LABOR LAW OVERVIEW LECTURE

Atty. Manuel Rodriguez II

LABOR – both a noun and a verb
 Work , employment, industry, sweat of one’s brow, a job, a chore.

in the context of labor law, it means a work rendered by a person to another who pays for
services. This is the compensation aspect. – Employer employee relationship.

 Exertion of physical or mental effort. In exchange for remuneration.

 As a noun, it may refer to the work personnel. (Labor = employees)

Why study labor law?
- Eventually it is found exciting. Union leaders are passionate.
- As compared to other branches of law, labor is one of the most fluid. You will find out in
many cases, the court will harp on the principles of social justice and equity.
Basic Principles: BALANCING OF INTEREST
- When we talk about labor, we talk about the human element. Not machines.
- Particularly deals with the relationship between the two sides, employers and employees.
- The two have invariable have contradicting interests. Management always want profit;
employees are deprived of their share in the profits.

- The balancing of interest in found in cases. There should be a paradigm shift towards
cooperation. If the two sides will always see each other as adversary, it will not be good.

- There should be good relationship. Hence, the exhortation of the constitution and SC
cases on cooperation between the two interest.

- It is high time that the employer and employee to cease view each other as adversaries,
and recognize the need for symbiotic relationship for the success of the business. (Toyota
motors case.)

EMPLOYEMENT is not merely a contractual relationship, it has an element of property

right. Being with or without work, may practically spell the difference whether a family have
something to eat or have a roof in their heads.
State had made sure to undertake measure to protect labor from unjustified dismissal. You
will see the balancing of interest when you see the State to step in. (Social Justice)

“Take not from the mouth of the labor, the bread it has earned.”
 Tension of the Opposites…Balancing of Interest
Employer – put in the capital. (money, property, equipment)
o The use of such capital is his prerogative. (Management Prerogative)
- the “how” in operating of business.
o Because I want to earn. I am allowed to operate the way I want to earn profit.
o My discretion on who to hire and who to fire. And everything in between.
- Work schedules, manner, means, tools to be used, processes, discipline and penalize.

Employees – they only have their labor. (not money to chip in, otherwise it is partnership)
 Once hired, you are already economically dependent to the employer. This
is the general scenario.
 Essence of inherent inequality of management and employee at the
time of hiring.
The law recognizes the inequality. The law now tries to balance the interest,
police power to achieve police power. The State now steps in.
 The State implements legislation to protect the workers and
employers. Intervention through labor standards and labor
relations.
 Minimum wages. Before there was none, the State made the law.
 8- Hour working day.
 Overtime, leaves, etc.
o These are the Labor Standards.

Labor laws that relate to political rights of the employees.

 The right to unionize. To vote the representation.
 The minimum requirement is the labor code. To improve, collective
bargaining is needed.
 Security of tenure. (cannot be terminated without due process)
Summary on this point: The dynamics must respond to the realities of life. Not all rules are
inflexible. We must use of the basic principles of social justice and equity and the interests of
both employers and employees must be balances.

The framework of labor law.

Management puts in the money, the law recognizes their right to earn money. They have the
right to tweak the variables in order to earn profits.
  Who to hire.
 Nature of hiring. (contractual?)
 How much pay.
 Etc.
Laborer do not have anything except their work. They want equitable share in the profits,
because they were not ordered to perform the task, there will be no profit.
How the law balance these? Through labor laws. Once employed, the labor code steps in the
employer employee relationship.

Employment “contract” is NOT necessary for the labor code to be effective.

OVERVIEW PRINCIPLES OF LABOR LAW

In life as well as in law, know the rules. So you can calibrate your answer.
Article 3 of Labor Code is the basic framework of labor law. The imprimatur given to labor
tribunals to rule for labor in cases of doubt.
1. The existence of employer – employee relationship is a must in application of labor laws.
a. Absence the relationship, some other law may apply, but not labor law.
2. Automatic incorporation – once employee is hired. Labor code automatically steps in on
the contract. Minimum standards are considered inherent in the contract.
3. Once employer – employee relationship in existing, the burden of proof is with the
management with regard to the exercise of management prerogative. Especially in firing
employee.
4. As regards number 3, only substantial evidence is required.
5. There is no retroactive effect of labor laws. Except when explicitly mentioned in the law.
6. In case of doubt or ambiguity, interpret in favor of labor.
a. If there is no ambiguity, no need to make an interpretation.

Employer – Employee Relationship

How to know if the person is employed? (SWDC)
The four-fold test:
1. Selection and hiring (right to hire)
2. Wages
3. Dismissal
4. The Control Test
a. Most important. Supreme Court has made us of the definition in the case of LVN
Pictures case. (“how” to do the work)
(LVN PICTURES v. PHILIPPINE MUSICIANS GUILD, GR Nos. L-12582 and L-
12598, 1961-01-28)
Facts: The Philippine Musicians Guild (FFW), hereafter referred to as the Guild, averred
that it is a duly registered legitimate labor organization; that LVN Pictures, Inc.,
Sampaguita Pictures, Inc., and Premiere Productions, Inc. are... corporations, duly
organized under the Philippine laws, engaged in the making of motion pictures and in the
processing and distribution thereof; that said companies employ musicians for the
purpose of making music recordings for title music, background music, musical
numbers,... finale music and other incidental music, without which a motion picture is
incomplete; that ninety-five (95%) percent of all the musicians playing for the musical
recording of said companies are members of the Guild; and that the same has no
knowledge of the existence of any... other legitimate labor organization representing
musicians in said companies. Premised upon these allegations, the Guild prayed that it be
certified as the sole and exclusive bargaining agency for all musicians working in the
aforementioned companies.
In their respective answers, the latter denied that they have any musicians as employees,
and alleged that the musical numbers in the films of the companies are furnished by
independent contractors. The lower court, however, rejected this pretense and sustained
the theory of... the Guild, with the result already adverted to. A reconsideration of the
order complained of having been denied by the Court en banc, LVN Pictures, Inc. and
Sampaguita Pictures, Inc. filed these petitions for review by certiorari.
Issues: The real issue in these cases, is whether or not the musicians in question are
employees of the film companies.
Ruling: We are thus called upon to apply R. A. Act No. 875, which is substantially the
same as and patterned after the Wagner Act and the Taft-Hartley Law of the United
States. Hence, reference to decisions of American Courts on these laws on the point-at-
issue is called for.
"The work of the musical director and musicians is a functional and integral part of the
enterprise performed at the same studio substantially under the direction and control of
the company.
In other words, to determine whether a person who performs work for another is the
latter's employee or an independent contractor, the National Labor Relations Board relies
on "the right of control' test. Under this test an employer-employee relationship exists
where the... person for whom the services, are performed reserves the right to control
not only the end to be achieved, but also the manner and means to be used in
reaching the end.
The right of control of the film company over the musicians is shown (1) by calling the
musicians through 'call slips' in the name of the company; (2) by arranging schedules in
its studio for recording sessions; (3) by furnishing transportation and meals to musicians;
and (4) by supervising and directing in detail, through the motion picture director, the
performance of the musicians before the camera, in order to suit the music they are
playing to the picture which is being flashed on the screen.
 The musical directors above referred to have no such control over the musicians involved
in the present case. Said musical directors control neither the music to be played, nor the
musicians playing it. The film... companies summon the musicians to work, through the
musical directors. The film companies, through the musical directors, fix the date, the
time and the place of work. The film companies, not the musical directors, provide the
transportation to and from the studio. The film... companies furnish meal at dinner time.
The decisive nature of said control over the "means to be used"... in which, by reason of
said control, the... employer-employee relationship was held to exist between the
management and the workers, notwithstanding the intervention of an alleged independent
contractor, who had, and exercised, the power to hire and fire said workers.

“Control” – if I can control the manner you do the work. There is employer – employee
relationship.

Control is the most important. How do we determine control?

- Most of the time there are rules employees have to follow. (time, uniform, I.D wearing,
etc.) How do we know if the rule determine control?
o Rules that fix methodology or merely guidelines.
o Methodology - how, when, where, what, why…. This is control. The law now
says there is employer – employee relationship. Employer dictate the manner how
you will work, and is not obliged to follow the labor code.
o Guidelines – parameters in which you can do the work. This is not control,
“employer” only needs output, no employer – employee relationship.
Independent Contracting v. Employer-Employee.

Burden of Proof is placed upon employer. (employer burden legality)

Employee has burden of proof that he is employee. (hiring/firing/relationship)

Substantial evidence shall be required. Administrative and Quasi-Judicial.

- Alilem Credit Cooperative v. Bandiola (2013)
o Sworn statement of people (extramarital affair) – enough to terminate an
employee?
 Affidavits of wife (complainant), friends of wife, etc.
 Unchallenged by the complained employee.
Is the evidence sufficient? Substantial evidence? SC: YES!
No retroactive effect of labor laws.
- Bayanihan Law (1M peso to anyone who died due to Covid) – retroactive because it is
stated in the law. (from ECQ declaration)

Doubt or ambiguity. - interpret in favor of labor. Only in cases of doubt.

“if you die in the line of duty, you are entitled to 50k”
“if you die not in the line of duty, 40k”
“if somebody in your family (legal dependent) dies, 15k”
Employee’s parents died. He lives with his parents. He incurred a lot of hospitalization fees. He
is claiming in the HR department 15k.

HR refuses. Because Parent is not legal dependent because you are married already.
Union says, hey it only said “legal dependent.” HR said, we assume the definition of SSS.
Spouse and children only!?
SC: The Union and employee are correct! Rules do not make referral to the SSS in the first
place. If the CBA provision is silent, the term “legal dependent” should be construed as a social
legislation. Entitled to money claim. Defined in most contemporaneous manner as legislators
would do.

Employer – Employee Relationship

- Not defined in the first part of the labor code, it will only appear in Book V.
- Employer is defined any person acting directly or indirectly in the interest of the
employer.
o IRR – better definition
o Book V rule 1 sec 1 (s) – Employer is any person who hires or employs the
services of other and who pays for the wages of the people.

 Employee – is any person who is hired by an employer who is

hired for remuneration. And it shall not be limited to the
employees of a particular employer except when the code says so.
 It includes one whose work has ceased in connection with any
labor dispute or unfair labor practice. Even dismissed, he
questioned the legality of the dismissal in the NLRC.
 Example:
Restaurant Employee earning minimum wage. He chose to moonlight
to competitor restaurant. Manager found out about it, he investigated
employee and terminated for violation of non-compete clause.

Employee filed a case in NLRC alleging illegal termination.

Restaurant said, employee cannot file NLRC because he is no longer
my employee.
WRONG! Employee includes individual even work has ceased
because of labor dispute.

- This is the basis of full back wages in case the NLRC found out that you are illegally
terminated. Also, you can still vote.

Why do you need to know who are your employees?

o So you know who among your people is entitled to labor code rights. It is possible
that they are not your employees, but of a contractor.

Independent Contracting / Job Contracting

- Bilateral Job Contracting Arrangement – company / worker
- Trilateral Job Contracting Arrangement – company / manpower agency / employee

In both arrangements, remember employer must not have any control whatsoever over
the manner or method the agency will do the job. In short, results oriented.

If this is the arrangement, this is arguably a job contracting.

Basic premises in a valid job contracting:

 Not everybody that works in my company is my employee.
 My right to contract out, and the agencies right to supply workers is based on free will.
 There must be a trilateral relationship. (Employer – Agency – Employees of Agency)
 The vinculum of the relationship between employer and agency is a civil contract
(services)
o Employer is giving merely guidelines.
 The vinculum of the relationship between agency and employees (e.g. guards), that is an
employer-employee relationship. Between the agency as actual employer, a labor contract
and govern by the labor code.
 The agency is expert in the particular field (e.g. security), employer relinquishes control
on manner and method on how it should be done. That is why employer hired an agency.
o Know if the agency is a valid contractor (D.O. 174) – elements of independent
contracting.
o (I – ARM - Free – Capital – TEMWORK – R&B)
 Independent business
 On his own Account
 Under his own Responsibility
 Using his own Means and Methods
 Free – from the control of the principal except as to the results

 Sufficient CAPITAL in the form of TEMWORK

 Tools
 Equipment
 Machinery
 Work premises

 In the contract between the principal and contractor, there must be a

provision that recognizes the (R&B) rights and benefits of employees.

 Labor Code makes the company solidarily liable in case agency cannot pay benefit of
employees. This is peculiar to the Labor Contract nature between employees and agency.

So what is this ENDO?

- Labor-only contracting. This is prohibited under existing labor policy.
- Proving labor-only contracting: (No Cap +Direct)
o No Capitalization
o Directly related
Principal dictates the manner and method in which they do the work. Controlling the
work. Company will be made liable under the labor code (claims, sss, philhealth,
paternity and maternity leave, right to self-organization, etc.)

The contractor is considered merely as agent. As if company directly hires

employees.
MANAGEMENT PREROGATIVE
- My decision to contract out, is part of my management prerogative.
- There are limitations. 3 elements of valid exercise of Management Prerogative:
o Done in good faith
o Furtherance of the valid interest of management
o Not purposely to circumvent the rights of my employees
(San Miguel Brewery cases)