SYLLABUS FOR THE 2023 BAR EXAMINATIONS

LABOR LAW AND SOCIAL LEGISLATION (10%)

Notes by: Atty. Edwin E. Torres (MSU 2022)un

NOTE: All Bar candidates should be guided that only laws, rules, issuances, and
jurisprudence pertinent to the topics in this syllabus as of June 30, 2022 are examinable
materials within the coverage of the 2023 Bar Examinations.

I. FUNDAMENTAL PRINCIPLES AND CONCEPTS

A. LEGAL BASIS

1. 1987 CONSTITUTION (Article XIII):

SECTION 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 on investments, and to
expansion and growth.

2. CIVIL CODE

CONTRACT OF LABOR

ARTICLE 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.

Generally, contracts are the law between the parties. However, they will not prevail when they
are contrary to public policy on labor. Provisions of applicable law, especially provisions relating
to matters affected with public policy, are deemed written into the contract. Put a little
differently, the governing principle is that the parties may not contract away applicable
provisions of law especially peremptory provisions dealing with matters heavily impressed with
public interest. The law relating to labor and employment is clearly such an area and 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.1

While the terms and conditions of a CBA constitute the law between the parties, it is not,
however, an ordinary contract to which is applied the principles of law governing ordinary
contracts. A CBA, as a labor contract within the contemplation of Article 1700 of the Civil Code
of the Philippines which governs the relations between labor and capital, is not merely
contractual in nature but impressed with public interest, thus, it must yield to the common
good. As such, it must be construed liberally rather than narrowly and technically, and the
1
Servidad s, NLRC, et al. (G.R. No. 128682, 18 March 1999).

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courts must place a practical and realistic construction upon it, giving due consideration to the
context in which it is negotiated and purpose which it is intended to serve. 2

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.3

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

The "right" of the employer to dismiss an employee should not be confused with the manner in
which the right was exercised and the effects flowing therefrom. If the dismissal was done anti-
socially or oppressively, then the employer violated article 1701 of the Civil Code which prohibits
acts of oppression by either capital or labor against the other, and article 21, which makes a
person liable for damages if he wilfully causes loss or injury to another in a manner that is
contrary to morals good customs or public policy, the sanction for which, by way of moral
damages, is provided in article 2219, No. 10. The case is intrinsically concerned with a civil (not
a labor) dispute, it has to do with an alleged violation of the employee's rights as a member of
society, and does not involve an existing employee-employer relation within the meaning of
section 2(l) of Presidential Decree No. 21. The complaint is thus properly and exclusively
cognizable by the regular courts of justice, not by the National Labor Relations Commission. 4

ARTICLE 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.

Article 4 of the Labor Code is explicit that "all doubts in the implementation and interpretation
of the provisions of the Labor Code, including its implementing rules and regulations, shall be
resolved in favor of labor." This liberal interpretation of labor laws and rules have been applied
to employment contracts by Article 1702 of the New Civil Code which mandates that ''all labor
contracts" shall likewise be construed in favor of the laborer. 5

ARTICLE 1703. No contract which practically amounts to involuntary

servitude, under any guise whatsoever, shall be valid.

RA 10364 (“Expanded Anti-Trafficking in Persons Act of 2012”) defines “involuntary servitude” as

follows:

"(f) Involuntary Servitude  – refers to a condition of enforced and compulsory

service induced by means of any scheme, plan or pattern, intended to cause a
person to believe that if he or she did not enter into or continue in such
condition, he or she or another person would suffer serious harm or other forms
of abuse or physical restraint, or threat of abuse or harm, or coercion including
depriving access to travel documents and withholding salaries, or the abuse or
threatened abuse of the legal process.”

ARTICLE 1704. In collective bargaining, the labor union or members of the

board or committee signing the contract shall be liable for non-fulfillment
thereof.

ARTICLE 1705. The laborer’s wages shall be paid in legal currency.

“Article 102. Forms of payment. No employer shall pay the wages of an

employee by means of promissory notes, vouchers, coupons, tokens, tickets,
chits, or any object other than legal tender, even when expressly requested
by the employee.

2
Davao Integrated Port Stevedoring Services vs. Abarquez and ATU-TUCP (G.R. No. 102132, 19 March 1993).
3
Innodata Philippines, Inc. vs. Quejada-Lopez and Natividad-Pascual (G.R. No. 162839, 12 October 2006).
4
Quisaba vs. Sta. Ines-Melale Veneer & Plywood, Inc., et al. (G.R. No. L-38088, 30 August 1974).
5
Leoncio vs. MST Marine Services (Phils.) Inc., et al. (G.R. No. 230357, 6 December 2017).

2
 Payment of wages by check or money order shall be allowed when such
manner of payment is customary on the date of effectivity of this Code, or is
necessary because of special circumstances as specified in appropriate
regulations to be issued by the Secretary of Labor and Employment or as
stipulated in a collective bargaining agreement.” (Labor Code)

ARTICLE 1706. Withholding of the wages, except for a debt due, shall not
be made by the employer.

"ART. 116. Withholding of wages and kickbacks prohibited. – It shall be unlawful

for any person, directly or indirectly, to withhold any amount from the wages
(and benefits) of a worker or induce him to give up any part of his wages by force,
stealth, intimidation, threat or by any other means whatsoever without the worker’s
consent." (Labor Code)

The above provision is clear and needs no further elucidation. An employer has no legal authority to
withhold his employees’ 13th month pay and other benefits. What an employee has worked for, his
employer must pay. Thus, an employer cannot simply refuse to pay the wages or benefits of its
employee because he has either defaulted in paying a loan guaranteed by his employer; or violated
their memorandum of agreement; or failed to render an accounting of his employer’s property. 6

ARTICLE 1707. The laborer’s wages shall be a lien on the goods

manufactured or the work done.

The lien referred to is on the goods manufactured or work done. Article 1707 of
the new Civil Code seems to contemplate chattels and not immovable property.
Furthermore, where there is a contractor the first article invoked does not seem
to apply, because article 1729 provides: "Those who put their labor upon or
furnish materials for a piece of work undertaken by the contractor have an
action against the owner up to the amount owing from the latter to the
contractor at the time the claim is made.”7

ARTICLE 1708. The laborer’s wages shall not be subject to execution or

attachment, except for debts incurred for food, shelter, clothing and
medical attendance.

A "laborer" is one who performs menial or manual services and usually looks to the reward of a
day's labor or services for immediate or present support. “Laborer" is a term ordinarily employed
to denote one who subsists by physical toil in contradistinction to those who subsists by
professional skill. “Laborers" are those persons who earn a livelihood by their own manual
labor. Hence, Article 1708 does not protect traveling salesmen, contractors, consulting or
assistant engineers, agents, superintendents, secretaries of corporations, etc. Furthermore,
Article 1708 used the word "wages" and not "salary" in relation to "laborer" when it declared
what are to be exempted from attachment and execution. The term "wages" as distinguished
from "salary", applies to the compensation for manual labor, skilled or unskilled, paid at stated
times, and measured by the day, week, month, or season, while "salary" denotes a higher degree
of employment, or a superior grade of services, and implies a position of office: by contrast, the
term wages " indicates considerable pay for a lower and less responsible character of
employment, while "salary" is suggestive of a larger and more important service. 8

The rule in Gaa v. Court of Appeals is that the exemption under Article 1708 26 of the Civil
Code favors only laboring men or women whose work is manual. Belonging to this class are
the workers who usually look to the reward of a day’s labor for immediate or present
support. They, more than any other persons, are the ones in need of the exemption which,
needless to say, does not encompass any and all workers. 9

ARTICLE 1709. The employer shall neither seize nor retain any tool or
other articles belonging to the laborer.

6
Special Steel Products Inc. vs. Villareal and So (G.R. No. 143304, 8 July 2004).
7
Bautista and 155 Others vs. The Auditor General (G.R. No. L-6799, 29 June 1955).
8
Gaa vs. CA, et al. (G.R. No. L-44169, 3 December 1985).
9
Spouses Balanoba and Madriaga vs. Madriaga (G.R. No. 160109, 22 November 2005).

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 ARTICLE 1710. Dismissal of laborers shall be subject to the supervision of
the Government, under special laws.

ARTICLE 1711. Owners of enterprises and other employers are obliged to

pay compensation for the death of or injuries to their laborers, workmen,
mechanics or other employees, even though the event may have been
purely accidental or entirely due to a fortuitous cause, if the death or
personal injury arose out of and in the course of the employment. The
employer is also liable for compensation if the employee contracts any
illness or disease caused by such employment or as the result of the nature
of the employment. If the mishap was due to the employee’s own notorious
negligence, or voluntary act, or drunkenness, the employer shall not be
liable for compensation. When the employee’s lack of due care contributed
to his death or injury, the compensation shall be equitably reduced.

1. 1. The employer shall be liable for the death or personal injury of its employees in
the course of employment as sanctioned by Article 1711 of the New Civil Code. The liability of
the employer for death or personal injury of his employees arose from the contract of
employment entered into between the employer and his employee which is likewise imbued with
public interest. Accordingly, when the employee died or was injured in the occasion of
employment, the obligation of the employer for indemnity, automatically attaches. The
indemnity may partake of the form of actual, moral, nominal, temperate, liquidated or exemplary
damages, as the case may be depending on the factual milieu of the case and considering the
criterion for the award of these damages as outlined by our jurisprudence. When the cause of
death is a fortuitous event for which the employer cannot be faulted, only the award of actual
damages, specifically the award for unearned income is warranted by the circumstances. The
formula for the computation of unearned income is:

Net Earning Capacity = life expectancy x (gross annual income - reasonable and
necessary living expenses).

Life expectancy is determined in accordance with the formula:

2 / 3 x [80 – age of deceased at the time of death]

Jurisprudence provides that the first factor, i.e., life expectancy, shall be computed by applying
the formula (2/3 x [80 - age at death]) adopted in the American Expectancy Table of Mortality or
the Actuarial of Combined Experience Table of Mortality. In the computation of the second
factor, it is computed by multiplying the life expectancy by the net earnings of the deceased,  i.e.,
the total earnings less expenses necessary in the creation of such earnings or income and less
living and other incidental expenses.  The loss is not equivalent to the entire earnings of the
deceased, but only such portion that he would have used to support his dependents or heirs.
Hence, we deduct from his gross earnings the necessary expenses supposed to be used by the
deceased for his own needs.10

2. An employee may also be compensated under the Workmen’s Compensations Act. Article
194 of the Labor Code states:

“ART. 194. DEATH. – (a) Under such regulations as the Commission may
approve, the System shall pay to the primary beneficiaries upon the death of
the covered employee under this Title an amount equivalent to his monthly
income benefit, plus ten percent thereof for each dependent child, but not
exceeding five, beginning with the youngest and without substitution, except
as provided for in paragraph (j) of Article 167 hereof; Provided, however, That
the monthly income benefit shall be guaranteed for five years: Provided,
further, That if he has no primary beneficiary, the System shall pay to his
secondary beneficiaries the monthly income benefit not to exceed sixty
months; Provided, finally, That the minimum monthly death benefit shall not
be less that fifteen thousand pesos.”

The rationale in awarding compensation under the Workmen’s Compensation Act differs from
that in giving damages under the Civil Code. The compensation acts are based on a theory of
compensation distinct from the existing theories of damages, payments under the acts being
made as compensation and not as damages. Compensation is given to mitigate harshness and
10
Candano Shipping Lines, Inc. vs. Sugata-on (G.R. No. 163212, 13 March 2007).

4
insecurity of industrial life for the workman and his family. Hence, an employer is liable
whether negligence exists or not since liability is created by law. Recovery under the Act is not
based on any theory of actionable wrong on the part of the employer. In other words, under
compensation acts, the employer is liable to pay compensation benefits for loss of income, as
long as the death, sickness or injury is work-connected or work-aggravated, even if the death or
injury is not due to the fault of the employer (Murillo v. Mendoza, 66 Phil. 689). On the other
hand, damages are awarded to one as a vindication of the wrongful invasion of his rights. It is
the indemnity recoverable by a person who has sustained injury either in his person, property or
relative rights, through the act or default of another. Save for the recognized exception, an
employee cannot pursue both remedies simultaneously but has the option to proceed by
interposing one remedy and waiving his right over the other.11

ARTICLE 1712. If the death or injury is due to the negligence of a fellow

worker, the latter and the employer shall be solidarily liable for
compensation. If a fellow worker’s intentional or malicious act is the only
cause of the death or injury, the employer shall not be answerable, unless
it should be shown that the latter did not exercise due diligence in the
selection or supervision of the plaintiff’s fellow worker.

The liability of the partners in a partnership is not solidary; but the law governing the liability of
partners is not applicable to the case wherein a claim for compensation by dependents of an
employee who died in line of duty is involved. The provisions of Article 1711 and 1712
reasonably indicate that in compensation cases, the liability of business partners should be
solidary; otherwise, the right of the employee may be defeated, or at least crippled. 12

CONTRACT FOR A PIECE OF WORK

ARTICLE 1713. By the contract for a piece of work the contractor binds
himself to execute a piece of work for the employer, in consideration of a
certain price or compensation. The contractor may either employ only his
labor or skill, or also furnish the material. (1588a)

Article 1713 covers independent contractors, not employees. The latter is paid for the labor he
performs, that is, for the acts of which such labor consists; the former is paid for the result
thereof. Manresa explained:

“. . . the difference between the lease of work by contract or for a fixed price and
the lease of services of hired servants or laborers is sufficiently clear. In the
latter, the direct object of the contract is the lessor's labor; the acts in which
such labor consists, performed for the benefit of the lessee, are taken into
account immediately. In work done by contract or for a fixed price, the lessor's
labor is indeed an important, a most important factor; but it is not the direct
object of the contract, nor is it immediately taken into account. The object
which the parties consider, which they bear in mind in order to determine the
cause of the contract, and upon which they really give their consent, is not the
labor but its result, the complete and finished work, the aggregate of the
lessor's acts embodied in something material, which is the useful object of the
contract. . . . (Manresa Commentarios al Codigo Civil, Vol. X, ed., pp. 774-
775.)”13

A contract for a piece of work, labor and materials may be distinguished from a contract of sale
by the inquiry as to whether the thing transferred is one not in existence and which would never
have existed but for the order, of the person desiring it. In such case, the contract is one for a
piece of work, not a sale. On the other hand, if the thing subject of the contract would have
existed and been the subject of a sale to some other person even if the order had not been given,
then the contract is one of sale. Thus, Mr. Justice Vitug explains that -

“A contract for the delivery at a certain price of an article which the vendor in the
ordinary course of his business manufactures or procures for the general market,
whether the same is on hand at the time or not is a contract of sale, but if the goods are
to be manufactured specially for the customer and upon his special order, and not for the
general market, it is a contract for a piece of work (Art. 1467, Civil Code). x x x.”
11
Ibid.
12
Liwanag and Reyes vs. Workmen’s Compensation Commission, et al. (G.R. No. L-12164, 22 May 1959).
13
Investment Planning Corporatiuon of the Philippines vs. SSS (G.R. No. L-19124, 18 November 1967).

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To Tolentino, the distinction between the two contracts depends on the intention of the parties.
Thus, if the parties intended that at some future date an object has to be delivered, without
considering the work or labor of the party bound to deliver, the contract is one of sale. But if
one of the parties accepts the undertaking on the basis of some plan, taking into account the
work he will employ personally or through another, there is a contract for a piece of work.
Hence, in a case, the contract was deemed to be for a piece of work. It is not petitioner's line of
business to manufacture air-conditioning systems to be sold "off-the-shelf." Its business and
particular field of expertise is the fabrication and installation of such systems as ordered by
customers and in accordance with the particular plans and specifications provided by the
customers. Naturally, the price or compensation for the system manufactured and installed will
depend greatly on the particular plans and specifications agreed upon with the customers. 14

ARTICLE 1714. If the contractor agrees to produce the work from material
furnished by him, he shall deliver the thing produced to the employer and
transfer dominion over the thing. This contract shall be governed by the
following articles as well as by the pertinent provisions on warranty of title
and against hidden defects and the payment of price in a contract of sale.
(n)

The provisions on warranty against hidden defects referred to in Article 1714 is found in Article
1561 which read as follows:

“Art. 1561. The vendor shall be responsible for warranty against the hidden defects which
the thing sold may have, should they render it unfit for the use for which it is intended,
or should they diminish its fitness for such use to such an extent that, had the vendee
been aware thereof, he would not have acquired it or would have given a lower price for
it; but said vendor shall not be answerable for patent defects or those which may be
visible, or for those which are not visible if the vendee is an expert who, by reason of his
trade or profession, should have known them.”

The remedy against violations of the warranty against hidden defects is either to withdraw from
the contract (redhibitory action) or to demand a proportionate reduction of the price (accion
quanti manoris), with damages in either case.15

ARTICLE 1715. The contractor shall execute the work in such a manner
that it has the qualities agreed upon and has no defects which destroy or
lessen its value or fitness for its ordinary or stipulated use. Should the
work be not of such quality, the employer may require that the contractor
remove the defect or execute another work. If the contractor fails or
refuses to comply with this obligation, the employer may have the defect
removed or another work executed, at the contractor’s cost. (n)

Under Article 1715 of the Civil Code, if the work of a contractor has defects which destroy or
lessen its value or fitness for its ordinary or stipulated use, he may be required to remove the
defect or execute another work. If he fails to do so, he shall be liable for the expenses by the
employer for the correction of the work. The demand required of the employer under the subject
provision need not be in a particular form.16

ARTICLE 1716. An agreement waiving or limiting the contractor’s liability

for any defect in the work is void if the contractor acted fraudulently. (n)

ARTICLE 1717. If the contractor bound himself to furnish the material, he

shall suffer the loss if the work should be destroyed before its delivery,
save when there has been delay in receiving it. (1589)

ARTICLE 1718. The contractor who has undertaken to put only his work or
skill, cannot claim any compensation if the work should be destroyed
before its delivery, unless there has been delay in receiving it, or if the
destruction was caused by the poor quality of the material, provided this
fact was communicated in due time to the owner. If the material is lost
through a fortuitous event, the contract is extinguished. (1590a)

14
Engineering & Machinery Corporation vs. CA and Almeda (G.R. No. 52267, 24 January 1994).
15
Ibid.
16
Mackay vs. Spouses Caswell (G.R. No. 183872, 17 November 2014).

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ARTICLE 1719. Acceptance of the work by the employer relieves the
contractor of liability for any defect in the work, unless:

(1) The defect is hidden and the employer is not, by his special
knowledge, expected to recognize the same; or

(2) The employer expressly reserves his rights against the

contractor by reason of the defect. (n)

ARTICLE 1720. The price or compensation shall be paid at the time and
place of delivery of the work, unless there is a stipulation to the contrary.
If the work is to be delivered partially, the price or compensation for each
part having been fixed, the sum shall be paid at the time and place of
delivery, in the absence of stipulation. (n)

ARTICLE 1721. If, in the execution of the work, an act of the employer is
required, and he incurs in delay or fails to perform the act, the contractor
is entitled to a reasonable compensation.

The amount of the compensation is computed, on the one hand, by the

duration of the delay and the amount of the compensation stipulated, and
on the other hand, by what the contractor has saved in expenses by reason
of the delay, or is able to earn by a different employment of his time and
industry. (n)

ARTICLE 1722. If the work cannot be completed on account of a defect in

the material furnished by the employer, or because of orders from the
employer, without any fault on the part of the contractor, the latter has a
right to an equitable part of the compensation proportionally to the work
done, and reimbursement for proper expenses made. (n)

ARTICLE 1723. The engineer or architect who drew up the plans and
specifications for a building is liable for damages if within fifteen years
from the completion of the structure, the same should collapse by reason
of a defect in those plans and specifications, or due to the defects in the
ground. The contractor is likewise responsible for the damages if the
edifice falls, within the same period, on account of defects in the
construction or the use of materials of inferior quality furnished by him, or
due to any violation of the terms of the contract. If the engineer or
architect supervises the construction, he shall be solidarily liable with the
contractor.

Acceptance of the building, after completion, does not imply waiver of any
of the causes of action by reason of any defect mentioned in the preceding
paragraph.

The action must be brought within ten years following the collapse of the
building. (n)

ARTICLE 1724. The contractor who undertakes to build a structure or any

other work for a stipulated price, in conformity with plans and
specifications agreed upon with the land-owner, can neither withdraw from
the contract nor demand an increase in the price on account of the higher
cost of labor or materials, save when there has been a change in the plans
and specifications, provided: EaEmmw

(1) Such change has been authorized by the proprietor in writing; and

(2) The additional price to be paid to the contractor has been determined in
writing by both parties. (1593a)

ARTICLE 1725. The owner may withdraw at will from the construction of
the work, although it may have been commenced, indemnifying the

7
 contractor for all the latter’s expenses, work, and the usefulness which the
owner may obtain therefrom, and damages. (1594a)

ARTICLE 1726. When a piece of work has been entrusted to a person by

reason of his personal qualifications, the contract is rescinded upon his
death.

In this case the proprietor shall pay the heirs of the contractor in
proportion to the price agreed upon, the value of the part of the work done,
and of the materials prepared, provided the latter yield him some benefit.

The same rule shall apply if the contractor cannot finish the work due to
circumstances beyond his control. (1595)

ARTICLE 1727. The contractor is responsible for the work done by persons
employed by him. (1596)

ARTICLE 1728. The contractor is liable for all the claims of laborers and
others employed by him, and of third persons for death or physical injuries
during the construction. (n)

ARTICLE 1729. Those who put their labor upon or furnish materials for a
piece of work undertaken by the contractor have an action against the
owner up to the amount owing from the latter to the contractor at the time
the claim is made. However, the following shall not prejudice the laborers,
employees and furnishers of materials:

(1) Payments made by the owner to the contractor before they are
due;

(2) Renunciation by the contractor of any amount due him from

the owner.

This article is subject to the provisions of special laws. (1597a)

ARTICLE 1730. If it is agreed that the work shall be accomplished to the

satisfaction of the proprietor, it is understood that in case of disagreement
the question shall be subject to expert judgment.

If the work is subject to the approval of a third person, his decision shall be
final, except in case of fraud or manifest error. (1598a)

ARTICLE 1731. He who has executed work upon a movable has a right to
retain it by way of pledge until he is paid. (1600)

3. LABOR CODE

B. STATE POLICY TOWARDS LABOR

1. SECURITY OF TENURE

2. SOCIAL JUSTICE

3. EQUAL WORK OPPORTUNITIES

4. RIGHT TO SELF-ORGANIZATION AND COLLECTIVE BARGAINING

5. CONSTRUCTION IN FAVOR OF LABOR

6. BURDEN OF PROOF AND QUANTUM OF EVIDENCE