Who are not covered by the Labor Code?

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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

 

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AT A GLANCE

• “All rights and benefits granted to workers under the Labor Code shall, except as may otherwise be provided herein, apply alike to all workers, whether agricultural or non-agricultural, including employees in a government corporation incorporated under the Corporation Code.” (Article 6, Labor Code of the Philippines)
• The following persons and entities are NOT COVERED by the Labor Code:
  1. Corporate officers involved in intra-corporate disputes;
  2. Employees of government agencies, including government-owned and controlled corporation with a special or original charter;
  3. Employees of local water districts; and
  4. Employees of foreign governments, intergovernmental or international agencies and organizations.
  
  

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In addressing the query “Who are not covered by the Labor Code?”, it is imperative that we first know who are covered.

The Labor Code mandates that all rights and benefits shall apply to all workers, except as otherwise excluded therein.

 

The law says:

“All rights and benefits granted to workers under the Labor Code shall, except as may otherwise be provided herein, apply alike to all workers, whether agricultural or non-agricultural, including employees in a government corporation incorporated under the Corporation Code.” (Article 6, Labor Code of the Philippines)

 

Who are not covered by the Labor Code?

The following persons and entities are NOT COVERED by the Labor Code:

1. Corporate officers involved in intra-corporate disputes;
2. Employees of government agencies, including government-owned and controlled corporation with a special or original charter;
3. Employees of local water districts; and
4. Employees of foreign governments, intergovernmental or international agencies and organizations.

 

Corporate officers

Corporate officers involved in intra-corporate disputes under P.D. No. 902-A or the SEC Reorganization Act or those that fall under the jurisdiction of the regular courts in accordance with the Securities Regulations Code (SRC) are not covered by the Labor Code. As such, they are governed by the Securities Regulations Code (SRC).

Jurisprudence says:

“As petitioner’s appointment as comptroller required the approval and formal action of the IBC’s Board of Directors to become valid, it is clear therefore holds that petitioner is a corporate officer whose dismissal may be the subject of a controversy cognizable by the SEC under Section 5(c) of P.D. 902-A which includes controversies involving both election and appointment of corporate directors, trustees, officers, and managers. Had petitioner been an ordinary employee, such board action would not have been required.” (Nacpil v. International Broadcasting Corporation, G.R. No. 144767, March 21, 2002)

 

Employees of government agencies including GOCCs with special or original charter

Employees of government agencies including GOCCs created by special or original charters are not covered by the Labor Code. Such employees are governed by the Civil Service.

The law says:

“SECTION 2. (1) The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters.

(2) Appointments in the civil service shall be made only according to merit and fitness to be determined, as far as practicable, and, except to positions which are policy-determining, primarily confidential, or highly technical, by competitive examination.

(3) No officer or employee of the civil service shall be removed or suspended except for cause provided by law.

(4) No officer or employee in the civil service shall engage, directly or indirectly, in any electioneering or partisan political campaign.

(5) The right to self-organization shall not be denied to government employees.

(6) Temporary employees of the Government shall be given such protection as may be provided by law. (Section 2, Article IX-B, 1987 Constitution)

 

In the case of Benjamin Juco v. NLRC (G.R. No. 98017, August 18, 1997), the Supreme Court ruled that the Civil Service covers government-owned or controlled corporations with original charters.

Jurisprudence says:

“Thus, the NLRC erred in dismissing petitioner’s complaint for lack of jurisdiction because the rule now is that the Civil Service now covers only government-owned or controlled corporations with original charters. Having been incorporated under the Corporation Law, its relations with its personnel are governed by the Labor Code and come under the jurisdiction of the National Labor Relations Commission.”

 

Employees of local water districts

Employees of local water districts are likewise not covered by the Labor Code.  In the case of Tanjay Water District v. Gabaton (G.R. No. L-63742, April 17, 1989), the Supreme Court held that local water districts are quasi-public corporations whose employees shall be governed by the civil service law, rules and regulations.

Jurisprudence says:

“Local water districts are quasi-public corporations whose employees belong to the civil service; hence, the dismissal of those employees shall be governed by the civil service law, rules and regulations.

“The hiring and firing of employees of government-owned or controlled corporations are governed by the Civil Service Law and Civil Service Rules and Regulations. 

“Significantly, Article IX(B), Section 2(1) of the 1987 Constitution provides that” (t)he civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters” which come under the coverage of the civil service law, rules and regulations.”

 

Foreign governments

In line with the doctrine of state immunity, foreign governments are exempt from the coverage of the Labor Code due to the fact of being outside the jurisdiction of the Philippines.

In the case of JUSMAG Philippines v. National Labor Relations Commission (G.R. No. 108813, December 15, 1994), the Supreme Court held that one state cannot assert jurisdiction over another.

Jurisprudence says:

“In this jurisdiction, we recognize and adopt the generally accepted principles of international law as part of the law of the land. Immunity of State from suit is one of these universally recognized principles. In international law, “immunity” is commonly understood as an exemption of the state and its organs from the judicial jurisdiction of another state. This is anchored on the principle of the sovereign equality of states under which one state cannot assert jurisdiction over another in violation of the maxim par in parem non habet imperium (an equal has no power over an equal).”

 

Intergovernmental or international agencies and organizations

Like foreign governments, international organizations and agencies are endowed with certain privileges and immunities to secure them legal and practical independence in fulfilling their duties. This was ruled in the case of Eldepio Lasco, et. al. v. UNRFNRE (G.R. Nos 109095-109107 February 23, 1995).

Jurisprudence says:

“We recognize the growth of international organizations dedicated to specific universal endeavors, such as health, agriculture, science and technology and environment. It is not surprising that their existence has evolved into the concept of international immunities. The reason behind the grant of privileges and immunities to international organizations, its officials and functionaries is to secure them legal and practical independence in fulfilling their duties.

Immunity is necessary to assure unimpeded performance of their functions. The purpose is “to shield the affairs of international organizations, in accordance with international practice, from political pressure or control by the host country to the prejudice of member States of the organization, and to ensure the unhampered performance of their functions”

[T]here is no conflict between the constitutional duty of the State to protect the rights of workers and to promote their welfare, and the grant of immunity to international organizations. Clauses on jurisdictional immunity are now standard in the charters of the international organizations to guarantee the smooth discharge of their functions.” (Citations omitted.)

In the case of Southeast Asian Fisheries Development Center – Aquaculture Department, et. al. v. National labor Relations Commission (G.R. No. 86773, February 14, 1992), the Supreme Court ruled that Petitioner Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDEC-AQD) is an international agency beyond the jurisdiction of public respondent NLRC.

Jurisprudence says:

“Being an intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys functional independence and freedom from control of the state in whose territory its office is located. Permanent international commissions and administrative bodies have been created by the agreement of a considerable number of States for a variety of international purposes, economic or social and mainly non-political. Among the notable instances are the International Labor Organization, the International Institute of Agriculture, the International Danube Commission. In so far as they are autonomous and beyond the control of any one State, they have a distinct juridical personality independent of the municipal law of the State where they are situated. as such, according to one leading authority ‘they must be deemed to possess a species of international personality of their own.’ (Citations omitted.)

 

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