress employers?
ANSWER: No

Questions:
11. A and B were workers in a company engaged in the business of selling ornamental
construction materials. They were dismissed for abandonment of work. They filed a complaint
for illegal dismissal before the LA, who ruled in their favor. The NLRC reversed on appeal. The
CA sustained the NLRC’s decision. They further appealed to the SC, disputing the finding of
abandonment, and claiming that the company did not comply with the twin requirements of
notice and hearing.

Is the non-compliance of the twin notice and hearing requirement sufficient not to uphold the
dismissal for just cause?

Held:
NO. SC upheld the finding of abandonment, because the act of the workers in seeking
employment elsewhere clearly showed a deliberate intent to severe the ER-EE relationship.
Procedural due process (for just cause, there must be a written notice informing him of grounds
for termination, a hearing or opportunity to be heard, and a final notice of termination stating the
grounds therefore): There was no due process because ER did not send the requisite notices to
the last known address of the EEs. ER only gave a flimsy excuse that the notice would be useless
because the EEs no longer lived there. This is not a valid excuse, they should have still sent a
notice as mandated by law. For not sending the requisite notices, the ER should be held liable for
non-compliance with the procedural requirements of due process however the worker’s
abandonment of their work shall constitute as a just cause for termination.
The constitutional policy to provide full protection to labor is not meant to be a sword to oppress
employers. The commitment of this Court to the cause of labor does not prevent us from
sustaining the employer when it is in the right, as in this case. Certainly, an employer should not
be compelled to pay employees for work not actually performed and in fact abandoned. (Agabon
v. NLRC, G.R. No. 158693)

STATE POLICIES, NOT SELF- EXECUTING PROVISIONS.

Question:
12. Are the provisions under Article II on State Policies intended to be in the nature of self-
executing principles ready for enforcement through the courts?

ANSWER: No. ( Tañada vs. Angara, G.R. No. 118295 )

Question:
13. Can it give rise to a cause of action in the courts if the provisions of State Policies relevant
to Labor Law be disregarded?

ANSWER: No. They do not embody judicially enforceable constitutional rights but mere
guidelines for legislation. (Kilosbayan, Incorporated v. Morato, G.R. No. 118910) and needs
legislative enactments such as the labor code to implement them. ( Basco v Pagcor, G.R. No.
91649)

(Article III of the Constitution)

1.B BILL OF RIGHTS
FREEDOM OF SPEECH
Question:
1. What is Picketing?
ANSWER: Picketing involves the act of marching to and fro in front of the employer’s premises,
usually accompanied by the display of placards and other signs making known the facts
onvolved in a labor dispute.

Question:
2. What is the difference between RIGHT TO PICKET and RIGHT TO STRIKE as to its
constitutionality?
ANSWER: Right to picket is based on Article III (Bill of Rights) of the Constitution while right
to strike is anchored on Article XIII (Social Justice and Human Rights) of the Constitution.
Question:
3. About thirty persons among whom where the herein defendants, all members of the National
Labor Union, picketed the plaintiffs the said theater from 9:00 a.m. to 2:30 p.m., more or less, by
walking to and from on the side walk fronting the lobby of the theater and displaying placards
which for the slogans: "Do not patronize the Dalisay Theater," "Dalisay Theater is unfair to
labor." "Have mercy on the picketeers" "and sympathize with us," and others
The picketing was done by defendants so that they might re-employed in the Dalisay Theater.
Due to this, the box-office receipts of said theater for January 10, 1952 amounted only to about
P1,250; and that a premiere showing of such a film like" DIMAS" would ordinarily earned a
P2,500 gross receipt for the theater.
In the trial court, the decision was that the defendants’ walking slowly and peacefully back and
forth on the public sidewalk in front of the premises of the Dalisay Theater and displaying
placards publicizing the dispute between the theater and the management did not disturb the
public peace at the place. There was no clear and present danger of destruction to life of property
or of other forms of breach of the peace. Thus the trial court dismiss the complaint against the
defendants who picketed.
Is the trial court correct?
ANSWER: YES. Picketing peacefully carried out is not illegal even in the absence of employer-
employee relationship for peaceful picketing is a part of a freedom of speech guaranteed by the
Constitution. ( De Leon v. National Labor Union, G.R. No. L-7586, Jan. 30, 1957)

Question:
4. Distinguish picketing from strike as to its purpose.
ANSWER: Picketing may be distinguished from strike in that while the latter centers on
stoppage of work, the former focuses on publicizing the labor dispute and its incidents to the
public-exercising freedom of speech.

Question:
5. Distinguish picketing from strike as to its requirement for its validity.
ANSWER: Picketing, being a freedom of speech activity, is not bound by the mandatory
requirements for the conduct of a strike. It is simply required to be peaceful for its validity.

FREEDOM OF ASSOCIATION
Question:
6. What is freedom of association?
ANSWER: It is the right of the people to form unions, associations or societies for purposes not
contrary to law and it is available to both public and private sector.
FREEDOM OF CONTRACT
Question:
7. What is the purpose of the non-impairment clause of the Constitution?
ANSWER: It is to safeguard the integrity of contracts against unwarranted interference by the
State.

Question:
8. Is the non-impairment clause absolute?
No. The prohibition to impair the obligation of contracts is not absolute and unqualified. In spite
of the constitutional prohibition, the State continues to possess authority to safeguard the vital
interest of its people.

Question:
9. R.A. No. 3350, a law that ensures freedom of belief and religion was promulgated. Such law
will prohibit the employer from terminating its employees upon the recommendation of the
union labor for not being a member therein due to their religious affiliation -not to be members
of any such labor organization. The union contends that such law is unconstitutional for
impairing the obligation of its contract, the union security clause embodied in its CBA with the
company. By virtue of the said CBA, membership in the union was required as a condition for
employment. The said agreement was already in existence at the time R.A. No. 3350 was
enacted. However, because of R.A. No. 3350, employees can no longer be dismissed should
they cease to be a member of the union due to their religious belief. It cannot be denied,
therefore, that there was indeed an impairment of the said union clause.
Is R.A. No. 3350 unconstitutional?
ANSWER: NO. The SC, ruled that the prohibition to impair the obligation of contracts is not
absolute and unqualified. In spite of the constitutional prohibition, the State continues to possess
authority to safeguard the vital interests of its people.
The free exercise of religious profession or belief is superior to contract rights. In case of
conflict, the latter must, therefore yield to the former. (Anucension v. National Labor Union G.R.
No. L-26097, Nov. 29, 1977)

Question:
10. The Governing Board of the POEA issued Resolution No. 01, series of 1994 amending and
increasing the compensation and other benefits for Seafarers. This shall be applied to any
Filipino seafarer already on-board any vessel provided, that the cause of action occurs after the
said compensation and benefits take effect. Clearly, with such new Resolution, it will increase
the compensation and other benefits more than that of what is stated in any existing contract
between the employers and seafarers.
Was there a violation of the non-impairment clause?
ANSWER: NO. They were enacted under the Police Power of the State and thus, they cannot be
struck down on the ground that they violate the contract clause. To hold otherwise is to alter
long-established constitutional doctrine and to subordinate the police power to the contract
clause. (Conference of Maritime Manning Agencies v. POEA, G.R. No. 114714, April 21, 1995)
Question:
11. A seafarer was illegally dismiss on the 3rd month of his employment. The original
employment contract was for a period of 12 months, leaving an unexpired portion of 9 months.
Hence, a complaint was file for illegal dismissal and for payment of money claims for the
unexpired portion of his employment contract.
However, there was contention that the money claim cannot prosper because R.A. No. 8042 was
already in effect. The said law provides that “In case of termination of overseas employment
without just, valid or authorized cause as defined by law or contract, the workers shall be entitled
to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum,
plus his salaries for the unexpired portion of his employment contract or for three (3) months for
every year of the unexpired term, whichever is less.
Petitioner contends that the subject clause is unconstitutional because it unduly impairs the
freedom of OFWs to negotiate for and stipulate in their overseas employment contracts a
determinate employment period and a fixed salary package.
Is R.A. No. 8042 unconstitutional impairing non-impairment clause?
ANSWER: NO.
Section 10, Article III of the Constitution provides:
No law impairing the obligation of contracts shall be passed.
The prohibition is aligned with the general principle that laws newly enacted have only a
prospective operation, and cannot affect acts or contracts already perfected; however, as to laws
already in existence, their provisions are read into contracts and deemed a part thereof. Thus, the
non-impairment clause under Section 10, Article II is limited in application to laws about to be
enacted that would in any way derogate from existing acts or contracts by enlarging, abridging or
in any manner changing the intention of the parties thereto.
The enactment of R.A. No. 8042 in 1995 preceded the execution of the employment contract
between petitioner and respondents in 1998. Hence, it cannot be argued that R.A. No. 8042,
particularly the subject clause, impaired the employment contract of the parties. Rather, when the
parties executed their 1998 employment contract, they were deemed to have incorporated into it
all the provisions of R.A. No. 8042.
(nota bene: However, R.A. No. 8042 was declared unconstitutional which violates equal
protection clause but not on non-impairment clause.) Serrano v. Gallant Maritime Services, Inc.
G.R. No. 167614, March 24, 2009

SPEEDY LABOR JUSTICE

Question:
12. X was hired by Respondent under a 2 year contract in Kuwait. Only after 1 year, however, X
was terminated from employment and was sent back to the Philippines. X then filed a complaint
for illegal dismissal with the Labor Arbiter. Respondents were given by the Labor Arbiter 10
days to answer the charges against. Respondents submitted a bill of particulars instead alleging
that X was lacking in the required narration of facts constituting the causes of action. X, on the
other hand, moved to declare respondents in default for failing to submit their position papers.
Both parties agreed that the Labor Arbiter should decide on the motion on the Bill of Particulars.
The Labor Arbiter, however, declared the respondents in default for failure to submit their
position papers within the period given.   Were the respondents denied due process?
ANSWER: YES. The court rules that there was denial of due process since no notice or order
requiring respondents to file their position paper, nor an order informing the parties that the case
was already submitted for decision. There was an utter absence of opportunity to be heard at the
arbitration level. What the Labor Arbiter should have done was to rule on the pending motions,
or at least notify private respondents that he would no longer resolve their motions, and to direct
them forthwith to submit within a reasonable time their position paper as well as all the evidence.
While the speedy disposition of labor cases may be the policy of the law, it must be emphasized
that speed alone is not the chief objective of a trial. It is the careful and deliberate consideration
for the administration of justice, a genuine respect for the rights of all parties and the
requirements of procedural due process, and an adherence to this Court's standing admonition
that the disposition of cases should always be predicated on the consideration that more than the
mere convenience of the courts and of the parties in the case, the ends of justice and fairness
would be served thereby. These are more important than a race to end the trial.
(Habana vs. NLRC G.R. No. 129418 September 10, 1999).

INVOLUNTARY SERVITUDE
Question:
13. What is involuntary servitude?
ANSWER: It is a condition of enforced or compulsory service of one to another, no matter
under what form such servitude may be disguised.

Question:
14. A new company X merges with another company Y, a voluntary arbitrator ruled that, in
accordance with Section 80 of the Corporation Code, the employees of company Y form part of
the “assets and liabilities” transferred to new company by virtue of the new merger.
Is the ruling of the voluntary arbitrator correct?
ANSWER: NO. The Supreme Court, did not agree to the postulation. In legal parlance, human
beings are never embraced in the term “assets and liabilities. It is contrary to public policy to
declare the former employees of Company Y as forming part of the assets or liabilities therein
that were transferred and absorbed by Company X in the Articles of Merger. Assets and
liabilities, in this instance, should be deemed to refer only to property rights and obligations of
company Y and do not include the employment contracts of its personnel. A corporation cannot
unilaterally transfer its employees to another employer like chattel. Certainly, if company X as
an employer had the right to choose who to retain among the Y company’s employees, company
Y employees had the concomitant right to choose not to be absorbed by company X.
It would have been different matter if there was an express provision in the Articles of Merger,
that as a condition for the merger, company X was being required to assume all the employment
contracts off all existing company Y employees with the conformity of the employees. The
employees of company Y retained the prerogative to allow themselves to be absorbed or not,
otherwise, that would be tantamount to involuntary servitude.( BPI v. BPI Employees Union-
Davao Chapter G.R. No. 164301, Aug. 10, 2010.)
RETURN-TO-WORK ORDER IN NATIONAL INTEREST DISPUTES
Question:
15. What is meant by a return-to-work order?
ANSWER: A return-to-work order is an indispensable consequence of the assumption or
certification order issued by the DOLE Secretary in national interest cases. It is automatic in
nature which means that it may be enforced even if it is not expressly stated in the assumption or
certification order because it is considered the logical and legal effect of the issuance of said
order. Violation thereof, even for one day, would make the strike illegal.

Question:
16. For failure of respondent company to concede to the request of petitioners for a wage
increase, the laborers declared a strike which suspended all the work in the respondent company.
The parties reached a temporary wage arrangement and the laborers were ordered to return to
work. Months later and while their main case was still pending in court, the court ordered
petitioning union which again picketed against respondent company to return to work.
Is the court order a violation of the constitutional inhibition against involuntary servitude?
ANSWER: NO. The very impossibility of prompt decision or settlement of the dispute confers
upon the court the power to issue the order for the reason that the public has an interest in
preventing undue stoppage or paralyzation of the wheels of industry.

(Article XIII of the Constitution)

1.C SOCIAL JUSTICE AND HUMAN RIGHTS

SOCIAL JUSTICE

Question:
1. What is the nature of the provision found in Section 2 of Article XIII in relation to Section 10
of Article II of the Constitution about the promotion of Social Justice?
ANSWER: Section 2 of Article XIII is the amplification of that policy in that the promotion of
social justice shall include the commitment to create economic opportunities based on the
freedom of initiative and self-reliance.

PROTECTION-TO-LABOR CLAUSE

Question:
2. Private respondent, the School, hires both foreign and local teachers as members of its faculty,
classifying the same into two: foreign-hires and local-hires. The School grants foreign-hires
salary rate twenty-five percent (25%) more than local-hires. The School justifies the difference
on two “significant economic disadvantages” foreign-hires have to endure, namely: (a) the
“dislocation factor” and (b) limited tenure.

Is the classification for employment employed by the school discriminatory?

ANSWER: YES. The Constitution in the Article on Social Justice and Human Rights exhorts
Congress to "give highest priority to the enactment of measures that protect and enhance the
right of all people to human dignity, reduce social, economic, and political inequalities.
In the workplace, where the relations between capital and labor are often skewed in favor of
capital, inequality and discrimination by the employer are all the more reprehensible.
The Constitution specifically provides that labor is entitled to "humane conditions of work."
These conditions are not restricted to the physical workplace — the factory, the office or the
field — but include as well the manner by which employers treat their employees.

PROTECTION OF WOMEN

Question:
3. PT&T (Philippine Telegraph & Telephone Company) initially hired Grace de Guzman
specifically as reliever for C.F. Tenorio who went on maternity leave. She was again invited for
employment as replacement of Erlina F. Dizon who went on leave on 2 periods. De Guzman was
again asked to join PT&T as a probationary employee. She indicated in the portion of the job
application form under civil status that she was single although she had contracted marriage a
few months earlier.
When petitioner learned later about the marriage, its branch supervisor sent de Guzman a
memorandum requiring her to explain the discrepancy including a reminder about the company’s
policy of not accepting married women for employment. She was dismissed from the company
and Labor Arbiter handed down a decision declaring that petitioner illegally dismissed de
Guzman, who had already gained the status of a regular employee. It was apparent that she had
been discriminated on account of her having contracted marriage in violation of company
policies.

Is the policy of the company unconstitutional?

ANSWER: YES. Amongst other provisions in the Constitution, Section 14 of Article XIII
mandates that the State shall protect working women through provisions for opportunities that
would enable them to reach their full potential.
Moreover, the Civil Code provisions on the contract of labor state that the relations between the
parties, that is, of capital and labor, are not merely contractual, impressed as they are with so
much public interest that the same should yield to the common good.  It goes on to intone that
neither capital nor labor should visit acts of oppression against the other, nor impair the interest
or convenience of the public. In the final reckoning, the danger of just such a policy against
marriage followed by petitioner PT&T is that it strikes at the very essence, ideals and purpose of
marriage as an inviolable social institution and, ultimately, of the family as the foundation of the
nation. That it must be effectively interdicted here in all its indirect, disguised or dissembled
forms as discriminatory conduct derogatory of the laws of the land is not only in order but
imperatively required.
1.D CONSTITUTIONAL RIGHTS THAT CANNOT BE INVOKED IN COMPANY-
LEVEL ADMINISTRATIVE CASES

Question:
1. What are the Constitutional rights that are not applicable in company-level administrative
cases?
ANSWER: (a) Right to constitutional due process
(b) Right to equal protection of the laws
(c) Right to counsel

Question:
2. When can the above constitutional rights be invoked?
ANSWER: Right to constitutional due process, right to equal protection of the laws and right to
counsel can only be invoked when the labor case is finally lodged with the labor and judicial
courts, any deprivation thereof would afford the employee the right to invoke them, this time,
against the government or state as represented by the labor and judicial authorities.

INAPPLICABILITY OF RIGHT TO CONSTITUTIONAL DUE PROCESS

Question:
3. What is the difference between Constitutional due process and
Statutory due process?
ANSWER: Constitutional due process protects the individual from the government and assures
him of his rights in criminal, civil or administrative proceedings while statutory due process
found in the Labor Code and Implementing Rules protects employees from being unjustly
terminated without just cause after notice and hearing.

INAPPLICABILITY OF RIGHT TO EQUAL PROTECTION OF THE LAWS

Question:
4.Tecson was hired by Glaxo as a medical representative. Contract of employment signed by
Tecson stipulates, among others, that he agrees to study and abide by the existing company rules;
to disclose to management any existing future relationship by consanguinity or affinity with co-
employees or employees with competing drug companies and should management find that such
relationship poses a possible conflict of interest, to be transferred to another department or to
resign from the company. Eventually, Tecson married to a woman who is working in another
company which is Glaxo’s competitor.
Tecson's superiors informed him of conflict of interest. Tecson asked for time to comply with the
condition (that either he or Betsy resign from their respective positions). Unable to comply with
condition, Glaxo transferred Tecson to another area. After his request against transfer was
denied, Tecson brought the matter to Glaxo's Grievance Committee and while pending, he
continued to act as medical representative. The National Conciliation and Mediation Board ruled
that Glaxo's policy was valid.
Is the ruling correct?
ANSWER: YES. Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing
strategies and other confidential programs and information from competitors, especially so that it
and Astra are rival companies in the highly competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor
companies upon Glaxo’s employees is reasonable under the circumstances because relationships
of that nature might compromise the interests of the company. In laying down the assailed
company policy, Glaxo only aims to protect its interests against the possibility that a competitor
company will gain access to its secrets and procedures.
The challenged company policy does not violate the equal protection clause of the Constitution
as petitioners erroneously suggest. It is a settled principle that the commands of the equal
protection clause are addressed only to the state or those acting under color of its authority.
Corollarily, it has been held in a long array of U.S. Supreme Court decisions that the equal
protection clause erects no shield against merely private conduct, however, discriminatory or
wrongful. The only exception occurs when the state in any of its manifestations or actions has
been found to have become entwined or involved in the wrongful private conduct. Obviously,
however, the exception is not present in this case. Significantly, the company actually enforced
the policy after repeated requests to the employee to comply with the policy. Indeed, the
application of the policy was made in an impartial and even-handed manner, with due regard for
the lot of the employee.

INAPPLICABILITY OF RIGHT TO COUNSEL

Question:
5. Petitioners were positively identified as being involved in a series of thiefts at the respondent
company. Thus, when invited to the police station for investigation, the respondent’s counsel
conducted an investigation and interrogated the petitioners on their alleged participation in the
series of thefts committed at respondent company. Petitioners then admitted their guilt and
offered to resign in exchange of any criminal charges against them. Hence, the lawyer of the
company accepted their resignation.
However, the respondents filed illegal dismissal against private respondents and argued that their
admission and resignation were not voluntary but were obtained by means of threat and
intimidation, and invoked that they were deprived the right to counsel as provided by the Bill of
Rights.
Was there a violation of the rights of the petitioners to have a competent and independent
counsel when they were investigated by the private respondents lawyer?
ANSWER: NO. The SC emphasized that the right to counsel under the said provision of the
Constitution is meant to protect a suspect in a criminal case who is under custodial investigation,
where the police investigation is no longer a general inquiry but has begun to focus on a process
of interrogation that lends itself to elicit incriminating statements. The right to counsel attaches
only upon the start of such investigation.
In the case at bar, the admission was made by the petitioners during the course of the
investigation conducted by private respondents’ counsel to determine whether there is sufficient
ground to terminate their employment. The investigation was merely an administrative
investigation conducted by employer, not a criminal investigation. The questions were
propounded by the employer’s lawyer, not by the police officers. The fact that the investigation
was concluded at the police station did not necessarily put petitioners under custodial
investigation as the venue of the investigation was merely incidental. Hence, the admissions
made by the petitioners during such investigation may be used as evidence to justify their
dismissal.

EFFECT OF FAILURE OF EMPLOYER TO INFORM EMPLOYEE OF HIS RIGHT TO

COUNSEL
Question:
6. An employee was terminated for a just cause. However, records do not show that she was
informed of her right to be represented by counsel during the conference with her employer.
Hence, the employee raised this issue. However, the employer’s contention was that the right to
be informed of the right to counsel does not apply to investigations before administrative bodies
and that the law and jurisprudence merely give the employee the option to secure the services of
counsel in a hearing or conference.
Is the contention of the employer correct?
ANSWER: NO. Article 292(b), 277(b) of the Labor Code provides that the employer shall afford
the worker whose employment is sought to be terminated ample opportunity to be heard and to
defend himself with the assistance of his representatives if he so desires in accordance with
company rules and regulations pursuant to guidelines set by the DOLE, and the SC’s explicit
pronouncement that “ample opportunity” connotes every kind of assistance that the management
must accord the employee to enable him to prepare adequately for his defense including legal
representation. ( Punzal v. ETSI Technologies, Inc. G.R. Nos. 170384-85, March 9, 2007)
Nota bene: The Punzal ruling above no longer holds because a new pronouncement was made in
2011 in the case of Lopez vs. Alturaz Group of Companies.

Question:
7. An employee was hired by Alturas Group of Companies in as truck driver.  Ten years later, he
was dismissed after he was allegedly caught by company’s security guard in the act of
attempting to smuggle out of the company premises 60 kilos of scrap iron aboard company’s
Van that was then assigned to him.  When questioned, the employee allegedly admitted to the
security guard that he was taking out the scrap iron consisting of lift springs out of which he
would make axes.
The employee, in compliance with the Show Cause Notice issued by company’s Human
Resource Department Manager, denied the allegations by a handwritten explanation.
Finding the employee’s explanation unsatisfactory, the company terminated his employment by
Notice of Termination on the grounds of loss of trust and confidence, and of violation of
company rules and regulations.   In issuing the Notice, the company also took into account the
result of an investigation showing that the employee had been smuggling out its cartons which
he had sold, in conspiracy with another person, for his own benefit to thus prompt it to file a
criminal case for Qualified Theft against him before the Regional Trial Court.
Was there a violation of due process?
ANSWER: There is no violation of due process even if no hearing was conducted, where the
party was given a chance to explain his side of the controversy.  What is frowned upon is the
denial of the opportunity to be heard.
Petitioner was given the opportunity to explain his side when he was informed of the charge
against him and required to submit his written explanation with which he complied.  
The right to counsel and the assistance of one in investigations involving termination cases is
neither indispensable nor mandatory, except when the employee himself requests for one or that
he manifests that he wants a formal hearing on the charges against him. ( Lopez v. Alturas Group
of Companies G.R. No. 191008, April 11, 2011.)

2. CIVIL CODE PROVISIONS

1. RELEVANT PROVISIONS.

ARTICLE 1700 (The relations between capital and labor are not merely contractual)
Question:
1. Arlene was engaged by Fuji Television Network, Inc. as a news correspondent/producer. The
employment contract was initially for one year, but was successively renewed on a yearly basis
with salary adjustments upon every renewal.
Arlene was diagnosed with lung cancer. She informed Fuji about her condition, and the Chief of
News Agency of Fuji, Yoshiki Aoki, informed the former that the company had a problem with
renewing her contract considering her condition. Arlene insisted she was still fit to work as
certified by her attending physician.
After a series of verbal and written communications, Arlene and Fuji signed a non-
renewal contract. In consideration thereof, Arlene acknowledged the receipt of the
total amount of her salary, year-end bonus, mid-year bonus and separation pay. However,
Arlene executed the non-renewal contract under protest.
Arlene filed a complaint for illegal dismissal with the NCR Arbitration Branch of the NLRC,
alleging that she was forced to sign the non-renewal contract after Fuji came to know of her
illness. She also alleged that Fuji withheld her salaries and other benefits when she refused to
sign, and that she was left with no other recourse but to sign the non-renewal contract to get her
salaries
Will the case prosper?
ANSWER: YES. ART. 1700. The relations 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.
In contracts of employment, the employer and the employee are not on equal footing. Thus, it is
subject to regulatory review by the labor tribunals and courts of law. The law serves to equalize
the unequal. The labor force is a special class that is constitutionally protected because of the
inequality between capital and labor. This presupposes that the labor force is weak. However, the
level of protection to labor should vary from case to case; otherwise, the state might appear to be
too paternalistic in affording protection to labor. 

Question:
2. Estrella and Jocelyn were employed as formatters by Innodata Philippines, Inc. They worked
for a period of 1 year after which there contract was terminated. However, they believed that
their job was necessary and desirable to the usual business of the company which is data
processing/conversion and that their employment is regular pursuant to Article 280 of the Labor
Code, hence they filed a complaint for illegal dismissal and for damages as well as for attorney’s
fees against Innodata Phil’s., Incorporated.
Innodata contended that their employment contracts expired, having a fixed period of one (1)
year. Since the period expired, their employment was likewise terminated. Innodata claims that it
was constrained by the nature of its business to enter into fixed-term employment contracts with
employees assigned to job orders. It relies on the availability of job orders or undertakings from
its clients. Thus, the continuity of work cannot be ascertained.
Is the contention of the employer meritorious?

ANSWER: NO. Innodata’s contract of employment failed to comply with the standards set by
law and by this Court. “ A contract of employment is impressed with public interest. For this
reason, provisions of applicable statutes are deemed written into the contract. Hence, the “parties
are not at liberty to insulate themselves and their relationships from the impact of labor laws and
regulations by simply contracting with each other.” Moreover, in case of doubt, the terms of a
contract should be construed in favor of labor.” ( Innodata Knowledge Services, Inc. v. Inting,
G.R. No. 211892, Dec. 06, 2017.)

Question:
3. What are the kinds of labor contracts referred to in Article 1700?
ANSWER: Employment Contract and Collective Bargaining Agreement

ARTICLE 1701 ( Neither capital nor labor shall act oppressively against the other or
impair the interest or convenience of the public)

Question:
4. An employer allowed its employees to use its property for housing by virtue of their status as
its employees. This was out of liberality and for the convenience of its employees on the
condition that the employees would vacate the premises anytime the company deems fit.
Due to serious business losses, the employer’s operation had ceased. This circumstance was then
acknowledge by the employees and were required to sign a memorandum of agreement that their
separation pay and other benefits will be given only in the condition that they are going to vacate
the employer’s property offered to them before for housing.
However, the employees refused to sign the document and demanded that their separation pay
and other benefits shall not be withheld.
Is the withholding of the separation pay and other benefits valid pending settlement of
employees’ accountability- to vacate the employer’s property used by them for housing?

ANSWER: YES. Withholding of payment by the employer does not mean that the employer may
renege on its obligation to pay employees their wages, termination payments, and due benefits. 
The employees’ benefits are also not being reduced.  It is only subjected to the condition that the
employees return properties properly belonging to the employer.  This is only consistent with the
equitable principle that “no one shall be unjustly enriched or benefited at the expense of
another.”
For these reasons, we cannot hold that petitioners are entitled to interest of their withheld
separation benefits.  These benefits were properly withheld by respondent employer because of
their refusal to return its property. ( Milan v. NLRC, G.R. No. 202961, Feb. 4, 2015)