JULY 16, 2008
So, there
RIGHTS OF WORKERS
ARTICLE 83. Normal hours of work. — The normal hours of
work of any employee shall not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population of
at least one million (1,000,000) or in hospitals and clinics with a bed
capacity of at least one hundred (100) shall hold regular office hours
for eight (8) hours a day, for five (5) days a week, exclusive of time
for meals, except where the exigencies of the service require that such
personnel work for six (6) days or forty-eight (48) hours, in which case
they shall be entitled to an additional compensation of at least thirty
per cent (30%) of their regular wage for work on the sixth day. For
purposes of this Article, "health personnel" shall include: resident
physicians, nurses, nutritionists, dietitians, pharmacists, social workers,
laboratory technicians, paramedical technicians, psychologists,
midwives, attendants and all other hospital or clinic personnel.
Article 83 says that the normal hours of work of any employee
should not be more than 8 hours. If you are asked a question, how
many hours of work is an employee need to do for a full day’s wage?
The answer is not 8 hours.
The answer is not more than 8 hours because an employee may
that we are working 8 to 12 and 2 to 5 - 4 hours in the morning and 3
hours in the afternoon, because the lunch break is 2 hours, instead of
1. Let us say that has been a practice – you show up at 2 o’clock
instead of 1. That is a de facto company practice that ripens into a
right. Dili nimo buyagon. So, 7 hours of work. Unya karon na galisod
na muingon ka, balik report at 1 o’clock. No more! One of the
sources of an employee’s rights is company practice. For 7 hours of
work, you are paid a full day’s wage. That ripens into a right.
If you do the opposite, suppose you tell the workers – 8 to 12
and 1 to 6. And they earn a full day’s wage. You have been doing
that for 3 years. Does that ripen a right on the part of the employer to
demand that? Never! The workers can still collect, all the way back
for 3 years for the underpayment of 1 hour. That 1 hour is already
overtime rate. If you are made to work in excess of 8 hours for every
working day, then, you must be paid overtime.
What is the referend? Is it the working day or the work week?
The referend (?) is the working day.
What is the working day? Under the Rules to Implement the
Labor Code, Rule I-A of Labor Standards, the working days is 24
consecutive hours beginning each day at the same time on the first
hour of work. It is not work week.
SECTION 5. Regular working hours. — The regular working
hours of any person covered by this Rule shall not be more than eight
(8) hours in any one day nor more than forty (40) hours in any one
week.
For purposes of this Rule a "day" shall mean a work day of
twenty-four (24) consecutive hours beginning at the same time each
calendar year. A "week" shall mean the work of 168 consecutive hours,
or seven consecutive 24-hour work days, beginning at the same hour
and on the same calendar day each calendar week.
I am emphasizing this because there is a government of the
Department of Labor of compressed work week, by which the workers
will only work 5 days and for 48 hours only for those 5 days. There
will be 4 days for 10 hours plus 1 day for 8 hours. So, you have 48
hours because that is the maximum number of working days (hours
ata ang pasabot dito .. pero sa rules kay 40 hours man ang max ..
hmmm. .. verify niyo lang ) in a work week according to the Labor
Code. The work week is 6 consecutive working days.
Remember the definition of a working day – 24 consecutive hours
beginning at the same time each day on the first hour of work.
If you are an ordinary white-collar employee, you begin at 8
o’clock. So, your working day begins at 8 and 24 consecutive hours –
meaning kaduha mutuyok sa relo. So, your working day is not co-
terminus with the calendar day.
If you are made to work in excess of 8 hours during the 24-hour
period beginning from your first hour, then, you are entitled to
overtime.
Let us make this a 3-shift working day: 7 to 3 (1 st/day shift), 3 to
11 (2nd/night shift) and 11 to 7 (3 rd/graveyard shift). In medical
parlance, they never use graveyard – day, afternoon and night shift.
Suppose you are assigned to the 1 st shift (7 to 3). You report for
work following the working hours for one month. In the end of the
month, you are shifted.
Let us say, on the last day of the month, having been informed of
the memo of your schedule in the past week, you are shifted to the
graveyard shift (11 to 7). So, on the last day, nireport ka 7 to 3. On
the same calendar day, pagkagabii, nireport na sad ka 11 to 7.
will be an overlapping.
So, on your last day, you are finished at 3. On the same calendar day,
you report at 11 and finish at 7. So, you are entitled to overtime and night-
shift differential up to 6 o’clock (?) in the morning (?). Why? Because it
still falls within your working day.
When you reported at 7 o’clock in the evening, that is the start of your
new working day. Your first day of work in the change of shift is overtime
because you exceeded 8 hours in your continuous 24-hour working day.
Suppose you are a white-collar worker, with regular schedule of
working hours. You report at 8, lunch break for 1 hour (demanded by law)
and then, 1 to 5. That is your ordinary working hours.
Suppose one day, na-late ka. Nagsugod ka 10. Nalate ka kay
giubanan nimo imong anak sa principal kay nangaway. So, undertime ka 2
hours. Wala pa gani nainit imong lingkuranan, tindog na sab ka kay
maniudto na sab mo. Unya balik ka ug trabaho. Pagka-ala-5, niingon
imong boss, we have to finish work because I am going to report on this. 2
more hours of work, we will finish this. So, up to 7. So, overtime na.
Pag-abot sa sweldo, sila tanan gibayranan ug overtime. Ikaw, maka-
claim ka ug overtime? You cannot because within your 24-hour period, you
did not work for more than 8 hours. You only worked for 8 hours. So, you
are not entitled to overtime pay.
So, you called the office because you reported that you worked for 10
hours. So, they added overtime. Suppose, inadvertently, na-apil ka
paghatag overtime sa imong sweldo. Nadiskubrehan sa imong boss. And
then, your boss says, alkanse ko ana. Nabayran ka unya di man ka dapat
bayran. Unya muingon ka na bayran ra nako ug 2 ka oras – overtime ba.
So, the following day, instead of going home at 5, you worked extra
for 2 hours. But you are not paid for the overtime of 2 hours. You are just
paid for 8 hours. Is that allowed? NO, because of Article 88.
ARTICLE 88. Undertime not offset by overtime. — Undertime
work on any particular day shall not be offset by overtime work on any
other day. Permission given to the employee to go on leave on some other
day of the week shall not exempt the employer from paying the additional
compensation required in this Chapter.
Article 88 says prohibition from offsetting undertime with overtime.
Why is offsetting undertime with overtime disallowed? Because the
employee is at the losing end. For undertime, they are penalized, straight-
time pay. For overtime, they should be paid more than the straight-time
pay. He or she loses in the exchange. Mas mahal imong gibayad.
Article 88, until that is repealed, makes what the Department of Labor
says of compressed work week - trabaho ka 10 oras 4 ka adlaw, pagka-ika
5 na adlaw 8 oras na lang, 48 hours. Na-comply nimo ang work week. Dili
na mutunga sa Sabado ug Domingo – (bitin .. hehe ) Alkanse ka ana! In
the 4 days that you worked for 10 hours those 2 extra hours should be
overtime rate. But that is only counted as regular time.
Can workers waive their right? Waiving rights in Labor Standards can
only be done in backward direction, never in forward direction. Unya
musulat ka ug waiver kay kinahanglan man ka ug kwarta.
Would that preclude you from filing money claims complaint? NO, you
can file because your waiver is contrary to public policy.
The aim of the law is so that nobody will be paid lower than the
standard.
Let us say you are with the Labor Arbiter. Nag-file na ka ug kaso –
underpayment of straight-time pay. First meeting with the Labor Arbiter –
the employer is willing to pay. So, magcompute ang Labor Arbiter. Pila
man ka days na nagtrabaho tag-2 oras overtime? Ang imong kubrahunon
kay P 7,000. Pila man imong ihatag? Mga katunga ana arun mahumana.
Can he do that? YES, because now what you are claiming is reduced to a
money claim. Backward ba! Ug musugot ka, pirmahanay dayon with the
Labor Arbiter. The Labor Arbiter will adopt your compromise agreement
and make it as a basis for decision. So, it becomes final and executory.
You cannot say later on, alkanse ko ato ah. Katunga ra akong nakuha.
The compressed work week is again being revived because of the high
cost of petroleum. Naa ganiy proposal na 4 na lang ka adlaw ang trabaho.
In the United States, that can be done because the referend for
overtime is the total number of work hours during the week, not the
working day, but the working week. The working week now in the United
States is just 5 consecutive working days. 40 hours ra man na sa America.
Sa Australia, 37.5
That is why the nurses work 12-hour shifts.
Flexi-time is allowed in the US because the Fair Labor Standards Act
allows the determination of working hours on the basis of the working
week, not the working day.
Ang ato, gikuha nato sa Fair Labor Standards Act, gi-amend man to.
Wala man nato sundan tong sa ilaha.
Pangutan-on mo sa bar, tagaan mog problem na naay compressed
work week. You better put there the legal difficulties:
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 1. 8-hour labor law – increase from the maximum 8-hours for a
full day’s payment
2. Prohibition from offsetting undertime with overtime – that is
a concrete barrier
3. The notion of the working day, which is 24 consecutive
hours beginning at the same time each day on the first hour
of work
ARTICLE 84. Hours worked. — Hours worked shall include (a)
all time during which an employee is required to be on duty or to be at
a prescribed workplace, and (b) all time during which an employee is
suffered or permitted to work.
Rest period of short duration during working hours shall be
counted as hours worked.
Article 84 has rest period. What are rest periods? Rest period
are 5 to 20 minutes during which, in a working day, the employee can
stop working and rest. And that time is compensable working time
although he is not working.
When can you be deprived of that right? If the establishment is
operating on a 2-shift basis, with the more reason if the establishment
is on a 3-shift basis. The employer can refuse from giving rest periods
or meal periods.
ARTICLE 85. Meal periods. — Subject to such regulations as
the Secretary of Labor may prescribe, it shall be the duty of every
employer to give his employees not less than sixty (60) minutes time-
off for their regular meals.
Article 85 provides the Labor Standards benefit of 1-hour meal
periods. What is this meal? It is the Anglo-Saxon custom – only 3
meals a day.
If you are assigned on a night-shift, can you claim a meal period?
You might claim a break, but you cannot claim a meal period because
our Labor Standards is patterned after the Anglo-Saxon, the Fair Labor
Standards Act.
ARTICLE 86. Night shift differential. — Every employee shall
be paid a night shift differential of not less than ten percent (10%) of
his regular wage for each hour of work performed between ten o'clock
in the evening and six o'clock in the morning.
Article 86 mandates a night shift differential. How much is night
shift differential? Please do not answer 10%. The correct answer is
not less than 10%. That means it could be higher than 10%, as in
other specific industries.
Night shift differential for pilots is close to 100%. It is more than
the ordinary 10% because you have no more excuse. If you fly at
night, you must fly instrumental rules.
Night shift differential operates from 10 in the evening to 6 in the
morning.
ARTICLE 87. Overtime work. — Work may be performed
beyond eight (8) hours a day provided that the employee is paid for
the overtime work, an additional compensation equivalent to his
regular wage plus at least twenty-five (25%) per cent thereof. Work
performed beyond eight hours on a holiday or rest day shall be paid an
additional compensation equivalent to the rate of the first eight hours
on a holiday or rest day plus at least thirty percent thereof.
Article 87 gives you overtime pay. If you are made to work in
excess of 8 hours during the work day, then, you are paid 25% more
than the straight-time pay.
Remember these terminologies. Do not use ordinary pay.
Straight-time pay is the technical term for ordinary pay.
Overtime rate is payment in excess of 8 hours.
It has been asked: What is premium pay and what overtime
pay? Overtime pay is additional compensation just like premium pay
is additional compensation. Additional to the regular rates.
Overtime pay is additional compensation paid for working in
excess of regular working hours or 8 hours for the working day.
Premium pay is additional compensation paid for working on days
when you should not be working. Let us say –regular holiday, special
holiday, rest day. Those are days when you should not be working.
But if you are made to work, then, you are paid premium pay for
working, in excess of your regular pay.
Can it happen that you are paid both the premium and overtime?
YES, if you worked more than 8 hours during the days when you are
not supposed to work. Then, it becomes both premium and overtime
pay.
Let us say you work overtime from 10 to 12 in the evening. There are
2 kinds of pay there – there is overtime pay for working in excess of 8
hours and there is premium pay of night differential.
According to the Supreme Court, the night was not made for working
but made for rest 
What do you add first? Do you compute first the overtime rate and
then you add the night shift differential? Regular pay 25% and then, 10%
of that night shift differential? Or regular pay plus 10% night shift
differential, then, 25% overtime? It does not matter! Either way, it is the
same. You compute it 
ARTICLE 91. Right to weekly rest day. — (a) It shall be the duty
of every employer, whether operating for profit or not, to provide each of
his employees a rest period of not less than twenty-four (24) consecutive
hours after every six (6) consecutive normal work days.
(b) The employer shall determine and schedule the weekly rest day
of his employees, subject to collective bargaining agreement and to such
rules and regulations as the Secretary of Labor may provide. However, the
employer shall respect the preference of employees as to their weekly rest
day when such preference is based on religious grounds.
Rest day is 24 consecutive hours after every 6 consecutive working
days.
Suppose you work everyday. For example, security guards work every
day. Other persons who work everyday are the lagare boys. (Basta iyong
gadala ng film from one sine to another .. trabaho ni Piolo Pascual sa
Lagarista .. haha .. hindi ko napanood iyon ) Kada-adlaw na sige
gatrabaho kay ang sine dili man mapugnan.
The assumption under the law is that every Sunday, you will be paid
130% because that is your rest day. The assumption is Sunday is your rest
day.
Sunday is not necessarily your rest day. If your work week begins on
a Wednesday, your rest day is on Tuesday. If you work on a Sunday, it is
like any ordinary day. If you work on a Tuesday, since that is your rest
day, you get a form of a premium.
Work may be required on your rest day for almost identical reasons as
overtime work may be required:
1. emergency
2. inclement weather
3. perishable goods
4 necessary repairs of machines, etc
5. other analogous reasons.
There can be local or national emergency.
There can be loss of perishable goods. To prevent loss of perishable
goods, you can be made to report for work.
There are necessary repairs of machines. You can be made to report
for work.
ARTICLE 92. When employer may require work on a rest day.
— The employer may require his employees to work on any day:
(a) In case of actual or impending emergencies caused by serious
accidents, fire, flood, typhoon, earthquake, epidemic or other disaster
or calamity to prevent loss of life and property, or imminent danger to
public safety;
(b) In cases of urgent work to be performed on the machinery,
equipment, or installation, to avoid serious loss which the employer
would otherwise suffer;
(c) In the event of abnormal pressure of work due to special
circumstances, where the employer cannot ordinarily be expected to
resort to other measures;
(d) To prevent loss or damage to perishable goods;
(e) Where the nature of the work requires continuous operations and the
stoppage of work may result in irreparable injury or loss to the
employer; and
(f) Under other circumstances analogous or similar to the foregoing as
determined by the Secretary of Labor.
IBM vs. NLRC
The Supreme Court gave its imprimatur to a collective bargaining
agreement where there is a built-in overtime of each worker in the
bargaining unit. The Supreme Court allowed that. And the Supreme Court
rendered the strike illegal because they were asking for a higher rate on the
agreed built-in overtime. That is also extra-ordinary.
IBM vs. NLRC (June 27, 1991)
FACTS: The Union's position was that the workers' refusal "to work
beyond 8 hours everyday starting October 16, 1989" as a legitimate means
of compelling SMC to correct "the distortion in their wages brought about by
the implementation of the said laws to newly-hired employees." There
ensued thereby a change in the work schedule which had been observed by
daily-paid workers at the Polo Plant for the past 5 years, i.e., "10 hours for
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the first shift and 10 to 14 hours for the second shift, from Mondays to
Fridays; and on Saturdays, 8 hours for both shifts" — a work schedule
which, SMC says, the workers had "welcomed, and encouraged"
because the automatic overtime built into the schedule "gave them a
steady source of extra-income," and pursuant to which it (SMC)
"planned its production targets and budgets."
This abandonment of the long-standing schedule of work and the
reversion to the 8-hour shift apparently caused substantial losses to
SMC. It claimed that there ensued work disruption and lower
efficiency resulting in low production. These losses occurred despite
such measures taken by SMC as organizing "a third shift composed of
regular employees and some contractuals," and appeals "to the Union
members, through letters and memoranda and dialogues with their
plant delegates and shop stewards," to adhere to the existing work
schedule.
HELD: The work schedule had not been forced upon the workers; it
had been agreed upon between SMC and its workers at the Polo Plant
and indeed, had been religiously followed with mutually beneficial
results for the 5 years. The workers never asked, nor were there ever
any negotiations at their instance, for a change in that work schedule
prior to the strike. What really bothered them, and was in fact the
subject of talks between their representatives and management, was
the "wage distortion" question, a fact made even more apparent by
the joint notice circulated by them prior to the strike, i.e., that they
would adopt the eight-hour work shift in the meantime pending
correction by management of the wage distortion.
JULY 17, 2008
Q: May an employer convert a daily wage scheme of compensation
to monthly paid compensation? Can he do that? Change from daily to
monthly?
A: YES, he cannot do it. The only limitation being Article 100 – the
prohibition against diminution of wages and benefits.
ARTICLE 100. Prohibition against elimination or
diminution of benefits. — Nothing in this Book shall be construed to
eliminate or in any way diminish supplements, or other employee
benefits being enjoyed at the time of promulgation of this Code.
How do you measure whether or not there is diminution?
The measurement, according to the Supreme Court is not the
gross pay. The measurement is the take home pay. In other words,
the pay net of taxes.
Q: Is there diminution if after change of scheme, the employee is no
longer awarded overtime work?
A: According to the Supreme Court, NO. The basis for comparison is
the regular wage and not the regular wage plus overtime. That is the
basis. The Supreme Court said that no employee has a vested right
over overtime.
What do you mean by vested right? The meaning of vested
right is just because in the past year you have been granted 5 hours of
overtime work every week, it does not mean that that practice has
grown into a matter of right.
Let us say you are changed from daily pay to monthly pay. You
are given an increase but you are no longer entitled to overtime. If
your basis is regular wage without overtime, you are actually bringing
home more pay than before. But if you add overtime, you are actually
brining less.
Is that diminution of wage? The Supreme Court says NO, that is
not a diminution of wage because no employee has a vested right over
overtime.
The problem is given to you. You are given daily wage. And
then, you are asked the monthly pay on the basis of the daily wage.
Or you are given monthly pay and you are asked if the equivalent daily
wage is the minimum wage. How will you find out?
To arrive at the monthly pay, you have applicable daily rate times
total no. of working days in a year divided by 12 equals applicable
monthly rate.
Applicable Total # of Working Applicable
Daily Rate x Days in a Year = Monthly Rate
----------------------------------------------
12
The Wage Order has minimum wages for each worker. There is
non-agricultural and agricultural. Non-agricultural – there is
commercial or industrial. First class cities, municipalities, provinces.
This (Applicable Daily Rate) is a combination of the kind of
worker/employee you are and the place where you are working
because that is how workers are classified (?) in the wage order. You are
working in the city or in a first-class municipality or province.
And the total working days is determined. You begin with 365 days.
You deduct from that 52 days because there are 52 weeks in a year. Non-
working man na, rest day. Kuhaon nimo ug regular holiday – 11. You must
memorize that.
What is the 11th holiday? The day designated for election? That is no
longer a regular holiday. That is a special holiday. The 11 th holiday is Eidul
Fitr – the first day of the end of the Ramadan. That is the technical word
given by the law. You do not say end of the Ramadan. That is the 11 th
holiday. So, iphon nimo tanan.
365 days
- 52 days (rest days)
- 11 days (regular holidays)
---------------------------------------------------
302 TOTAL NO. OF WORKING DAYS
If you are a security guard who works everyday, mausab ang imong
working days. Why will the computation be changed?
Ang 365 days dungagan nimo ug 22. Ngano man nimo dungagan ug
22? Because the 11 regular holidays, 200% man. 100% if they do not
work. If they work, 200%. And 52 weeks – if you are working on your rest
day, pila man na? Times 1.3 man na?
365
+ 22 (Holiday – 200%)
67. 6 (52 days x 1.3)
-------------------------------------------------------
454.6 TOTAL NO. OF WORKING DAYS
If you are given the monthly rate, and you are asked whether or not
this results in the receiving at least the minimum daily wage, how do you
compute?
You begin with the applicable monthly rate. Multiply by 12 because
there are 12 months in a year. Divide nimo sa total number of working
days. And then, that is the Applicable Daily Rate.
Applicable Applicable
Monthly Rate x 12 = Daily Rate
-------------------------------------
Total # of Working Days
If ang mugawas gani kay mubo pa sa minimum wage na giingon sa
Wage Order, sa ato pa, mubo ang daily wage na gihatag. Sa ato pa, naay
diminution. If mas taas gani, walay diminution.
That is the way to find out mathematically.
Ayaw ingni ha na if tagaan mo ug computation, si Father wala man 
But the last time, I think, the bar examiners gave a computational problem
in Labor Standards was more than 50 (?) years ago because all the deans
protested.
TIP: If you are in the bar examination and suddenly you see a
computational problem, you must read it twice, three times, four times. Be
sure that it is computational because chances are you are not being asked
to compute. Ikaw ray gadamgo 
Let us go to 5-day service incentive leave.
What is this 5-day service incentive leave?
Those who work for at least 1 year are entitled to 5 days leave with
pay. Is that for vacation or for sick leave? Either. But you are entitled to 5
days?
Where is it located in law where employers should grant 15 days in
vacation or sick leave? That is nowhere to be found. The only right in
Labor Standards law is 5 days after service for 1 year.
How about workers with a fixed term of 10 months? Are they not
entitled to 5 days service incentive leave? YES, they are entitled to
proportionate share of the 5-day service incentive leave. Proportionate
meaning 5 is to 12 as to X is to 10. And then, you solve what X is. So,
50/12. So, 4 days.
ARTICLE 95. Right to service incentive leave. — (a) Every
employee who has rendered at least one year of service shall be entitled to
a yearly service incentive leave of five days with pay.
(b) This provision shall not apply to those who are already enjoying the
benefit herein provided, those enjoying vacation leave with pay of at least
five days and those employed in establishments regularly employing less
than ten employees or in establishments exempted from granting this
benefit by the Secretary of Labor after considering the viability or financial
condition of such establishment.
(c) The grant of benefit in excess of that provided herein shall not be
made a subject of arbitration or any court of administrative action.
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 What are service charges? Service charges are benefits
belonging, first and foremost, to restaurants, hotels and similar
establishments. For benefits of service charges to apply, it is a
condition that clients or customers of these restaurants and hotels
must be charged as a separate item in their bill with the so-called
service charge – 10% or 15% of the total bill.
If that is the case where the restaurant slaps (?) a service charge
to the customer, then, it must follow the law. 85% of the service
charge must be given out to the rank and file and the remaining 15%
is the employer’s share or the management.
ARTICLE 96. Service charges. — All service charges collected
by hotels, restaurants and similar establishments shall be distributed at
the rate of eighty-five percent (85%) for all covered employees and
fifteen percent (15%) for management. The share of the employees
shall be equally distributed among them. In case the service charge is
abolished, the share of the covered employees shall be considered
integrated in their wages.
If the restaurant should change its set-up, it no longer charging
service charge, what happens? The employer is under the obligation
to incorporate into the salary of the employee the average rate of
service charges that he used to earn. So, you compute for the past
year. That is his imputed (?) service charges that is now considered as
part of his regular rate under the new establishment.
So, fine dining ka. Naa kay 15% service charge. Karon usbon
nimo ang imong fine dining – Turo Turo ni Mang Tura. You are forced
to incorporate the shares. In order to do that, you might as well close
down and then, you open a new establishment because you might not
be able to sustain the imputed salary.
We have seen the basic Labor Standards benefits, in terms of
hours of work, rates of pay, leaves, rest days and other specialized
benefits.
Let us now go to WAGES.
The important things to remember about wages are the 22
PROHIBITIONS with respect to wages. It is easier to remember
that way.
1. Article 99 – Prohibition against non-payment of minimum
Wage
ARTICLE 99. Regional minimum wages. — The minimum
wage rates for agricultural and non-agricultural employees and
workers in each and every region of the country shall be those
prescribed by the Regional Tripartite Wages and Productivity Boards.
2. Articles 100 and 127 – Prohibition against diminution of
supplements, wages and benefits
ARTICLE 100. Prohibition against elimination or
diminution of benefits. — Nothing in this Book shall be construed to
eliminate or in any way diminish supplements, or other employee
benefits being enjoyed at the time of promulgation of this Code.
ARTICLE 127. Non-diminution of Benefits. — No Wage Order
issued by any regional board shall provide for wage rates lower than
the statutory minimum wages rates prescribed by Congress.
You are familiar with prohibition against diminution of wages.
When you read Article 127, it says prohibition against diminution –
nothing in the Labor Code should be understood to mean a diminution
as a result of the application of a new wage order of the supplements,
wages and other benefits of the employee.
Here comes the issue. What is wage? What is the
characteristic of wage? Should wages be entirely in cash?
And the answer is, as a general rule, wages should be not just in
cash but in legal tender.
The only exceptions are facilities. What are facilities?
Facilities are items of expenses necessary for the laborers and his
family’s existence and subsistence, they form part of the wage and
when furnished by the employer, are deductible therefrom, since if
they are not furnished to the laborers, he would have to spend and
pay for them just the same.
The opposite of facilities are supplements. What are
supplements? They are extra remuneration or special privileges or
benefits given to or received by the worker over and above his
ordinary earnings or wages. They cannot be considered as part of
wages. They are over and above wages.
PHILIPPINE STEAM NAVIGATION CO. vs. CIR.
In 1952, the first minimum wage law was passed. It was to be
effective in 1953. It decreed the gargantuan sum of P 4 daily minimum
wage. At that time, the peso-dollar exchange rate is P 2 to $ 1.
When they put that first minimum wage law (P 4 a day), Philippine
Steam Navigation was paying below that. To comply with that, they
counted the value of meals that they were giving to their crew men. Then,
that would be more than the minimum wage. At that time, for 10 centavos,
you would already have a decent meal.
You count the value there of the meals. Then, according to Philippine
Steam Navigation, we fulfill already the increase in minimum wage. If we
do not provide that, they will spend anyway to prepare their meal. Do we
not count it as wages? They are facilities, according to Philippine Steam
Navigation.
But the Supreme Court disagreed. They cannot be called facilities.
They are given for your benefit. How? If you do not give them meals in
the boat, each one has to cook. So, they are not facilities. They are
supplements, over and above regular wage which you have to pay or to
give them.
That is the exception to the rule that wages must be paid in legal
tender. Although the law says it is payable in cash, the more accurate
description is legal tender. Ug muingon ka ug cash, ang bayad sa imo isa
ka dako na sako 1 centavo coins. Kihanglan pa ka magtaxi paadto sa
inyoha.
You know very well that coins 5 centavos and below is only legal
tender up to P 20 pesos. It cannot be higher than that. The rest must be
paid in higher denominations.
What is the correct example of facilities?
1. Customary in that particular trade or industry
2. There is prior consent on the part of the employee and the consent is
written
3. The employer does not obtain any pecuniary gain in giving the
facilities
4. In no case shall the meals or board and lodging be computed except
for fair and reasonable value
In Region 11, they have not changed the value of meals. You cannot
value meals as facilities above P 5.
Give me a trade or occupation where facilities are customary.
If you ask the waiters or cooks in a restaurant, the meals apart from
their wages are facilities. Ang sabot ana kay libre ang kaon. Dili di ai na
libre! Part di ai na siya sa wage and that is allowed because that is
customary. If you do not make it customary, it will be a big headache (not
sure if tama to pagkarinig .. hehe .. pero it makes sense man, I think )
If panahon na ug tingkaon mao pa pud ang tigluto, mubiya siya.
Muadto siya sa carenderia arun didto mukaon. Di na mahimo. You cannot
do that. So, you might as well count it.
The waiters – the same. Part of their salaries is their meals.
MABEZA vs. NLRC (271 SCRA 670 1997)
The Supreme Court gives the requisites or rules for the valuation of
facilities.
Mabeza was a chambermaid for a small inn in Baguio. She was given
a room just above the lodge where she could stay free of charge. She was
also given meals.
There was an adjustment in minimum wage. The employer now
counted the value of the room she was staying in all by herself and the
meals that she was allowed to take from the inn. She complained. When
the examiner went there for inspection, the examiner found out that her
cash wage is lower than the minimum wage. So, the company was
indicted.
What is the contention of employer? The wage is not only the cash
wage. You also have to count the value of the room where she is staying.
Anyway, she will have to pay a room somewhere else. She is also given the
meals. You count the meals.
Is that a valid computation of facilities?
The Supreme Court said they are not facilities because you have made
her stay within the compound of the inn for the employer’s benefit. If there
are guests who come late in the evening, ibuzzer nimo. Dali-dalii ni day kay
naa tay guests. So, those are not facilities. They were necessary
supplements for the benefit of the employer.
Then, the Supreme Court said that for it to be considered facilities,
one, it must be customary. They are not customary because she is a
chambermaid.
Second, they must be prior consent. There is no prior consent much
less is there a written consent.
And the employer must not pecuniarily profit from the arrangement.
You are profiting from the arrangement because she, being close by, is at
your beck and call.
Therefore, you violate all the four requisites (murag 3 ra lagi ang
namention .. hehe) of the facilities.
MABEZA vs. NLRC (April 18, 1997)
FACTS: Mabeza contends that she and her co-employees at the Hotel
Supreme in Baguio City were asked by the management to sign an
4
instrument attesting to the latter's compliance with minimum wage
and other labor standard provisions of law.
Mabeza signed the affidavit but refused to go to the City
Prosecutor's Office to swear to the veracity and contents of the
affidavit as instructed by management. The affidavit was drawn by
management for the sole purpose of refuting findings of the Labor
Inspector of DOLE.
After she refused to proceed to the City Prosecutor's Office,
Mabeza avers that she was ordered by the hotel management to turn
over the keys to her living quarters and to remove her belongings from
the hotel premises. She was told not to report to work and continue
with her unofficial leave of absence. Thus, Mabeza filed a complaint
for illegal dismissal. In addition thereto, she alleged underpayment of
wages, non-payment of holiday pay, service incentive leave pay, 13th
month pay, night differential and other benefits.
Respondent maintained that there was no basis for the money
claims for underpayment and other benefits as these were paid in the
form of facilities to petitioner and the hotel's other employees..
ISSUE: Whether or not there was underpayment of wages and other
benefits
HELD: YES, there was underpayment of wages and benefits.
Granting that meals and lodging were provided and indeed
constituted facilities, such facilities could not be deducted without the
employer complying first with certain legal requirements. Without
satisfying these requirements, the employer simply cannot deduct the
value from the employee's wages.
First, proof must be shown that such facilities are customarily
furnished by the trade.
Second, the provision of deductible facilities must be voluntarily
accepted in writing by the employee.
Finally, facilities must be charged at fair and reasonable value.
These requirements were not met in the instant case.
More significantly, the food and lodging, or the electricity and
water consumed by the petitioner were not facilities but supplements.
A benefit or privilege granted to an employee for the convenience of
the employer is not a facility. The criterion in making a distinction
between the two not so much lies in the kind (food, lodging) but the
purpose.
Considering, therefore, that hotel workers are required to work
different shifts and are expected to be available at various odd hours,
their ready availability is a necessary matter in the operations of a
small hotel, such as the private respondent's hotel.
JULY 23, 2008
WAGES
The best way to remember wages is to remember it negatively –
what are prohibited with respect to wages.
1. It is prohibited to engage an employee for less than the
minimum wage
Suppose you are given a question: Ms. X is a recent passer of the
National Licensure Examination for Registered Nurses. Due to the fact
that there are 49,000 passers out of the 100,000 who took the exam
and limited number of hospitals, there is an oversupply of nurses. Our
Lady of Perpetual Help Clinic engages Ms. X and told her that she will
be working at least 1 shift (8 hours) but you will be under training
only. So, you will only be given an allowance. Your allowance will
constitute free meals plus P 1,000 a month.
Q: Is there a law that has been violated? Explain with reasons.
That is just for one prohibition – prohibition against non-payment
of minimum wage.
There is only diminution if you were paid the correct wage, and
subsequently, you are paid lower – that is diminution, kulang ang
sweldo. (So, walang diminution sa problem na to )
In this case, you are in training you are only given an allowance –
magulang lang gamay sa hangyo nga volunteer. Is that allowed?
For as long as you are a time-worker, you are entitled to the
minimum wage. Even if you are an independent contractor, where
there is no ER-EE relationship, you are entitled to the minimum wage.
The minimum wage does not require the existence of ER-EE
relationship.
The implementing rules are so audacious as to say that trainings
in a school set-up will not be paid minimum wage. But that is true if
that is a required training on the part of the school.
But if you are a nurse student and you go to another hospital that
does not know you and you go there as a nurse assistant, and you
work for how many hours – you have to be paid minimum wage in the
very least.
Does the law says that for as long as you are in training you can be
paid less than the minimum? NO.
The exceptions are:
1. Learnership agreements
2. Apprenticeship agreements
3. Trainings for the handicap
Before you can be paid less than the minimum wage in these 3
instances, you must be sure that they are bonafide programs of learnership,
apprenticeship and handicap trainings. They must register it with TESDA,
no longer with the Department of Labor.
But in no instance, less than 75% of the minimum wage.
So, there are only few exceptions.
So, if tagaan mo ug kaso na ingana, gi pitik mo ana. The moment it
gives a classification of workers that has nothing to do with whether or not
you are a time-worker – ingnon nila na regular ka ba, probationary ka ba,
allowance ka lang, maregular gani ka, diha na – you ask yourself what law
is there to justify it. If you can find a law to justify it, by all means uphold
the law because tan-awon man na sa corrector.
Understand and apply the law. And if you can find any exceptions
written in the law itselt or in the decided cases, you uphold the law. Stick
to the law.
2. Prohibition against diminution of supplements, wages or
benefits
For this principle to apply:
a. First, there must be correct payment
b. Subsequent to the correct payment, there is payment for less
Article 100 or 127 cannot apply unless there are these 2 payments –
one, there is correct payment and second, that is payment for less than
what was correct.
The second one is what is prohibited.
Normally, the second payment is occasioned by a new law. That is
why Article 127 says that no wage order can be understood in a manner
that will diminish any supplement, benefits or wages.
From this provision, you know that wages have only one direction to
go – that is upwards. Minimum wages have only one direction to go,
upward. And minimum wage dili muubos, puros na siya paingon sa taas.
The law prohibits the diminution of supplements, wages and benefits.
Article 100 says that this code cannot be interpreted as to diminish
wages, supplements and benefits. That is in relation to the wage before
the enactment of the Labor Code. Ang resulta ang imong sweldo musaka
tingali, pero dili momenos. Mupermanent pero dili mamenos.
Article 127 also says that wage order cannot be interpreted as to
diminish wages, benefits and supplements.
Is there any exception to the rule of wages, supplements and benefits
decreasing? There is an exception!
This time we will go ahead to Labor Relations. If you are in a regime
of Labor Relations, you have a CBA.
Can the CBA provide lower than minimum wage? It cannot. It is
contrary to public policy to agree to receive less than the minimum wage.
That is an illegal agreement. That is contrary to public policy. That is void.
Suppose you are only paid minimum wage and it is enshrined in the
CBA? Is that a valid CBA?
It is a sweetheart contract, regarded as an unfair labor practice.
Because you do not need to go through the rigor (?) of certification
election, bargaining proposal, CBA just to arrive at the minimum wage
because it is already provided for law. Ngano gihago-hago ra ang
Department of Labor, gihago-hago ang workers, unya ang inyong sabutan
kay minimum wage ra man di ai.
The CBA must provide higher than minimum wage in order for it to be
a bonafide CBA.
If it provides already a higher minimum wage, can it agree in a
subsequent period of the CBA, lower than what they agreed before? Is that
a valuation of Article 100 or 127?
The answer is they can agree, provided it is not lower than the
minimum wage. It is higher than minimum wage but lower than what they
were receiving in the past. And they agree to that in exchange for another
substantial benefit.
What is an example of a substantial benefit? Let us say, the
management will agree to a no lay-off policy for the next 5 years in
exchange for a wage cut. That is a fair exchange. And that is not a
violation of Article 100 or 127.
3. Prohibition against paying piece rate to escape minimum
wage payment
An employer cannot resort to a piece rate system in order to escape
the effects of the minimum wage low.
Piece rate workers (pakiao workers) are exempted from the minimum
wage. But the piece rate system cannot be used to escape the burdens of
minimum wage.
5
 How do you know that the piece rate system is used escape the
minimum wage? The only way to know is by asking for an official time
and motion studies conducted by the Department of Labor.
After the time and motion study is conducted by the Department
of Labor, then, you will know that the rate used per piece of output
that is reported is based not on the slowest worker’s pace, not on the
fastest worker’s pace, but on the average worker’s speed.
That is the correct basis for the determination of the piece rate.
After that study, then, you can go to the Labor Arbiter on money
claims complaint for payment below minimum wage as a result of the
piece rate system.
Pareha lang na siya taripa. Minimum musakay ka ug jeep karon
kay P 8. Unsa man ang basehan ana sa P 8? Kanang puno jud ang
jeep or kanang tunga ra ang sakay sa jeep? Dili mahimo na puno jud
kay dili mudagan ang jeep ug dili pun okay dili man siya makabawi.
Kung 1/3 ang gasakay, mahimo na ireduce niya ang iyang trips 1/3 sa
tibuok adlaw basta puno ra permanente ang iyang sakyanan,
makabawi na siya. Ang maalkanse kay ang mga tao, public utility gud
na.
That is why tariff rates are based on ½. That P8 is based on ½.
Karong mahal na ang gasolina, katunga na lang ng mga kotse ang
gadagan diha. Is it not fair for the LTFRB to take that into
consideration? Where before the passengers was only this much, now,
it has increased because they have abandoned riding their private
vehicles.
Ignorance has a way of betraying those who are unwilling to
learn.
4. Prohibition against payment of wages other than cash
The more accurate term is legal tender.
Exception to the rule: facilities. These are items of expenses
necessary for the laborers and his family’s existence and subsistence.
They form part of the wage and when furnished by the employer, are
deductible therefrom, since if they are not furnished to the laborers, he
would have to spend and pay for them just the same.
4 requisites, according to the SC, for facilities:
a. Customary in the trade or business
b. Given at their fair and reasonable value
c. There is prior written consent on the part of the employee
d. There is no pecuniary benefit that will be earned by the ER
Those are the 4 requisites in the Implementing Rules that were
violated and affirmed by the Supreme Court in the decided case of
MABEZA vs. NLRC (271 SCRA 670 1997)
The classic case of facilities is normally board and lodging.
The classic case with respect to board is restaurant waiters and
waitresses and cooks. Normally, part of their wage is the meals that
are provided by the employer. That does not exempt from written
consent. When they are hired, they must sign that they are accepting
the practice of receiving a part of their wages in the form of meals.
And then, the valuation of the meals must not be inconsistent
with the directive of the Regional Director of Department of Labor. Dili
mulapas P 5 ang value sa meal na i-charge sa empleyado if facilities
are warranted. P 5 – which was the cost of meals when Judge Cañete
was still a student at RMC. Judge Cañete loves to recall that 
May the workers be paid their salaries in checks?
There is an implementing rule which outlines the requisites of
payment in checks. It is necessary that in payment of checks, you
must go to the bank to encash the check. There are 4 rules:
1. There must be a bank within 1 km radius of the workplace
2. That you must be allowed to go to the bank to encash the
check during working hours and going there and coming
back is to be
considered as compensable working time
3. You must be given free transportation if there is a need for
the
Transportation
4. The company or the employer must not obtain any
pecuniary
benefit from such arrangement
These are the 4 requisites for allowing the payment of checks
through the bank.
How about ATM? Can it pay through the ATM? YES, and the
requisites are more simple.
All they have to do is serve notice to the Department of Labor
and it is already allowed because ATMs are deemed to be within reach
of all workers in an urban city.
It does not require that there is an ATM with a 1 km radius
because ATMs are more ubiquitous than banks.
5. Prohibition against of wages at intervals longer than 16 days
Suppose you are a piece rate worker and you decided to weave hats
for 24 hours because you are catching the deadline, not of the hats, but of
your child to be enrolled. Before, you could finish 20 hats in an 8-hour
working day. But because you worked 24 hours, you weaved 100.
Q: Can you now demand payment and say pay me for the hats?
The answer is NO. The employer has 16 days to pay you. And it is
regardless whether you are paid piece-rate, task basis or daily basis.
Remember that wages are already in another title of the Labor Code.
Why is it 16 days? Because sometimes the interval in a month can be
16. There is one day more than 30 in a month. So, the first half is 15 and
the second half is 16 days. So, that is allowed.
Q: If the 16 th day is a Sunday, when should the pay be released? And
Sunday is a rest day.
The pay should be released on the last working day immediately
preceding the last day when the payment should be made.
If the last working day is Saturday noon, then, it should be paid not
later. It should not be paid on Monday because that is already the 17 th day.
So, it must be the last working day immediately preceding the 16th day.
6. Prohibition against payment of wages away from the
workplace
The issue is the worker should not be made to spent travel time and
money to collect his salary. That is why the rule is it should be the
employer who should go to the workplace to go to pay the employee.
Suppose the employee is a member of a construction crew. The main
office of the construction company of which the employee belongs to is in
San Pedro St., Davao City. The working site is in Sta. Cruz, Digos, where a
highway is being repaired.
Where should be the pay site? In the office in San Pedro or in Sta.
Cruz? The answer is in Sta. Cruz. That is where it should be paid.
What are the exceptions to the rule when the employer need not pay
the wages at the place of work?
a. If the place of work is close to gambling houses, massage
parlors and other similar establishments
That is a very important section in the implementing rules
because the money will be easily dissipated as they pass by these
houses of temptation.
Exception to the exception: If you are working in the
gambling house, massage parlors and other similar establishments.
If you are a card dealer of PAGCOR, that is where you are paid
because that is where you work.
b. For the greater protection of wages
Suppose the workplace is so unsafe for this purpose, then, you
will be required to move to another place to receive your salary.
And there is already a decided case here: NORTH DAVAO
MINING vs. NLRC. After so many hold-ups of their paymaster,
North Davao Mining has finally requested their employees to go out
from their site to Tagum collect their pay because the company, at
that time it had already declared bankruptcy and it was already PNB
taking over the operations of North Davao Mining, was spending so
much for guarding the payroll going there because it could no longer
be insured. No insurance company was willing accept the insurance.
So, they requested their employees to go down to Tagum to collect
their salaries for the greater safety of the wages. That is another
exception to the rule.
NORTH DAVAO MINING vs. NLRC (March 13, 1996)
FACTS: North Davao Mining was private-owned company. In May 1992, it
ceased operations due to serious business reverses.
Respondent is one among several employees of North Davao who
were separated by reason of the company’s closure. Inasmuch as the
region where North Davao operated was plagued by insurgency and other
peace and order problems, the employees had to collect their salaries at a
bank in Tagum, Davao del Norte, some 58 kilometers from their workplace
and about 2 ½hours’ travel time by public transportation. This
arrangement lasted from 1981 up to 1990.
ISSUES: Whether or not time spent in collecting wages in a place other
than the place of employment is compensable notwithstanding that the
same is done during official time.
Whether or not private respondents are entitled to transportation
expenses in the absence of evidence that these expenses were incurred
HELD: YES, it is compensable and respondents are entitled to
transportation expenses.
Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the
Labor Code provides that:
Section 4. Place of payment. - (a) As a general rule, the place of payment
shall be at or near the place of undertaking. Payment in a place other than
6
the workplace shall be permissible only under the following
circumstances: xxx
(2) When the employer provides free transportation to the
employees back and forth; and
Hours spent by complainants in collecting salaries at a bank in
Tagum shall be considered compensable hours worked. Considering
further the distance between Amacan, Maco to Tagum which is 2½
hours by travel and the risks in commuting all the time in collecting
complainants’ salaries, would justify the granting of backwages
equivalent to 2 days in a month as prayed for. Respondents are liable
for the transportation expenses incurred by complainants at P40.00
round trip fare during pay days.
7. Prohibition of payment of wages other than to the
employee himself or herself
You cannot pay the wages except to the employee.
Exceptions:
1. Force majeure
Dili na makalakaw ang employee – naparalyze, nastroke.
Naa siyay kuhaon na sweldo. Musulat siya karon ug power of
attorney. That power of attorney need not be notarized. There
is no requirement of notarization. A power of attorney can exist
without notarization. Only when the law requires a notarization is
their a need for notarization.
2. When the employee dies
Suppose the employee dies the day before the payday. So,
he has a complete pay period. Naa pa siyay overtime.
Q: Is the salary receivable part of the estate?
NO, it is not part of his estate.
What is needed? All that is needed is the intervention of the
Department of Labor official. And then, all the putative (?) forced
heirs come – his wife, all the children. They come so long as they
are contained in his official record. And the parent signs for
herself and for the minors, being the natural guardian of the
minors. As so declaring, they are the heirs and no one else.
Then, the employer can release the full pay to them and they are
excused of whatever liability that may arise therefrom.
The Department of Labor official will witness it.
Please be careful: this is with respect to wages and benefits.
Suppose he has a provident fund contribution as president. It is
already now P 60,000 with accrued interests. That is not covered by
the labor provision of payment of wages to the survivors of a deceased
employee. That is covered by his estate.
You have to execute an extra-judicial partition for settlement and
partition (?).
Suppose you have other benefits. It is covered by the CBA. The
CBA says any covered employee who dies while still an employee will
receive P 10,000. That the survivors will receive it is not indicated.
That is still benefit. That is covered by payment of benefits to the
survivors of the deceased.
But I am talking about provident fund – kanang hulog-hulogan.
That is not covered by this (Labor Code).
8. Prohibition against interference in the disposal of wages
The employee cannot be told to do with his wages.
Canteens in isolated workplaces cannot be owned by the
employers themselves.
Canteens from which the employee or his family can withdraw on
a vale system essentials for the household – that cannot be under the
control of the employer.
Normally, canteens are run by cooperatives or by outside parties
because if it is the employer, it will run afoul with this prohibition
against the interference in the disposal of wages.
9. Prohibition against deduction from wages
ARTICLE 113. Wage deduction. — No employer, in his own
behalf or in behalf of any person, shall make any deduction from the
wages of his employees, except:
(a) In cases where the worker is insured with his consent by the
employer, and the deduction is to recompense the employer for
the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his
union to check-off has been recognized by the employer or
authorized in writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations
issued by the Secretary of Labor.
Article 113 provides for the following allowable deductions:
1. Premiums on industrial insurance
If you have an industrial insurance, insurance of small
amounts of premium but enjoying a high return, that is allowed.
The premiums may be deducted from your salaries.
2. Union dues provided in the CBA
They are checked-off from your salaries at source.
3. Deductions that are authorized by law
Withholding tax, SSS counterpart contribution of the
employee, PhilHealth contribution, PAG-IBIG.
But Employees’ Compensation you cannot deduct. Only the
employer contributes P 10 per head. Any provision to the
contrary is void.
Those are the deductions allowable from the employee’s salary.
10. Prohibitions against deductions from deposits
How about deductions from deposits? May an employee be required
deposits in case of loss of equipment or breakage in a job? The answer is
as follows. There are 5 requisites when you allow for deposits to answer
for breakage:
1. Industry is one where deductions for breakage is recognized.
What is an example? Waiters in restaurants and hotesl.
They must provide for deposits for breakage of china and other
equipment. Kung dili, mudistansya sila mag-arrange ug table.
That is customary in that particular instance.
2. The employee is shown to be clearly responsible for the loss
There must be an investigation.
3. The employee must be given an opportunity to be heard, to
present his side
4. The deduction must not exceed the actual value of loss or
damage
That is a technical term. Delivery boy ka sa Jollibee.
Nagdeliver ug 25 ka cheese burger and 25 ka Coke. Gideliver
nimo sa Agdao, suot sa eskinita. Pagbalik nimo wala na imong
motor. – nawala, loss.
Can the acquisition cost of the motorcycle be deducted from
your salary? NO.
What is the value to be deducted? Acquisition cost less
accumulated depreciation. Therefore, it is the equal to the actual
value of the loss, not just straight acquisition cost.
5. The deduction cannot be more than 20% of the weekly wage of
the employee
For that reason, you must study FIVE J TAXI vs. NLRC
(235 SCRA 556 1995).
JULY 24, 2008
The amount of attention that you should place is in the following
order:
1. The text of the Code itself – You have to be familiar because it is
the source of terminology and technicalities (?)
2. The implementing rules
3. Decided cases
We were last in Article 113 and Article 114 – the deductions from
wages and deductions from deposits.
ARTICLE 114. Deposits for loss or damage. — No employer shall
require his worker to make deposits from which deductions shall be made
for the reimbursement of loss of or damage to tools, materials, or
equipment supplied by the employer, except when the employer is engaged
in such trades, occupations or business where the practice of making
deductions or requiring deposits is a recognized one, or is necessary or
desirable as determined by the Secretary of Labor in appropriate rules and
regulations.
For deductions from deposits to be allowed:
1. It must be an industry where deductions from deposits is
recognized
2. The employee must be shown to be clearly responsible for the
loss
3. The employee is given the opportunity to be heard
4. The deduction must not exceed actual loss or damages
7
 5. The deduction should not exceed 20% of the weekly wage
of the employee
FIVE J TAXI vs. NLRC (235 SCRA 556 1985)
Where the Supreme Court validated these foregoing rules found
in the Rules Implementing the Labor Code.
The deductions that were at issue were deductions for shortage
deposit and deductions for the washing of the taxi. This was the rule
of Five J Taxi.
Everyday when you return the taxi, aside from the boundary that
is turned in, you are deducted. One is deductions for shortage. Bisan
sakto imong paghatag sa boundary, deductan ka ug P 25 para
shortage allowance. Arun kung muabot ang adlaw na dili ka
makahatag sa boundary, adto kuhaon sa shortage allowance ang
kulang.
The other deduction is washing of the taxi. Gikuha nimo ang taxi,
limpyo na.
The Supreme Court said that the first deduction (for shortage) is
a violation. That is not what is provided (?) in Article 113.
The second deduction for washing, according to the Supreme
Court, is an obligation in equity because you got the taxi washed and
clean. This deduction is in accordance with the law.
FIVE J TAXI vs. NLRC (August 22, 1994)
FACTS: Private respondents Maldigan and Sabsalon were hired by
the petitioners as taxi drivers and they worked for 4 days on a 24-hour
shifting schedule. Aside from the daily boundary, they were also
required to pay P20 for car washing and to further make a P15 deposit
to answer for any deficiency in their “boundary” for very actual
working day. In les than 4 months, petitioners learned that Maldigan
rarely reported for work since he was working for “Mine of Gold” Taxi
Company. Sabsalon, on the other hand, was hospitalized but was re-
admitted by petitioners. He failed to report for work and it was
revealed that he was driving a taxi for “Bulaklak” company. In 1989,
Maldigan requested for the reimbursement of his daily cash deposits
for 2 years but petitioners told him that not a single centavo was left
of his deposits as these were spent for the repairs of the taxi he was
driving. This was allegedly the practice adopted by petitioners. When
Maldigan insisted on the refund, petitioners terminated his services.
Sabsalon claimed that his termination was effected when he refused to
pay for the washing of his taxi seat covers. In 1991, private
respondents filed a complaint charging petitioners with illegal dismissal
and illegal deductions.
ISSUE: Whether or not the deductions were illegal
RULING: Article 114 of the Labor Code provides the rule on deposits
for loss or damage to tools, materials or equipment supplied by the
employer. Clearly the same does not apply to or permit deposits not
do defray any deficiency which the taxi driver may incur in the
remittance of his boundary. When private respondents stopped
working for petitioners, the alleged purpose for which petitioners were
required such unauthorized deposits no longer existed. Any balance
due to private respondents after proper accounting must be returned
to them with legal interest.
The accounting shows that Sabsalon incurred shortages such
that he mentioned questioning the same. The evidence shows that he
had not withdrawn the same, thus, he should be reimbursed the
amount of his accumulated cash deposits.
Private respondents are not entitled to the refund of the P20 car
wash payment they made. There was nothing to prevent private
respondents from cleaning the taxi units themselves. Car washing as a
tour of duty is a practice in the industry and is in fact, dictated by fair
play.
11. Prohibitions against withholding of wages and kickbacks
ARTICLE 116. Withholding of wages and kickbacks
prohibited. — It shall be unlawful for any person, directly or
indirectly, to withhold any amount from the wages 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.
Article 116 is the prohibition against withholding of kickbacks.
ARTICLE 117. Deduction to ensure employment. — It shall
be unlawful to make any deduction from the wages of any employee
for the benefit of the employer or his representative or intermediary as
consideration of a promise of employment or retention in employment.
11. Prohibitions against deduction to ensure employment
Article 116 and Article 117 (prohibition against deduction to
ensure employment) are common practices in workplaces where the
manpower that is requires does not demand education. What are
those? In the arrastre, you are a stevedore. Ang imong capital ana kay
liug ur imong kusog.
What happens in the workplace? You rely on a kapatas (?) In the
Labor Code, the kapatas is called cabo. That technical term is allowed in
the Labor Code. Kana sila musulay (?) ug mga tao. Ang ilang mga tao no
read, no write.
Suppose there is a kickback by the cabo. Muabot ang sweldo, nay
pahalipay. That is illegal - deductions to ensure employment or the
withholding of the wages. If cabo is the paymaster unya kuhaan niya or
withhold niya, mao na na.
These are practices which are sought to be protected by Articles 116
and 117. These are age old practices by which the wage of the employee is
deducted unbeknownst to them or with their tolerance because they do not
know better. That is what they have known. That is actually contrary to
law.
12. Prohibitions against retaliatory measures
ARTICLE 118. Retaliatory measures. — It shall be unlawful for an
employer to refuse to pay or reduce the wages and benefits, discharge or in
any manner discriminate against any employee who has filed any complaint
or instituted any proceeding under this Title or has testified or is about to
testify in such proceedings.
Article 118 – prohibition against retaliatory measure.
Let me just recall to you, Article 248 (f) when you dismiss the
employee about to complain or to testify against the employer. This is it.
Only in this case, he is complaining or testifying interference or coercion of
the employer in the exercise of his self-organization. Therefore, that is an
unfair labor practice.
ARTICLE 248. Unfair labor practices of employers. — It shall be
unlawful for an employer to commit any of the following unfair labor
practice: xxx
(f) To dismiss, discharge, or otherwise prejudice or discriminate against
an employee for having given or being about to give testimony under this
Code; xxx
Here (Article 118), there is no right to self-organization involved. What
is involved here are just labor standards rights. And because the employee
complains, the employer retaliates by dismissing him or changing the terms
and conditions of work because the worker has filed a complaint or is about
to testify in a case of labor standard. That is prohibited.
The action of the employer becomes malicious, whimsical and
capricious, which in turn means that the employer becomes liable to moral
damages.
13. Prohibitions against false reporting
ARTICLE 119. False reporting. — It shall be unlawful for any person
to make any statement, report, or record filed or kept pursuant to the
provisions of this Code knowing such statement, report or record to be false
in any material respect.
The most common false reporting is making the employee sign a blank
payroll. After everybody signs, they fill in the blanks. What are the blanks
to be filled? The name of the establishment kay naa man nang payroll
forms for sale sa National Bookstore.
Papirmahan nimo ang mga empleyado. The amounts that are put
there are not the actual amount that they receive. It is the amount that is
in accordance with law.
This comes to light when there is a workplace inspection, when the
Department of Labor comes unannounced. Part of the inspection is
interviewing workers. “Pila imong nadawat karon?” Kanang empleyado
under instruction na sila. “Minimum sir.” “Pila man nang minimum?”
“Basta minimum.”
Ang panlaban ana kay kanang inspection under Articles 128 and 129.
Manggawas jud na.
Please remember what has to be contained in the payroll:
1. Pay period
2. Regular rate
3. Gross Pay
4. Additional pay – overtime pay, premium pay, night-shift differential
5. Deductions – cash advance, SSS contributions, PAG-IBIG,
Withholding tax
6. Take home pay
8
 How long will the employer maintain the payroll records? Under
the Labor Code, 3 years. But under the National Internal Revenue
Code in Taxation, it is 5 years.
Why is it just 3 years for Labor Code? Because money claims
prescribe in 3 years from the date of accrual.
WAGE ORDERS
RA 6727 – Wage Rationalization Act, which became effective on
June 25, 1989, amending Articles 120 to 127 of the Labor Code.
The Wage Rationalization Act provides for the creation of 2
bodies:
1. Regional Tripartite Wage and Productivity Board
(RTWPB)
That is regional in nature, created by Article 122
ARTICLE 122. Creation of Regional Tripartite Wages and
Productivity Boards. — There is hereby created Regional Tripartite
Wages and Productivity Boards, hereinafter referred to as Regional
Boards, in all regions, including autonomous regions as may be
established by law. The Commission shall determine the
offices/headquarters of the respective Regional Boards.
The Regional Boards shall have the following powers and
functions in their respective territorial jurisdiction:
(a) To develop plans, programs and projects relative to wages,
incomes and productivity improvement for their respective regions;
(b) To determine and fix minimum wage rates applicable in their
respective regions, provinces or industries therein and to issue
the corresponding wage orders, subject to guidelines issued by the
Commission;
(c) To undertake studies, researches, and surveys necessary for the
attainment of their functions, objectives and programs, and to
collect and compile data on wages, incomes, productivity and other
related information and periodically disseminate the same;
(d) To coordinate with the other Regional Boards as may be
necessary to attain the policy and intention of this Code;
(e) To receive, process and act on applications for exemption from
prescribed wage rates as may be provided by law or any Wage
Order; and
(f) To exercise such other powers and functions as may be necessary
to carry out their mandate under this Code.
Implementation of the plans, programs and projects of the
Regional Boards referred to in the second paragraph, letter (a) of this
Article, shall be through the respective regional offices of the
Department of Labor and Employment within their territorial
jurisdiction; Provided, however, That the Regional Boards shall have
technical supervision over the regional office of the Department of
Labor and Employment with respect to the implementation of said
plans, programs and projects.
Each Regional Board shall be composed of the Regional Director
of the Department of Labor and Employment as chairman, the
Regional Directors of the National Economic and Development
Authority and the Department of Trade and Industry as vice-chairmen
and two (2) members each from workers and employers sectors who
shall be appointed by the President of the Philippines, upon
recommendation of the Secretary of Labor and Employment, to be
made on the basis of the list of nominees submitted by the workers
and employers sectors, respectively, and who shall serve for a term of
five (5) years.
Each Regional Board to be headed by its chairman shall be
assisted by a Secretariat.
2. National Wage and Productivity Council (NWPC)
The national body does not promulgate or pass any wage order
because there is no universal language in wage order. The wage
order is regional in nature, admitting for differences in cost of living
and living standards among various regions in the Philippines.
It is the local board, the RTWPB, that determines the minimum
wage level.
How is it determined? By the decision of the Board which is
composed of 2 representatives from labor, 2 representatives from
capital or management or 4 of which appointed by the President and 2
representatives from the Government, the Regional Director of Labor
being ex-officio chairman of RTWPB.
So, 2 employees’ representatives, 2 management and 2
government.
The Board decides the wage order and limits increases by
majority vote.
So, whoever the 2 government representatives side with, that is
the proposal that will be accepted. If it sides with the management, it
is the management’s proposal. If it sides with the workers, it is the
laborers’ proposal that will be accepted. So, in the end, it is still the
government who really determines the minimum wage levels.
Before such determination, there must be a hearing that is conducted.
The purpose is this is to inform the Board of the various conditions that are
obtaining in the region.
It conducts a hearing at which anyone who is interested may
participate. You can go there and raise questions and submit position
papers to the RTWPB.
Remember that under Article 127 can only be raise wages. It cannot
go lower. No wage order may be interpreted to mean a diminution of
benefits. Kanang wages, pataas jud na.
It is therefore safe to say, although the law does not say that, that the
RTWPB has power only to raise not reduce wages.
It can segment regions in anyway they want. They can decree wages
per industry. They can decree wages per occupation or per locality as to
cities, municipalities and provinces. Under categories, which they
themselves can decide it – agricultural, non-agricultural. With agricultural,
they can divide it into plantation or non-plantation. The moment it is more
than 25 hectares, you are considered as a plantation. So, the plantation
agricultural worker has slightly higher minimum wage than the non-
plantation. Then, you have various categories like retail and service
establishments employing not more than 5, etc. Those non-agricultural
workers in cities and they list the cities. Regional 11 they normally lump it
there – Davao, Tagum, Panabo, etc.
What is the minimum wage? The minimum wage rate now has 2
components: wage and ECOLA. The ECOLA is the Emergency Cost of Living
Allowance.
Why do they have ECOLA and regular wage? Because ECOLA is
supposed to answer the sudden rise in the cost of living. Regular wage is
supposed to be that wage which is subject of computation in rendering
overtime pay, rest day pay, premium pay such as night-shift differential and
13th month pay. ECOLA is not counted in the definition of overtime,
premium pay, 13th month pay.
Where is that found? That is not found in the Labor Code. It is found
in a separate law, which is now Wage Order 15. Wage Order 15 has
decreed an additional ECOLA of P15 effective June 16, 2008.
So, the old ECOLA was P 16, gidungagan ug P 16, P 31 na karon ang
ECOLA. Starting August 1, I think, P 15 of that ECOLA willl be integrated
into the regular wage so that, starting August 1, it is no longer a P 31
ECOLA. It will just be a P 15 ECOLA and the pay will now be P 250 regular
wage. I am talking of the City of Davao – Region 11.
The others, tan-awa na ninyo sa internet.
What happens if you disagree with the wage order? When that
happens or if that happens, you appeal the wage order to the national
body, NPWC.
Does the appeal to the national body suspend the effectivity of the
wage order? NO, unless you put up a bond in such amount to be
determined by the council, the national body.
The perennial objector everytime a wage order comes out is the
Philippine Banana Producers and Exporters Association.
The law says that the appeal does not stay the wage order. The board
says put up a bond and the bond is not less than P 60 M because that is the
wages for one month of the banana workers, assuming 1 worker per
hectare.
They cannot put up the bond. A bonding company is covered by
insurance. What is the capitalization of insurance? P 25 M ra man na ilang
capital. Dili man gani na kaabot ug katunga sa bond na kinahanglan. Kinsa
may musukol ana?
Every year they oppose the wage order. But they failed to obtain the
bond because the bond that is required is huge.
But does that stop them from complaining? No, they still complain
because it has been a matter of reflex  So, what happens? There is no
staying of the wage order.
WAGE DISTORTION
What is wage distortion? There is a long definition in Article 124. I
suggest you memorize that like a mantra.
ARTICLE 124. Standards/Criteria for Minimum Wage Fixing. xxx
As used herein, a wage distortion shall mean a situation where an
increase in prescribed wage rates results in the elimination or severe
contraction of intentional quantitative differences in wage or salary rates
between and among employee groups in an establishment as to effectively
obliterate the distinctions embodied in such wage structure based on skills,
length of service, or other logical bases of differentiation. xxx
That is the definition.
Elements:
1. There is a hierarchical difference in wages
Hierarchical – wage is not the same. It is not homogenous.
Naay taas, taas-taas, nay kinatas-an.
9

2. There is a mandatory minimum wage increase mandated by law
3. The minimum wage law applies only to one or more of the
categories, but does not apply to all in the hierarchy.
4. As a result, there is an obliteration or severe contraction in the
wage differences.
5. Employees affected belong to the same region
This is a new case: PRUBANKERS ASSOCIATION vs.
PRUDENTIAL BANK (302 SCRA 74 1999)
How to remedy a wage distortion? There are 2 ways:
a. If there is a CBA or an EBA, then, wage distortion should be
processed like an ordinary grievance. It goes through the
grievance machinery and ends with voluntary arbitration.
b. If there is no union or there is no union, then, it may be adjusted
by:
1. With the assistance of National Conciliation and Mediation
Board (NCMB)
2. If the NCMB cannot resolve the disagreement to the
satisfaction of the parties, then, the aggrieved party may raise
the issue with the Labor Arbiter. Then, it follows the remedial
stages: LA, NLRC, CA, SC.
Can a wage distortion be a ground for a strike? The Supreme
Court says NO, because of the law. After giving all these remedial
measures, it is intended that this be disseminated (?) from a strike.
The law itself providing these 2 measures has eliminated wage
distortion as a strikeable (?) issue. This was ruled upon the by the
court in ILAW AT BUKLOD NG MANGGAGAGAWA (IBM) vs.
NLRC.
IBM vs. NLRC (June 27, 1991)
HELD: These joint or coordinated activities may be forbidden
or restricted by law or contract. In the particular instance of wage
distortions, Section 3 of RA 6727 prescribes a specific, detailed and
comprehensive procedure for the correction thereof, thereby implicitly
excluding strikes or lockouts or other concerted activities as modes of
settlement of the issue. The provision states that the employer and
the union shall negotiate to correct the distortions. Any dispute arising
from wage distortions shall be resolved through the grievance
procedure under their collective bargaining agreement and, if it
remains unresolved, through voluntary arbitration. In cases where
there are no collective agreements or recognized labor unions, the
employers and workers shall endeavor to correct such distortions. Any
dispute arising therefrom shall be settled through the NCMB and, if it
remains unresolved after 10 calendar days of conciliation, shall be
referred to the appropriate branch of the NLRC.
The legislative intent that solution of the problem of wage
distortions shall be sought by voluntary negotiation or arbitration, and
not by strikes, lockouts, or other concerted activities of the employees
or management, is made clear in the rules implementing RA 6727.
Section 16, Chapter I of these implementing rules, after reiterating the
policy that wage distortions be first settled voluntarily by the parties
and eventually by compulsory arbitration, declares that, "Any issue
involving wage distortion shall not be a ground for a
strike/lockout."
Moreover, the CBA also prescribes a similar eschewal of strikes or
other similar or related concerted activities as a mode of resolving
disputes or controversies, generally, said agreement clearly stating
that settlement of "all disputes, disagreements or controversies of any
kind" should be achieved by the stipulated grievance procedure and
ultimately by arbitration. It was also stipulated that the union agrees
that there shall be no strikes, walkouts, stoppage or slowdown of
work, boycotts, secondary boycotts, refusal to handle any
merchandise, picketing, sit-down strikes of any kind, sympathetic or
general strikes, or any other interference with any of the operations of
the company during the terms of the CBA.
The Union was thus prohibited to declare and hold a strike or
otherwise engage in non-peaceful concerted activities for the
settlement of its controversy with SMC in respect of wage distortions.
The partial strike or concerted refusal by the Union members to follow
the 5-year-old work schedule which they had therefore been
observing, resorted to as a means of coercing correction of
"wage distortions," was therefore forbidden by law and
contract and, on this account, illegal.
Please bear in mind that the key requisite of wage distortion is
that there is a mandatory minimum wage distortion that causes the
distortion.
Suppose, by a unilateral act of management, a group of workers’
wage was adjusted. In doing so, it creates a distortion.
Is the management now obliged to go through the remedial measures
of either grievance or a case before the NLRC? NO.
Although, the Supreme Court does not use a different term. The
Supreme Court says that this is still wage distortion. But in ordinary
parlance of labor relations, this is not a wage distortion. This is called a
WAGE COMPRESSION because the reason for the truncating or severing
or reduction or elimination of differences is not a wage order but the
unilateral act of the management.
Suppose you have a machine shop. The machine shop has regular lith
(?) operators and probationary. There is a substantial difference between
the salaries of the regular operators and the probationary. There are also
master lith operators.
So, you have a hierarchy – probationary, regular, master.
Suppose the difference between regular and probationary is P 50 a
day. The regulars are paid P 300 a day and the probationary P 250 a day.
Now, all of a sudden, the management finds out that there are no
more regular operators because they are applying abroad. Recruiters from
Manila recruit them to work in Nigeria.
So, management increases. So, there is now a severe reduction.
Naay difference na P 10 but before it was P 50.
Can the regular operators now cry wage distortion? The Supreme
Court says NO. The wage distortion is caused not by a wage order but by
the unilateral act of the management.
Let us say that there is situation where it decreases. The wage
difference between the probationary and the regular operators is P 10.
In the adjustment of the grievance, is management obliged to restore
the historical difference of P 50? Can the voluntary arbitrator order the
management to adjust the regular so that the historical difference of P 50?
The Supreme Court says NO. If management out of the goodness of its
heart adjusts the pay just as P 5 more, so it will be P 15, then, that will be
sufficient.
Suppose the management, because there is a conflict between the
regular and probationary, says there is no more probationary. All of you
will be regular. So katong increase na P 40, na increase pa jud ug P 10
arun mahimo na regular. Reklamo ang regular. Is that allowed? The
Supreme Court says YES, that is allowed because that is part of
management prerogative. In the first place, who created the hierarchy? It
is the management and the management can also do away with the tiered
hierarchy.
That is wage distortion. Every 3 years, the Bar Examination asks wage
distortion. What is wage distortion? Is there a wage distortion? That has
now been a favorite question. Bantayi na ninyo. Memorize that wage
distortion.
JULY 30, 2008
Even if the employee is lawfully paid through an ATM, you must have a
separate record of the payroll that must be given to him or her.
The requisites of what the payroll should contain:
1. length of time covered
2. rate of pay (monthly, weekly, daily, piece-rate)
3. straight time pay
4. additional pay (premium, overtime)
5. deductions
6. actual take home pay
That must be contained in the payroll which the employee is supposed
to have.
The exception there is that if the employee signs the payroll, it means
that he has already received what he signs up in the payroll. If he should
object, then, he should not sign. That is the assumption of the law. Mao
na ang kinaraan.
Pero karon na naay payroll account, the payroll account is
distinguished from a regular bank account in that the payroll account does
not require a minimum balance. You can withdraw the whole thing.
A payroll account is not really in the nature of an actual deposit
because there is only one client there that exists. These are the amounts
that should be credited in the following accounts and the bank does the
transfer. The employees have an ATM card. Expect that on that day,
kusog na ng ATM.
(The following discussions were already discussed in the previous lecture
but I included it here nevertheless just in case I missed something )
WAGE RATIONALIZATION ACT
Republic Act 6727, made effective on June 25, 1989.
That Republic Act amended Articles 120-127 of the Labor Code.
Originally, Articles 120-127 provided for minimum wage but on the premise
that it was Congress who pass the wage law. But after awhile, Congress
got fed up. Every year, there are all these demonstrations.
10
 So, what they did was they created Regional Wage Boards. The
Regional Wage Boards would determine the wages of a particular
region on the premise that the wages in Manila should be
quantitatively and qualitatively higher than the wages outside Metro
Manila. And even between other regions, there are differences
because there are differences in cost of living.
So, that is what Congress did.
There were 2 bodies created:
1. Regional Tripartite Wages and Productivity Board
(RTWPB)
2. National Wages and Productivity Commission (NWPC)
It was the job of RTWPB to enact wage orders within regions.
If there is someone who is aggrieved with the wage order, you
appeal to the NWPC. But the Commission does not issue wage orders.
The Commission merely reviews the wage orders.
ARTICLE 124. Standards/Criteria for Minimum Wage
Fixing. — The regional minimum wages to be established by the
Regional Board shall be as nearly adequate as is economically feasible
to maintain the minimum standards of living necessary for the health,
efficiency and general well-being of the employees within the
framework of the national economic and social development program.
In the determination of such regional minimum wages, the Regional
Board shall, among other relevant factors, consider the following:
(a) The demand for living wages;
(b) Wage adjustment vis-à-vis the consumer price index;
(c) The cost of living and changes or increases therein;
(d) The needs of workers and their families;
(e) The need to induce industries to invest in the countryside;
(f) Improvements in standards of living;
(g) The prevailing wage levels;
(h) Fair return of the capital invested and capacity to pay of
employers;
(i) Effects on employment generation and family income; and
(j) The equitable distribution of income and wealth along with the
imperatives of economic and social development.
The wages prescribed in accordance with the provisions of this
Title shall be the standard prevailing minimum wages in every region.
These wages shall include wages varying within industries, provinces
or localities if in the judgment of the Regional Board conditions make
such local differentiation proper and necessary to effectuate the
purpose of this Title.
Under Article 124, there are several criteria for the determination
of the propriety of the wage order. The list is long – cost of living, the
consumer price index (CPI), the demand for increases of the various
sectors, and the just share on the cost of capital.
Those are the criteria for the determination of the minimum wage
order. You might be asked what are some of the criteria. Maayo
magbaon mo ug 3 or 4 kabuok arun naa moy ikabuga 
An appeal of the wage order does not stay the wage order,
unless you can put up a bond. And the bond is to be determined by
the Commission.
The Association of Banana Exporters and Producers of the
Philippines, which has headquarters here in Davao, are perennial
objectors of wage orders of the Region XI. Kada nay wage order,
oppose jud na sila.
Their opposition cannot stay the execution of the wage order
because they cannot put the bond to stay the wage order because the
bond is in the vicinity of P 70M to P 100M.
If you can raise the bond, then, you can stay the order.
Q: May a wage order be issued even without the conduct of a
hearing? RA 6727 requires that RTWPB must conduct hearings for
determination of the proper level of the wage order.
The Supreme Court has said that for regulating bodies to conduct
hearings before they can issue a standard, that is not the same as the
requirement of a hearing for due process.
The requirement of the hearing is for the benefit of the Board
itself to inform itself as to the various contending forces with respect
to a given issue. But it is not like the requirement of a hearing to
settle an adversarial dispute which you have to give a day in court to
each party of the dispute.
So, therefore, the requirement of hearing in RA 6727 is
merely directory. That is not the sole means by which therefore it
can inform itself for purposes of determining the proper level of the
minimum wage.
What is WAGE DISTORTION?
ARTICLE 124. Standards/Criteria for Minimum Wage
Fixing. xxx
As used herein, a wage distortion shall mean a situation where
an increase in prescribed wage rates results in the elimination or
severe contraction of intentional quantitative differences in wage or salary
rates between and among employee groups in an establishment as to
effectively obliterate the distinctions embodied in such wage structure
based on skills, length of service, or other logical bases of differentiation.
xxx
In wage distortion, there are at least 4 elements:
1. There is a hierarchical difference in wages among the employees
2. There is a mandatory wage increased that does not apply to all
employees
3. There is an obliteration or severe contraction of wage differences
4. The employees affected must belong to the same region.
The fourth one is supplied by jurisprudence – PRUBANKERS
ASSOCIATION vs. PRUDENTIAL BANK 372 SCRA 74 (1999).
The ordinary rank and file employees in Manila branches of Prudential
Bank are already pretty much higher than the supervisory employees of, let
us say, Zambales.
The supervisory employees in Zambales complained that their salaries
are just the same as the rank and file employees of Metro Manila.
The Supreme Court says that is not the proper comparison. The
proper comparison is whether or not there is distortion within your region
because now, with RA 6727, wages are regionalized for obvious reasons in
that there are differences in the cost of living and proper salary scales
standards according to the various regions of the Philippines.
PRUBANKERS ASSOCIATION vs. PRUDENTIAL BANK & TRUST
COMPANY (January 25, 1999)
FACTS: The RTWPB of Region V issued Wage Order No. RB 05-03 provided
COLA to workers in the private sector who had rendered service for at least
3 months. Subsequently, the RTWPB of Region VII issued Wage Order No.
RB VII-03, which directed the integration of the COLA mandated pursuant
to Wage Order No. RO VII-02-A into the basic pay of all workers. It also
established an increase in the minimum wage rates for all workers and and
employees in the private sector.
Respondent then granted a COLA of P17.50 to its employees at its
Naga Branch, the only branch covered by Wage Order No. RB 5-03, and
integrated the P150.00 per month COLA into the basic pay of its rank-and-
file employees at its Cebu, Mabolo and P. del Rosario branches, the
branches covered by Wage Order No. RB VII-03.
Prubankers Association wrote the respondent requesting that the
Labor Management Committee be immediately convened to discuss and
resolve the alleged wage distortion created in the salary structure upon the
implementation of the said wage orders. Petitioner then demanded that the
respondent extend the application of the wage orders to its employees
outside Regions V and VII, claiming that the regional implementation of the
said orders created a wage distortion in the wage rates of respondent's
employees nationwide.
ISSUE: whether or not a wage distortion resulted from respondent's
implementation of the aforecited Wage Orders.
RULING: No. The statutory definition of wage distortion is found in Article
124 of the Labor Code, as amended by Republic Act No. 6727, which reads:
As used herein, a wage distortion shall mean a situation where an
increase in prescribed wage results in the elimination of severe contraction
of intentional quantitative differences in wage or salary rates between and
among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of
service, or other logical bases of differentiation.
Wage distortion involves four elements:
1. An existing hierarchy of positions with corresponding salary rates
2. A significant change in the salary rate of a lower pay class
without a concomitant increase in the salary rate of a higher one
3. The elimination of the distinction between the two levels
4. The existence of the distortion in the same region of the country
It is clear that no wage distortion resulted when respondent
implemented the subject Wage Orders in the covered branches. In the said
branches, there was an increase in the salary rates of all pay classes.
Furthermore, the hierarchy of positions based on skills, length of service
and other logical bases of differentiation was preserved. In other words, the
quantitative difference in compensation between different pay classes
remained the same in all branches in the affected region.
Petitioner argues that a wage distortion exists, because the
implementation of the two Wage Orders has resulted in the discrepancy in
the compensation of employees of similar pay classification in different
regions. The Court is not persuaded. A wage parity between employees in
different rungs, is not at issue here, but a wage disparity between
employees in the same rung but located in different regions of the country.
A disparity in wages between employees holding similar positions but in
different regions does not constitute wage distortion as contemplated by
law. It is the hierarchy of positions and the disparity of their corresponding
wages and other emoluments that are sought to be preserved by the
concept of wage distortion. A wage distortion arises when a wage order
engenders wage parity between employees in different rungs of the
11
organizational ladder of the same establishment. Wage distortion
involves a parity in the salary rates of different pay classes which,
eliminates the distinction between the different ranks in the same
region.
Petitioner's claim of wage distortion must also be denied for one
other reason. The difference in wages between employees in the same
pay scale in different regions is not the mischief sought to be banished
by the law. A disparity in wages between employees with similar
positions in different regions is necessarily expected. In insisting that
the employees of the same pay class in different regions should
receive the same compensation, petitioner has apparently
misunderstood both the meaning of wage distortion and the intent of
the law to regionalize wage rates. RA 6727 recognizes that there are
different needs for the different situations in different regions of the
country. The fact that a person is receiving more in one region does
not necessarily mean that he or she is better off than a person
receiving less in another region. We must consider, among others,
such factors as cost of living, fulfillment of national economic goals,
and standard of living.
Petitioner also avers that the implementation of the Wage Order
in only one region violates the equal-pay-for-equal-work principle. At
the risk of being repetitive, we stress that RA 6727 mandates that
wages in every region must be set by the particular wage board of that
region, based on the prevailing situation therein. (Lendl Floyd Montes
)
There is this new case: BANKARD EMPLOYEES UNION-WATU
vs. NLRC 423 SCRA 148 (2004)
In this particular case, there was a severe contraction of the
wage differences among the group of workers but it was not the result
of a mandatory statutory wage increase. It was the result of a
unilateral practice of management. The management raised the entry
level group of workers into the Bankard Company.
According to this employer, if we do not increase the entry level
salary, we will not be able to get the kind of talent we need. With so
increasing, the regular members of their workforce, their salaries were
just slightly higher than the entry level employees. So, they
complained. Isn’t this a wage distortion and management should
adjust our wages so that the historical gap will be restored?
Is that correct?
The Supreme Court said that is NOT CORRECT because there is
no wage distortion. Why is there no wage distortion? Because there
is no mandatory statutory wage increase.
So, that is an essential requirement – to have a statutory wage
increase.
Then, the Supreme Court said that the nature of wage distortion
is such that it is a factual and economic condition that is brought about
by different forces.
Actually, the more accurate term of what happened in Bankard is
wage compression, where the truncated and eliminated differences
occur because of a unilateral action of management. That is not wage
distortion. That is wage compression.
Wage distortion happens if there is a new law and it does not
apply to everybody.
BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE
UNIONS vs. NATIONAL LABOR RELATIONS COMMISSION and
BANKARD, INC(February 17, 2004)
FACTS: Bankard classifies its employees by levels. Its Board of
Directors approved a "New Salary Scale", for the purpose of making its
hiring rate competitive in the industry’s labor market. The "New Salary
Scale" increased the hiring rates of new employees, to wit: Levels I
and V by P1,000.00, and Levels II, III and IV by P900.00. Bankard
Employees Union-WATU pressed for the increase in the salary of its
old, regular employees. Bankard took the position, however, that there
was no obligation on the part of the management to grant to all its
employees the same increase.
ISSUE: Whether the unilateral adoption by an employer of an
upgraded salary scale that increased the hiring rates of new employees
without increasing the salary rates of old employees resulted in wage
distortion within the contemplation of Article 124 of the Labor Code.
RULING: No. To determine the existence of wage distortion, the
"historical" classification of the employees prior to the wage increase
must be established. Likewise, it must be shown that as between the
different classification of employees, there exists a "historical" gap or
difference. The employees of private respondent have been
"historically" classified into levels, i.e. I to V, and not on the basis of
their length of service. It is thus clear that there is no hierarchy of
positions between the newly hired and regular employees of Bankard,
hence, the first element of wage distortion provided in Prubankers is
wanting.
While seniority may be a factor in determining the wages of
employees, it cannot be made the sole basis in cases where the nature
of their work differs. Moreover, for purposes of determining the
existence of wage distortion, employees cannot create their own
independent classification and use it as a basis to demand an across-the-
board increase in salary. It is properly a matter of management judgment
and discretion, and subject, perhaps, for bargaining negotiations
The third element provided in Prubankers is also wanting. Even
assuming that there is a decrease in the wage gap between the pay of the
old employees and the newly hired employees, said gap is not significant as
to obliterate or result in severe contraction of the intentional quantitative
differences in the salary rates between the employee group. As already
stated, the classification under the wage structure is based on the rank of
an employee, not on seniority.
Petitioner cannot legally obligate Bankard to correct the alleged "wage
distortion" as the increase in the wages and salaries of the newly-hired was
not due to a prescribed law or wage order. The wordings of Article 124 are
clear. The mere factual existence of wage distortion does not, ipso facto
result to an obligation to rectify it, absent a law or other source of
obligation which requires its rectification. Bankard’s right to increase its
hiring rate, to establish minimum salaries for specific jobs, and to adjust the
rates of employees affected thereby is embodied in the parties’ CBA, to wit:
Section 2. Any salary increase granted under this Article shall be without
prejudice to the right of the Company to establish such minimum salaries as
it may hereafter find appropriate for specific jobs, and to adjust the rates of
the employees thereby affected to such minimum salaries thus established.
In fine, absent any indication that the voluntary increase of salary
rates by an employer was done arbitrarily and illegally for the purpose of
circumventing the laws or was devoid of any legitimate purpose other than
to discriminate against the regular employees, this Court will not step in to
interfere with this management prerogative. (Lendl Floyd Montes )
There are 2 ways of resolving wage distortions:
1. If there is a union (CBA/EBA), you process it as if it is a grievance. So,
it goes to the grievance machinery, then finally, it undergoes (?) voluntary
arbitration.
2. If there is EBA/CBA/union, then, representatives of the management
and representatives of the employees meet together to resolve the dispute.
You invite the NCMB. If after 10 days, NCMB cannot solve the dispute, the
aggrieved party files a complaint with the appropriate branch of NLRC,
which is the Labor Arbiter. Then, Labor Arbiter, NLRC, Court of Appeals,
Supreme Court.
Take note that the Supreme Court says that there is no obligation to
correct the wage distortion that occurred because of the unilateral action of
the management.
There is also the case of METRO TRANSIT vs. NLRC 245 SCRA
767 (1995).
It has been a practice there that whatever has been granted to the
rank and file, they automatically grant the supervisory. Every time there
was increase in the rank and file, the supervisors are also normally included
in the increase, established not just one or two but several times.
Now, there is a wage increase only affecting the rank and file. The
rank and file wages were adjusted as mandated by law, but they did not
adjust the wages of the supervisory. So, they complained. Finally, it went
all the way to the Supreme Court.
The Supreme Court said that supervisors must be adjusted because
they have earned it as a matter of right. That practice of increasing one
and increasing the rest is a common practice for this particular employer.
METRO TRANSIT vs. NLRC (JULY 11, 1995)
FACTS: Metro is the operator and manager of the LRT System in Metro
Manila. Private respondent SEAM is a union composed of supervisory
employees of petitioner Metro. In May 1989, SEAM was certified as the sole
bargaining unit for the supervisory employees of Metro.
On 1 December 1989, the first CBA between Metro and SEAM took
effect. Prior to December 1989, Metro had a CBA only with its rank-and-file
employees. During the period when no CBA governed the terms and
conditions of employment between Metro and its supervisory employees,
whenever rank-and-file employees were paid a statutorily mandated salary
increase, supervisory employees were, as a matter of practice, also paid the
same amount plus P50.00.
On 17 April 1989, Metro paid its rank-and-file employees a salary
increase of P500.00 per month in accordance with the terms of their CBA.
Metro, however, did not extend a corresponding salary increase to its
supervisory employees.
On 1 December 1989, Metro, in compliance with its CBA with SEAM,
paid its supervisory employees a salary increase of P800.00 per month.
ISSUES:
1. W/N supervisory employees should be given wage increases based on
company practice (50 more to the increases given to rank and file)
even when they already have their own CBA which provides for their
annual salary increases?
2. W/N the wage distortion was effectively corrected after the grant of
increases to supervisory employees based on their CBA?
12
DECISION:
1. No. The issue of whether increases in wages essential for correcting
wage distortions may be credited against CBA-mandated increases, is
not an issue of first impression. In National Federation of Labor v.
National Labor Relations Commission , the Court rejected the argument
of the NLRC that wage increases resulting from collective bargaining
negotiations should not be regarded as constituting compliance with
the direction to correct wage distortions arising from the effectivity of
Wage Orders. In National Federation of Labor, the Court:
It is important to note that the creditability provisions of
Wage Orders Nos. 5 and 6 (as well as the parallel provisions in
Wage Orders Nos. 2, 3 and 4) are grounded in an important public
policy. The public policy may be seen to be the encouragement of
employers to grant wage and allowance increases to their
employees higher than the minimum rates of increases prescribed
by statute or administrative regulation. To obliterate the creditability
provisions in Wage Orders through interpretation or otherwise, and
to compel employers simply to add legislated increases in salaries or
allowances without regard to what is already being paid, would be
to penalize employers who grant their workers more than the
statutorily prescribed minimum rates of increases . Clearly, this
would be counter-productive so far as securing the interests of labor
is concerned. The creditability provisions in the Wage Orders
prevent the penalizing of employers who are industry leaders and
who do not wait for statutorily prescribed increases in salary or
allowances and pay their workers more than what the law or
regulations require.
In the instant case, the CBA-stipulated increase of P800.00 a
month was intended as the countervailing increase for supervisory
employees, the rank-and-file employees having already received their
own increase approximately 8 months earlier. In other words, the
wage distortion in the present case arose not because of a
government-decreed increase in minimum wages or because Metro
simply refused to treat its supervisory employees, differently from its
rank-and-file workers, but rather because of a failure to synchronize
the CBA-stipulated increases for rank-and-file and for supervisory
employees. Moreover, as more than once pointed out above, the
P800.00 monthly increase given to supervisory employees should be
taken in conjunction with the P550.00 month increase already awarded
to supervisory employees under Part I above. When these are taken
together, the wage distortion which occurred on 17 April 1989 was
completely and permanently corrected. There is no legal basis for
requiring Metro to pay not only the P800.00 month increase, but also,
on top thereof, the P550.00 monthly increase to supervisory
employees, after 1 December 1989 and forever after.
2. Yes. We consider the difference of P1,500.00 per month a
significant differential that clearly distinguishes, on the basis of pay
scales, a rank-and-file employee from a supervisory employee.
Applying the above increases to the actual salaries being received
by rank-and-file and supervisory employees of Metro, we find that
indeed the distortion caused by the CBA-stipulated wage increase
granted rank-and-file employees on 17 April 1989 was rectified by 1
December 1991. (Cherry Canda-Melodias )
Q: Suppose there is no such practice and there is a mandated wage
increase and only one group is increased and the other is not
increased. Let us say probationary welders are increased because
they adjust the minimum wage. Now, the salaries of the probationary
welders is the same except for a P2 or P3 difference with the regular
welders. Before, there was a P20 – P25 difference. Must the
employer restore the previous historical gap of P 25?
The Supreme Court says that there is no such obligation. The
employer cannot be ordered by the voluntary arbitrator or the Labor
Arbiter. What is required? Only good faith attempt at resolving the
issue is needed of the employer.
Let us say he restores up to P7 difference. There is now a
bonafide attempt to restore it.
Let us say only the probationary employees are affected by the
new wage orders. The regular employees are not. The regular goes
to the employer to complain. Ang diperensiya karon kay P 2 na lang.
There is no more difference.
Now, the employer says arun wala na tay diperensiya, kanang
probationary employees buhaton nako ug regular. Wala nay
probationary diha.
Is that a valid way of resolving a wage distortion?
The Supreme Court says YES, that is valid. In the first place, it is
the management’s prerogative that gives management the right to
create a hierarchy, several groups hierarchies with pay differentials. If
the law grants the power to create, the law has also granted the
power to abolish.
Workers’ preference in case of bankruptcy
ARTICLE 110. Worker preference in case of bankruptcy. —
In the event of bankruptcy or liquidation of an employer's business, his
workers shall enjoy first preference as regards their wages and other
monetary claims, any provisions of law to the contrary notwithstanding.
Such unpaid wages and monetary claims shall be paid in full before claims
of the government and other creditors may be paid.
Please take note that the Supreme Court has laid down the elements
as to the proper interpretation of Article 110.
Article 110 of the Labor Code grants preference to the workers over
other creditors, including the government, to claim their unpaid wages from
their employer ahead of other creditors, and even the government.
This can only be applied if there has been an in rem proceeding
declaring the employer insolvent.
If there is none, Article 110 has no application.
1. Required to present proof that the employer has been
adjudicated in an insolvency proceeding as insolvent or otherwise
known as bankrupt
2. If that is the case, Article 110 must be interpreted together
with all the other Civil Code provisions on concurrence and
preference of credits
Article 110 actually applies only to the so-called free property. It does
not apply to properties of the employer that are specifically mortgaged or
encumbered in favor of a specific creditor. It only applies to the so-called
free property.
3. Wages of workers’ claims of unpaid wages and other benefits
are superior to government claims
This must be interpreted as claims of government that are proprietary
in nature. They are not claims that are sovereign in nature – example are
taxes. In the payment of taxes and the unpaid wages of worker, it is still
taxes that is favored. There is no government employee that can waived
taxes unless it is specifically provided by law.
If you say that these workers’ preference in Article 110 is superior to
government claims, it must be government proprietary in nature.
4. Article 110 preference, brought about by RA 6715, became
effective March 21, 1989 and can only be given prospective effect.
It cannot be given retroactive effect.
Contracting and Sub-Contracting
ARTICLE 106. Contractor or sub-contractor. — Whenever an
employer enters into a contract with another person for the performance of
the formers work, the employees of the contractor and of the latter's sub-
contractor, if any, shall be paid in accordance with the provisions of this
Code.
In the event that the contractor or sub-contractor fails to pay the
wages of his employees in accordance with this Code, the employer shall be
jointly and severally liable with his contractor or sub-contractor to such
employees to the extent of the work performed under the contract, in the
same manner and extent that he is liable to employees directly employed by
him.
The Secretary of Labor may, by appropriate regulations, restrict or
prohibit the contracting out of labor to protect the rights of workers
established under this Code. In so prohibiting or restricting, he may make
appropriate distinctions between labor-only contracting and job contracting
as well as differentiations within these types of contracting and determine
who among the parties involved shall be considered the employer for
purposes of this Code, to prevent any violation or circumvention of any
provision of this Code.
There is "labor-only" contracting where the person supplying workers
to an employer does not have substantial capital or investment in the form
of tools, equipment, machineries, work premises, among others, and the
workers recruited and placed by such person are performing activities which
are directly related to the principal business of such employer. In such
cases, the person or intermediary shall be considered merely as an agent of
the employer who shall be responsible to the workers in the same manner
and extent as if the latter were directly employed by him.
ARTICLE 109. Solidary liability. — The provisions of existing laws to
the contrary notwithstanding, every employer or indirect employer shall be
held responsible with his contractor or subcontractor for any violation of any
provision of this Code. For purposes of determining the extent of their civil
liability under this Chapter, they shall be considered as direct employers.
What you have to remember about contracting or sub-contracting is
that there is such a thing as bonafide contracting and there is labor
only contracting.
BONAFIDE CONTRACTING means that the job contracted out is
susceptible in being contracted out. That it is not directly related to the
business of the employer.
13
 The one contracting, the contractor, has an independent business
as a contractor. He has sufficient capital, he has an office, he has
sufficient equipment. In other words, he is not a conduit. He is a
bonafide contractor.
Otherwise, he is a cabo. And if it is a cabo, the law disregards
him. And there is only one employer, namely the indirect employer –
the client of a cabo. That is LABOR-ONLY CONTRACTING.
If there is only labor-only contracting, the indirect employer
becomes the only employer and he is the employer for all purposes of
social and labor legislation.
As to minimum wage, he is liable. As to SSS and contributions of
social welfare, he is liable.
In bonafide contracting, the indirect employer is only liable for
underpayment or non-payment of wages and other benefits. He is not
liable for SSS contributions, etc. He is only liable for labor legislation,
not social legislation.
The Department of Labor has issued DO 18-02 February 21,
2002. In that particular order, there are prohibitions relating to
contracting and sub-contracting.
SECTION 6. Prohibitions. — Notwithstanding Section 5 of these
Rules, the following are hereby declared prohibited for being contrary
to law or public policy:
(a) Contracting out of a job, work or service when not done in good
faith and not justified by the exigencies of the business and the
same results in the termination of regular employees and
reduction of work hours or reduction or splitting of the bargaining
unit;
So, contracting is only made an excuse but the aim is really to
terminate regular employees or reduce work hours or split the
bargaining unit.
(b) Contracting out of work, with a "cabo" as defined in Section 1 (ii),
Rule 1, Book V of these Rules. "Cabo" refers to a person or group
of persons or to a labor group which, in the guise of labor
organization, supplies workers to an employer, with or without
any monetary or other consideration whether in the capacity of
an agent of the employer or as an ostensible independent
contractor;
(c) Taking undue advantage of the economic situation 1 or lack of
bargaining strength of the contractual employee, or undermining
his security of tenure or basic rights, or circumventing the
provisions of regular employment, in any of the following
instances:
i) In addition to his assigned functions, requiring the
contractual employee to perform functions which are currently
being performed by the regular employees of the principal or of
the contractor or subcontractor;
ii) Requiring him to sign, as a precondition to employment
or continued employment, an antedated resignation letter; a
blank payroll; a waiver of labor standards including minimum
wages and social or welfare benefits; or a quitclaim releasing
the principal, contractor or subcontractor from any liability as to
payment of future claims; and
iii) Requiring him to sign a contract fixing the period of
employment to a term shorter than the term of the contract
between the principal and the contractor or sub-contractor,
unless the latter contract is divisible into phases for which
substantially different skills are required and this is made known to
the employee at the time of engagement;
What is an example (iii)? Let us say, EEI was contracted by
Marco Polo Hotels to construct Marco Polo. EEI, the construction
company, subcontract the finishing carpentry and electrical and
plumbing works to another construction company, let us say, Santos
and Santos Engineering Works.
So, they have a contract to do this in 8 months. So, they hire
carpenters, plumbers, electricians.
Now, these electricians complained. Nganong giterminate naman
mi na sige pa man ug trabaho ang mga karpentero? The contract is
for 8 months. Kami, 4 lang mi kabulan. Nganong giterminate naman
mi?
Is it not the rule that the employees of the contractor should
have the same tenure as the contract with the indirect employer?
YES, but if the job is divisible you cannot claim to have been
illegally terminated.
(d) Contracting out of a job, work or service through an in-house
agency which refers to a contractor or subcontractor engaged
in the supply of labor which is owned, managed or controlled by
the principal and which operates solely for the principal;
1
And thereby, exaggerating needs of contracting or sub-contracting
What is an in-house agency? It is an agency providing contract
workers to only one particular indirect employer.
Example: SM. Unya naa silay contracting agency – MS Manpower
providing janitorial services. There are many SM stores that they are
providing with their services. But there is only one indirect employer that
they are providing janitorial services thereto. That is illegal. That is
prohibited because that is an in-house agency. Actually, that is owned by
the same controlling interest as SM and that is verifiable in the name – MS.
So, in-house agency is prohibited.
(e) Contracting out of a job, work or service directly related to the
business or operation of the principal by reason of a strike or lockout
whether actual or imminent;
Example: Coca-Cola Bottlers Phil. Inc. By law, the operating word
there is Bottlers. Dili nang Coca-Cola. Tagaan lang na sila ug formula.
Padad-an lang na sila ug concentrate sa Coca-Cola, ila na gamiton paghimo
ug Coke na binotilya.
What is the main job? To bottle.
Karon ang imong tao sa bottling line, contracted out. That is your
business. Mao gani imong ngalan. Sa ato pa, you are contracting out a
service directly related to your business or operation. That is prohibited.
Likewise, if you go to the General Banking Law of 2000, there are acts
enumerated there of the work of the bank which cannot be contracted out
because they are constituting the principal work or service line.
One example is tellering. Kanang teller dili na ma-contract out. That
is one of the main functions of the bank.
Let me just bring you the refinement in the law (?).
The Supreme Court does not use these yardsticks in determining on
whether there is or there is no valid contracting or sub-contracting. It does
not use the yardstick that is created in Articles 106.
What does the Supreme Court use? The Supreme Court uses another
yardstick found in Article 280 – whether or not you are engaged to perform
activities which are usual and necessary to the trade and business.
ARTICLE 280. Regular and Casual Employment. — The provisions
of written agreement to the contrary notwithstanding and regardless of the
oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the employment
is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such activity exist.
The Supreme Court admits that. Where does the Supreme Court
admit that? It admitted that in the en banc ruling of NERI vs. NLRC 224
SCRA 717 (1993).
At issue here is the job of the telephone operator. It is a banking
business. Is he or is he not in the position that can be contracted out? The
bank corporation contracted out the telephone operators’ job.
The Supreme Court said be that as it may, the Court has already taken
judicial notice of the general practice adopted in several government and
private institutions and industries of hiring independent contractors to
perform special services. These services range from janitorial, security and
even technical or other specific services such as those performed by
petitioners Neri and Cabelin. While these services may be considered
directly related to the principal business of the employer, nevertheless, they
are not necessary in the conduct of the principal business of the employer.
NERI vs. NLRC (July 23, 1993)
FACTS: Respondents are sued by two employees of BBC to compel Far
Eastern Banking Corporation (FEBTC) to recognize them as its regular
employees and be paid the same wages which its employees receive.
It was established in the proceedings that BBC had substantial
capitalization of P1M or stockholders equity of P1.5M. Thus, the Labor
Arbiter ruled that BBC was only job contracting and that its employees were
not of FEBTC. The factual findings were affirmed by NLRC.
BBC is a corporation engaged in providing technical, maintenance,
engineering, housekeeping, security and other specific services to its
clientele. Petitioners were assigned to work in Cagayan Branch of FEBTC as
radio telex operator and janitor.
Petitioners instituted complaints against FEBTC and BBC to compel the
bank to accept them as regular employees and for it to pay the differential
of between the wages being paid by BBC and those received by FEBTC
employees with similar length of service. It is the petitioner’s assertion that
BBC is engaged in “labor-only” contracting, hence, they conclude, they are
employees of the respondent FEBTC; that it failed to adduce evidence
purporting to show that it invested in the form of tools, equipment,
14
machineries, work premises and other materials which are necessary in
the conduct of its business; that they perform duties directly related to
the principal business or operation of FEBTC.
The Labor Arbiter dismissed the complaint for lack of merit. On
appeal, the NLRC affirmed the decision of the Labor Arbiter.
ISSUE: WON BBC is an independent job-contractor or not?
RULING: NO, BBC is not an independent job-contractor. BBC need
not prove that it made investments in the form of tools, equipment,
machineries, work premises, among others, because it has established
that it has sufficient capitalization; it was no longer necessary for BBC
TO further adduce evidence to prove that it does not fall within the
purview of labor-only contracting. There is even no need for it to
refute petitioners’ contention that the activities they perform are
directly related to the principal business of the respondent bank.
It is well-settled that there is labor-only contracting where: (a)
the person supplying the workers to an employer does not have
substantial capital OR investment in the form of tools, equipment,
machineries, work premises, among others; and, (b) the workers
recruited and placed by such person are performing activities which
are directly related to the principal business of the employer.
Based on the foregoing, BBC cannot be considered engaged only
in labor only contracting because the law does not require both
substantial capital and investment in the form of tools, equipment,
machineries, etc. This is clear from the use of the conjunction “or”. If
the intention was to require the contractor to prove that he has both
capital and the requisite investment, then the conjunction “and” should
have been used.
Be that as it may, the Court has already taken judicial notice of
the general practice adopted in several government and private
institutions and industries of hiring independent contractors to perform
special services. These services range from janitorial, security and
even technical or other specific services such as those performed by
petitioners Neri and Cabelin. While these services may be considered
directly related to the principal business of the employer,
nevertheless, they are not necessary in the conduct of the principal
business of the employer.
Even assuming ex argumenti that petitioners were performing
activities directly related to the principal business of the bank, under
the "right of control" test they must still be considered employees of
BCC. In the case of petitioner Neri, it is admitted that FEBTC issued a
job description which detailed her functions as a radio/telex operator.
However, a cursory reading of the job description shows that what was
sought to be controlled by FEBTC was actually the end-result of the
task, e.g., that the daily incoming and outgoing telegraphic transfer of
funds received and relayed by her, respectively, tallies with that of the
register. The guidelines were laid down merely to ensure that the
desired end-result was achieved. It did not, however, tell Neri how the
radio/telex machine should be operated.
Besides, petitioners do not deny that they were selected and
hired by BCC before being assigned to work in the Cagayan de Oro
Branch of FEBTC. BCC likewise acknowledges that petitioners are its
employees. The record is replete with evidence disclosing that BCC
maintained supervision and control over petitioners through its
Housekeeping and Special Services Division: petitioners reported for
work wearing the prescribed uniform of BCC; leaves of absence were
filed directly with BCC; and, salaries were drawn only from BCC. (Kim
Mamontuan )
Why did the Supreme Court decide that? Because there are
many activities that are directly related and should be contracted out.
Let us go to the bank again. The bank’s main function is to
secure the money that has been deposited. Mao man na ang job sa
bangko.
Is the security guard an employee of the bank? NO, it is sub-
contracted to a security agency. And yet, it is related directly to the
function of the bank to safeguard (?) the money.
Why is it sub-contracted? It is sub-contracted out and it is
allowed because if you assume the contrary where the bank hires its
own security guards, then, it will take the bank out of its normal
functions.
So, directly related in the principal business has been disregarded
by the Supreme Court in the Neri case and subsequently in the
ESCARIO, et al vs. NLRC 333 SCRA 257 (2000), in favor of Article
280, activities which are usual and necessary to the trade or business.
ESCARIO vs. NLRC (June 8, 2000)
FACTS: California Marketing Co. Inc. (CMC) is a domestic corporation
principally engaged in the manufacturing of food products and
distribution of such products to wholesalers and retailers. Private
respondent Donna Louise Advertising and Marketing Associates, Inc.
(D.L. Admark) is a duly registered promotional firm. Petitioners
worked as merchandisers for the products of CMC. Their services were
terminated on 16 March 1992.
Petitioners allege that they were employed by CMC as merchandisers.
Among the tasks assigned to them were the withdrawing of stocks from the
warehouse, the fixing of prices, price-tagging, displaying of merchandise,
and the inventory of stocks. These were done under the control,
management and supervision of CMC. Materials were provided by CMC.
Their salaries were paid by CMC.
Petitioners filed a case against CMC before the Labor Arbiter for the
regularization of their employment status.
During the pendency of the case, D.L. Admark sent to petitioners
notice of termination of their employment. Thereafter, 27 more persons
joined as complainants. CMC filed a motion to implead as party-defendant
D. L. Admark and at the same time the latter filed a motion to intervene.
Both motions were granted.
CMC, on the other hand, denied the existence of an employer-
employee relationship between petitioner, and itself. Rather, CMC
contended that it is D.L. Admark who is the employer of the petitioners.
D.L. Admark asserted that it is the employer of the petitioners.
Labor Arbiter found that petitioners are employees of CMC. On
appeal, the NLRC set aside the decision of the Labor Arbiter.
ISSUE: Whether petitioners are employees of CMC or D.L. Admark.
HELD: Petitioners are employees of D.L. Admark.
D.L. Admark is a legitimate independent contractor. CMC can validly
farm out its merchandising activities to a legitimate independent contractor.
Petitioners themselves admitted that they were selected and hired by
D.L. Admark. D.L. Admark was able to present in evidence the payroll of
petitioners. Petitioners admitted that it was D.L. Admark who terminated
their employment. Complainants were under the supervision and control of
the CMC.
Having proven the existence of an employer-employee relationship
between D.L. Admark and petitioners, it is no longer relevant to determine
whether the activities performed by the latter are necessary or desirable to
the usual business or trade of CMC. (eto talaga nakalagay sa case .. hehe
)
Other Prohibitions mentioned in DO 18-02, not mentioned in class:
(e) Contracting out of a job, work or service directly related to the
business or operation of the principal by reason of a strike or
lockout whether actual or imminent;
(f) Contracting out of a job, work or service being performed by
union members when such will interfere with, restrain or coerce
employees in the exercise of their rights to self-organization as
provided in Art. 248 (c) of the Labor Code, as amended.
SECTION 8. Rights of Contractual Employees. — Consistent with
Section 7 of these Rules, the contractual employee shall be entitled to all
the rights and privileges due a regular employee as provided for in the
Labor Code, as amended, to include the following:
(a) Safe and healthful working conditions;
(b) Labor standards such as service incentive leave, rest days,
overtime pay, holiday pay, 13th month pay and separation pay;
(c) Social security and welfare benefits;
(d) Self-organization, collective bargaining and peaceful concerted
action; and
(e) Security of tenure.
There is also a requirement that contractual employees are also
entitled to service incentive leave, rest days, overtime pay, holiday pay, 13 th
month pay and separation pay.
SECTION 9. Contract Between Contractor or Subcontractor and
Contractual Employee. — Notwithstanding oral or written stipulations to
the contrary, the contract between the contractor or subcontractor and the
contractual employee, which shall be in writing, shall include the following
terms and conditions:
(a) The specific description of the job, work or service to be
performed by the contractual employee;
(b) The place of work and terms and conditions of employment,
including a statement of the wage rate applicable to the individual
contractual employee; and
(c) The term or duration of employment, which shall be coextensive with
the contract of the principal and subcontractor, or with the specific phase
for which the contractual employee is engaged, as the case may
be.
The contractor or subcontractor shall inform the contractual employee
of the foregoing terms and conditions on or before the first day of his
employment.
The contract between the contractor and the sub-contractor with the
contractual employees shall be in writing which shall include the description
of the job, statement of the wage rate, duration of the employment which
must be co-extensive with contract of the principal and subcontractor.
15
SECTION 11. Registration of Contractors or Subcontractors. —
Consistent with the authority of the Secretary of Labor and
Employment to restrict or prohibit the contracting out of labor through
appropriate regulations, a registration system to govern contracting
arrangements and to be implemented by the Regional Offices is hereby
established.
The registration of contractors and subcontractors shall be
necessary for purposes of establishing an effective labor market
information and monitoring.
Failure to register shall give rise to the presumption that the
contractor is engaged in labor-only contracting.
The contractor is required to register his corporation or
partnership.
The contractual employees may form a union vis-à-vis their
employer who is their contractor, although it cannot form a union vis-
à-vis the indirect employer because there is no employer-employee
relationship.
SECTION 14. Duty to Produce Copy of Contract Between the
Principal and the Contractor or Subcontractor. — The principal
or the contractor or subcontractor shall be under an obligation to
produce a copy of the contract between the principal and the
contractor in the ordinary course of inspection. The contractor shall
likewise be under an obligation to produce a copy of the contract of
employment of the contractual worker when directed to do so by the
Regional Director or his authorized representative.
A copy of the contract between the contractual employee and the
contractor or subcontractor shall be furnished the certified bargaining
agent, if there is any.
The contractor is furthermore enjoined to readily produce a copy
of the contract between the principal and the contractor in the
ordinary course of inspection.
JULY 31, 2008
Make sure that DO 18-02 (February 21, 2002) is the
implementing rules in your text because if it is not then you are
reading the wrong implementing rules.
The rule that was replaced by 18-02 is similar to this. But it is not
the same. In the old rule, there was a requirement of registration of
contractors. Now, this requirement of registration of contractors or
sub-contractors is no longer deemed as essential. But the contractor
may be made to produce the contract that it enters into with its client.
Let us go to the new cases on Articles 105, 106 and 107.
You are well aware of course that even if the indirect employer is
government, the indirect employer may be made to answer for non-
payment or underpayment of wages in cases of failure on the part of
the contractor. You have seen that in the past.
However, there is this case of NFA vs. MASADA SECURITY
(March 8, 2005) – First Division, Justice Ynares-Santiago.
The NFA had a contract with Masada for the latter to provide
security services to the NFA warehouses and installations in Region 1 –
Pangasinan, La Union, Ilocos Sur and Ilocos Norte.
And then, during the effectivity of the contract, the RTWPB of
that particular wage region issued a wage order increasing the
minimum wage rate. Masada requested NFA for the corollary upward
adjustment in the monthly contract rate consisting of the increases in
the daily minimum wage of the security guards as well as for the
corresponding rate in overtime pay, holiday pay, 13 th month pay, rest
day pay, SSS and PAG-IBIG premiums.
The NFA granted the request only with respect to the increase in
the daily wage by multiplying the amount of the mandated increase by
the number of days. The NFA denied the request for the adjustment
in the other benefits computed on the basis of the daily wage. Those
are the so-called roll-up costs. Musaka ang imong costs kay nisaka
man ang imong basic. Musaka ang imong regular wage, ang imong
overtime which is based on the regular wage musaka. Wa man
gihatag sa NFA.
So, Masada filed a money claim complaint with the RTC, Quezon
City asking NFA to pay all the money claims.
Why trial court? Because this is not an issue of wages. This is an
issue of a contract of providing services.
The trial court ruled that NFA is liable because the basis of the
computation of the other benefits like overtime, holiday, SSS, PAG-
IBIG is the increase in the minimum wage. The Regional Trial Court
said that it stands to reason that they are also liable of the
consequences of the raise.
NFA appealed to the CA. But the appeal of the NFA was
dismissed. The CA ruled that the proper remedy was Rule 45 –
Petition for Review to the Supreme Court considering that the appeal raised
a pure question of law.
So, NFA went to the SC. How did the SC rule on this particular
interpretation of Section 6 of RA 6727?
Section 6 says:
SECTION 6. In the case of contracts for construction projects and
for security, janitorial and similar services, the prescribed increases in the
wage rates of the workers shall be borne by the principals or clients of the
construction/service contractors and the contract shall be deemed amended
accordingly. In the event, however, that the principal or client fails to pay
the prescribed wage rates, the construction/service contractor shall be
jointly and severally liable with his principal or client.
The Supreme Court said in construing the word "wage" in Section 6 of
RA 6727, reference must be had to Section 4 (a) of the same Act.
Section 4 (a) states upon the effectivity of this Act, the statutory minimum
wage rates for all workers and employees in the private sector, whether
agricultural or non-agricultural, shall be increased by twenty-five pesos
(P25) per day.
Hence, the additional liability to be borne by the principal under
Section 6 of RA 6727 is the increment or amount added to the remuneration
of an employee for an 8-hour work.
Then, the Supreme Court said if it was the intention of the lawmakers
to extend the obligation of principals in service contracts to the payment of
the increment in the other benefits and remuneration of workers, it would
have so expressly specified. In not so doing, the only logical conclusion is
that the legislature intended to limit the additional obligation imposed on
principals in service contracts to the payment of the increment in the
statutory minimum wage.
Expresio unius est exclusio alterius. That is a standard statutory
construction dictum.
Then, it is not within the province of this Court to inquire into the
wisdom of the law for indeed, we are bound by the words of the statute.
The law is applied as it is. At any rate, the interest of the employees will not
be adversely affected if the obligation of principals under the subject
provision will be limited to the increase in the statutory minimum wage.
This is so because all remuneration and benefits other than the increased
statutory minimum wage would be shouldered and paid by the employer or
service contractor to the workers concerned. Thus, in the end, all
allowances and benefits as computed under the increased rate mandated by
RA 6727 and the wage orders will be received by the workers.
So, strict implementation as to the liability of the indirect employer –
only what the law says is the liability of the indirect employer.
Suppose, the security guard themselves sued the NFA for the money
claims on the wage increase, and the allowances and benefits as computed
under the increase. Can the NFA be liable (?) virtue of Section 6, RA 6727?
NO, if it is the workers themselves who sued, the proper forum is no
longer the RTC.
What forum would be that? Labor Arbiter. The applicable provision is
Article 109 of the Labor Code which provides solidary liability. The
provisions of existing laws to the contrary notwithstanding, every employer
or indirect employer shall be held responsible with his contractor or
subcontractor for any violation of any provision of this Code. For purposes
of determining the extent of their civil liability under this Chapter, they shall
be considered as direct employers.
So, if contractors have difficulty meeting the requirement of substantial
capital or investment requirement, that is the possible ruling if the it is the
workers themselves who complained. Remember, it is already the labor
tribunal who will decide the claim and not the regular courts.
Another contracting case is the case of ABELLA, et al vs. PLDT,
PEOPLE’S SECURITY INC L-159469 (June 8, 2005). – 2nd Division,
Justice Chico-Nazareno
PLDT engages People’s Security to provide security guards. The
security guards are the complainants in this case. They are saying that
they no longer accept the security agency as their true employer. It is the
PLDT.
Why? Because they have been serving for PLDT for so many years.
Some for 5 years, some for 6 years. And these are the grounds for which
they say that the security agency should be disregarded and there will only
be one employer, that is PLDT:
a. We, when we were applicants, were interviewed by PLDT. They were
first interviewed by PLDT, not the security agency. And PLDT enforced
standards. Therefore, it was PLDT who hired us as guards.
b. People’s Security, Inc. (PSI) is a labor-only contractor. It is an in-
house agency. Hence, the doctrine of piercing the veil of corporate entity
should be applied.
c. PSI is mere conduit of PLDT because the PLDT supervisors normally
countersign their daily time records and only subsequent is the only time
they are paid the wages. If the supervisor does not sign their DTR, then,
they are not paid.
16

d. PLDT is the one which supervises the guards. PLDT issues
delinquency reports of infractions committed by the guards. They
issue the certificate of training in fire-fighting, first-aid. It is PLDT that
engages trainors. And as a consequence, it is PLDT which issues
certification that these security guards are now qualified as CPR first-
aid attendant or as firefighter. It is PLDT that does that. So,
therefore, PLDT is the direct employer. That is the claim of the
guards.
e. PLDT supervises the employment of the guards, not PSI. It is
PLDT which ultimately determines where you are assigned because if
PLDT does not assign you, PSI assign you to your position.
What is the ruling of the Supreme Court? The Supreme Court
was point by point in this sequence:
a. Does the initial interview of PLDT prove that PLDT is the true
employer and not PSI?
The Supreme Court says that the interview by the PLDT is merely
to make sure that their requirements are followed. Example, the
height requirement. The requirement that they must be licensed and
have completed the training. PLDT does not want the guards to be
working on their permits with the PNP as they are already performing
their duties as guards. Those are the standards of PLDT.
All the forms that are used are under the name of PSI, not PLDT.
And the final contract signatory is not PLDT but PSI.
b. As to whether or not PSI is a labor-only contractor or an in-house
agency?
PSI is is able to present proof that it has substantial capital in the
form of weapons, guns, ammos, security equipment and services other
clients – Triumph, PCIBank, etc. So, therefore, it is not an in-house
agency.
c. As to whether or not PLDT is merely a conduit of PSI
The Supreme Court said not all records of the guards are
approved by the PLDT supervisors. Hence, there is no condition
precedent to the payment of wages. Besides that, the SSS deductions
of the PSI are deducted by PSI, not by PLDT. So, the sources of the
fund is PSI because how could they deduct it if it did not originate
from them?
d. As to whether or not PLDT directly supervises them and controls
their means and methods
The Supreme Court says that the fact reports (?) were drawn up
by PLDT are made the basis for disciplinary actions on the part of the
guards is not proof of supervision. These are just records for the basis
of recommending disciplinary action and/or termination. The fact that
PLDT authorizes and funds and provides for special trainings – fire
fighting, CPR, traffic control, etc – is not proof that the PLDT employer
because PLDT even gives these trainings to barangay officials and
some PNP Personnel. In fact, there is a PNP command that has
received certifications of good performance in training by PLDT. And it
does not make the PNP Personnel the employees of PLDT.
e. They alleged direct supervision by PLDT of the guards by denied
by individual applications of the guards themselves filed to the PSI, not
PLDT - that they go on leave, on vacations, be paid, showing that it is
PSI that the guards clearly recognize as the one supervising them, not
PLDT. They do not ask to go on vacation to PLDT. It is PSI.
ABELLA, et al vs. PLDT (June 8, 2005)
FACTS: PSI entered into an agreement with the PLDT to provide the
latter with such number of qualified uniformed and properly armed
security guards. Under the agreement, it was expressly provided that
there shall be no employer-employee relationship between the PLDT
and the security guards, which may be supplied to it by PSI, and that
the latter shall have the entire charge, control and supervision over the
work and services of the supplied security guards. It was likewise
stipulated therein that PSI shall also have the exclusive authority to
select, engage, and discharge its security guards, with full control over
their wages, salaries or compensation.
PLDT interviewed these security guards and asked them to fill out
personal data sheets. Those who did not meet the height requirements
were sent back by PLDT to PSI.
65 guards filed a complaint for regularization against the PLDT
with the Labor Arbiter.
LA dismissed the complaint for lack of merit. On appeal, the NLRC
affirmed in toto the Labor Arbiter’s decision. CA affirmed NLRC’s
decision.
ISSUE: Whether or not an employer-employee relationship exists
between petitioners and respondent PLDT
HELD: NO employer-employee relationship exists between petitioners
and PLDT.
PSI is a legitimate job contractor. It has substantial capital and
investment in the form of guns, ammunitions, communication equipments,
vehicles, office equipments like computer, typewriters, photocopying
machines, etc., and above all, it is servicing clients other than PLDT.
Interviews and evaluation were conducted by PLDT to ensure that the
standards it set are met by the security guards. In fact, PLDT rarely failed
to accept security guards referred to by PSI but on account of height
deficiency.
The security guards which PSI had assigned to PLDT are already the
former’s employees prior to assignment and if the assigned guards to PLDT
are rejected by PLDT for reasons germane to the security agreement, then
the rejected or terminated guard may still be assigned to other clients of
PSI.
It is PSI that determined and paid the petitioners’ wages, salaries, and
compensation. The signature of the PLDT supervisor in the Daily Time
Records does not ipso facto make PLDT the employer of complainants
inasmuch as the Labor Arbiter had found that the record is replete with
evidence showing that some of the Daily Time Records do not bear the
signature of a PLDT supervisor yet no complaint was lodged for
nonpayment of the guard’s wages evidencing that the signature of the
PLDT’s supervisor is not a condition precedent for the payment of wages of
the guards.
Delinquency reports were nothing but reminders of the infractions
committed by the petitioners while on duty which serve as basis for PLDT to
recommend the termination of the concerned security guard from PLDT.
Termination of services from PLDT did not ipso facto mean dismissal from
PSI inasmuch as some of those pulled out from PLDT were merely detailed
at the other clients of PSI. Delinquency reports merely served as justifiable,
not arbitrary, basis for PLDT to demand replacement of guards found to
have committed infractions while on their tours of duty at PLDT’s premises.
While said seminars were conducted at the premises of PLDT, it also
remains uncontroverted that complainants’ participation was done with the
approval and at the expense of PSI.
I am bringing this discussion because there is a similar case –
VALLUM SECURITY vs. NLRC 224 SCRA 781 (1993), where Justice
Feliciano said that the security agency can be disregarded as the true
employer is, not Vallum Security, but Hyatt Hotels. This was the Hyatt
Hotel in Baguio before it collapsed.
Who interviewed the guards? It was the chief security officer of Hyatt
Hotel and they were made to fill-up forms of that hotel. And they were
made to apply in the Hyatt Hotel.
Vallum Security had no office in Baguio. The office of Vallum Security
was in Manila.
And the chief here really supervised the security guards of the hotel.
They were paid through an ATM payroll. And that was by an account put
up by Hyatt because Vallum Security did not have any offices in Baguio City.
That is why the Supreme Court in that case said that Vallum Security
can be disregarded. It is just a conduit of Hyatt.
VALLUM SECURITY vs. NLRC (July 30, 1993)
FACTS: On Sept. 1, 1986, Hyatt and Vallum entered into a contract for
security services under the terms of which Vallum agreed to protect the
properties and premises of Hyatt Baguio by providing 50 security guards, on
a 24-hour basis, a day.
On June 1988, Hyatt informed Vallum that the contract would be
terminated. Vallum agreed.
Private respondents, who were security guards provided by Vallum to
Hyatt, were informed that the contract between 2 had already expired.
Private respondents were directed to report to Vallum's head office at Sucat
Road, in Muntinlupa for re-assignment. Failure to report at Sucat would be
taken to mean that they were no longer interested in being re-assigned to
some other client of Vallum. None of them reported for re-assignment.
Instead, they filed complaints against petitioners in the NLRC for illegal
dismissal and ULP; for violation of labor standards relating to underpayment
of wages, premium holiday and restday pay, uniform allowances and meal
allowances.
The complaint was dismissed by the Labor Arbiter. NLRC reversed the
Labor Arbiter’s decision.
ISSUE: Whether or not private respondent security guards are indeed
employees of petitioner Hyatt Baguio
HELD: YES, they are employees of Hyatt Baguio.
The records here show that private respondents filled up Hyatt
employment application forms and submitted the executed forms directly to
the Security Department of Hyatt Baguio.
In respect of the mode or manner of payment of wages, private
respondents submitted in evidence 423 pay slips, which bore Hyatt Baguio's
logo. These pay slips show that it was Hyatt Baguio which paid their wages
directly and that Hyatt Baguio deducted therefrom the necessary amounts
for SSS premiums, internal revenue withholding taxes, and medicare
contributions.
It was Hyatt Baguio's Chief Security Officer
who exercised the power of enforcing disciplinary measures over the
security guards. In the matter of termination of services of particular
17
security guards, Hyatt Baguio had merely used Vallum as a channel to
implement its decisions, much as it had done in the process of
selection and recruitment of the guards.
The assignments of particular security guards was subject to the
approval of Hyatt Baguio's Chief Security Officer. Promotions were
approved or ratified by the Chief Security Officer of Hyatt Baguio.
Hyatt Baguio's Chief Security Officer decided who among the various
security guards should be an duty or on call, as well as who, in cases
of disciplinary matters, should be suspended or dismissed. Hyatt
Baguio, through its Chief Security Officer, awarded citations to
individual security guards for meritorious services.
Orders received by private respondent security guards were set
forth on paper bearing the letterheads of both Hyatt Baguio and
Vallum. It appears to us, therefore, that Hyatt Baguio explicitly
purported, at the very least, to share with Vallum the exercise of the
power of control and supervision with Vallum over the security guards,
if indeed Vallum was not functioning merely as an alter ego of Hyatt
Baguio in respect of the operations of the security guards. In the case
at bar, the functions performed by Hyatt Baguio's Chief Security Officer
were precisely the duties which the head or senior officer of a
legitimate security agency would be exercising over its own
employees.
Vallum, in the specific circumstances of this case, was not an
independent contractor but was, rather, a "labor-only" contractor.
Vallum did not have a branch office in Baguio City and that Hyatt
Baguio provided Vallum with offices at Hyatt's own premises and
allowed Vallum to use its Security Department in the processing of
applications.
The issue of illegal dismissal need not detain us for long. It has
not been alleged by petitioners that a just or authorized cause for
terminating private respondents' services had existed. And even if such
lawful cause existed, it is not alleged that private respondents' rights
to procedural due process in that connection had been appropriately
observed.
There is even a later case where there was a question of
reimbursement. The security agency claimed that under a new wage
order, the increase as to the minimum wage should be borne by the
indirect employer.
So, they go to the RTC for reimbursement from the indirect
employer.
What was the answer of the indirect employer? The indirect
employer said our contract has already ended. Your completion of the
contract is evidenced by supporting papers which we actually asked
from you. And that is the actual payrolls that were paid to the security
guards.
The related payrolls did not pay the adjusted wage which is
already new, after they were paid. You are not enforcing
reimbursement of which you did not pay. So, the indirect employer is
not liable to reimburse because you did not pay the security guards.
The Supreme Court said that is correct. First pay, and then you
can claim reimbursement. Or you get the security guards to sue the
indirect employer for the increase in minimum wage and the indirect
employer will have to pay.
Keep that in mind.
Even if the indirect employer is directly made liable to pay under
the law to pay the increase and the increase was not paid, he is not
liable to the security guards.
If the security guards of the contractor sue the employer for
backwages that were not paid, then, the indirect employer is liable.
But in this case, no security guard sued. It is the security agency
who did not pay. So, how can he ask for reimbursement?
VISITORIAL POWER
4 provisions in the Labor Code that are called visitorial power
provisions:
1. ARTICLE 37
ARTICLE 37. Visitorial Power. — The Secretary of Labor or his
duly authorized representatives may, at any time, inspect the
premises, books of accounts and records of any person or entity
covered by this Title, require it to submit reports regularly on
prescribed forms, and act on violations of any provisions of this Title.
The visitorial power of the Secretary or the POEA is direct or his
duly authorized representative to inspect recruitment or replacement
entities. Whenever they are open during business hours, the Secretary
can ask for records or interview if it is a place of recruitment.
The Department Secretary or the POEA Administrator does not
require a warrant to go there because this is an exercise of visitorial
power.
2. ARTICLE 165
The Department of Labor or the Secretary has visitorial powers to
inspect workplaces for occupational health and safety.
ARTICLE 165. Administration of safety and health laws. — (a)
The Department of Labor shall be solely responsible for the administration
and enforcement of occupational safety and health laws, regulations and
standards in all establishments and workplaces wherever they may be
located; however, chartered cities may be allowed to conduct industrial
safety inspections of establishments within their respective jurisdictions
where they have adequate facilities and competent personnel for the
purpose as determined by the Department of Labor and subject to national
standards established by the latter. xxx
If city personnel do the inspection, it must be deputized by the
Department of Labor. And the Department of Labor has the power.
This is a distinction from the inspection conducted by the city with
respect to the Building Code – do you have a fire extinguisher, fire exit, etc.
That is the right of the city due to the Building Code – to inspect.
If there is a new building constructed, you cannot occupy it unless
there is an occupancy permit that is issued by the city. That is not issued
by the Department of Labor.
If that building is not a workplace, the Department of Labor cannot
inspect that. If that building is a residential place, it is not a workplace.
If mu-claim (?) ang imong housemaids, dili ba na mahimong
inspectionon sa Department of Labor? It cannot because a house is not a
workplace. It is a residence. It is outside the jurisdiction of Department of
Labor. It is not covered by Article 165 because Article 165 says in all
establishments and workplaces wherever they may be located.
3. ARTICLE 274
This is the visitorial power of the Secretary to inspect the unions in
their offices.
ARTICLE 274. Visitorial power. — The Secretary of Labor and
Employment or his duly authorized representative is hereby empowered to
inquire into the financial activities of legitimate labor organizations upon the
filing of a complainant under oath and duly supported by the written
consent of at least twenty per cent (20%) of the total membership of the
labor organization concerned and to examine their books of accounts and
other records to determine compliance or non-compliance with the law and
to prosecute any violations of the law and the union constitution and by-
laws: Provided, That such inquiry or examination shall not be conducted
during the sixty (60)-day freedom period nor within thirty (30) days
immediately preceding the date of election of union officials.
This Article 274 has been blunted by RA 9481 because the failure to
file reportorial requirements, financial statements or any omissions of Article
241 (Rights and Conditions of Membership in a Labor Organization) is no
longer a ground for cancellation of union registration.
Even if that is the case, the Secretary of Labor or his duly authorized
representative to visit union offices. Examples – check for their payrolls,
their books of account, etc. At any time during business hours.
Q: Does the Director of Bureau of Labor Relations (BLR) have visitorial
power?
Article 274 mentions explicitly the Secretary of Labor and Employment
or his duly authorized representative. Does it mean that the Secretary has
to deputized the Director of BLR before he can inspect go out on his own
and inspect the principal office and examine books of the union?
The answer is NO. On his own, the Director of BLR has visitorial
powers. Where is that found in the Labor Code? It is not found in the
Labor Code. It is found in Section 16, Chapter 4, Book 4, Title 7 of the
Administrative Code of 1987.
The particular provision grants the BLR the power to inspect the
unions. And that grant of power in the Administrative Code has received
affirmation and confirmation by the Supreme Court in the case of LA
TONDENA WORKERS vs. SECRETARY 239 SCRA 110 (1994).
LA TONDEÑA WORKERS UNION vs. SECRETARY (Dec. 9, 1994)
FACTS: La Tondeña Worker's Union (LTWU) is a duly registered labor
organization. In 1989, some of its members petitioned DOLE-NCR for an
audit or examination of the funds and financial records of the union.
Accordingly an audit was ordered and a report was submitted Ramon de la
Cruz and Norma Marin accountable for P367,553.00 for union dues remitted
by La Tondeña Inc. to LTWU.
De la Cruz and Marin appealed to then DOLE Secretary Drilon,
complaining that they had not been heard before the report was made. The
case was indorsed to the respondent Director of the BLR. BLR Director
found that indeed De la Cruz and Marin had not been heard. For this reason
she set aside the findings and recommendations of the DOLE-NCR and
ordered another audit/examination to be conducted.
The union raised a jurisdictional question: That under Art. 274 of the
Labor Code, as amended by Republic Act No. 6715, the power to order an
examination of the books of accounts and financial activities of a union is
18
vested in the Secretary of Labor and Employment or his representative
and the BLR can not be considered the Secretary's representative.
BLR found the union officers personally accountable and liable.
ISSUE: Whether or not BLR had no authority to conduct an
examination of the books of the LTWU and that such authority is
vested solely in the Secretary of Labor or his duly authorized
representative
HELD: BLR has authority to conduct an investigation.
By indorsing the case to the BLR, the Secretary of Labor and
Employment must be presumed to have authorized the BLR to act on
his behalf.
Independently of any delegation, the BLR had power of its own to
conduct the examination of accounts in this case as provided in Book
IV, Title VII, Chapter 4, sec. 16 of the Administrative Code of 1987.
The Labor Code, as amended by RA 6715, likewise authorizes the
BLR to decide intra-union disputes as provided under Article 226. This
includes the examinations of accounts.
(Lab Rel ni na part)
The validity of the request for examination of union accounts
must be determined as of the time of its filing. Hence we hold that the
request of the 200 union members (19.70% of its total membership) in
this case was validly made and conferred jurisdiction on the DOLE-NCR
to conduct the examination of the books of accounts of the petitioners.
The requirement of 20% of the membership were inserted in Art. 274
by way of an amendment by R.A. 6715 which took effect on March 21,
1989. On the other hand, the letter of the union members petitioning
for an examination of the financial records of the union was made on
March 14, 1989, i.e., seven days before the effectivity of the
amendments.
4. ARTICLE 128
ARTICLE 128. Visitorial and enforcement power. — (a) The
Secretary of Labor or his duly authorized representatives, including
labor regulation officers, shall have access to employer's records and
premises at any time of the day or night whenever work is being
undertaken therein, and the right to copy therefrom, to question any
employee and investigate any fact, condition or matter which may be
necessary to determine violations or which may aid in the enforcement
of this Code and of any labor law, wage order or rules and regulations
issued pursuant thereto.
(b) Notwithstanding the provisions of Articles 129 and 217 of this
Code to the contrary, and in cases where the relationship of employer-
employee still exists, the Secretary of Labor and Employment or his
duly authorized representatives shall have the power to issue
compliance orders to give effect to the labor standards provisions of
this Code and other labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers
made in the course of inspection. xxx
This is what happens. There is an inspector from the Department
who goes to the workplace. They start asking. Hain man ang inyong
treasurer? Where are the copies of your payrolls for the past 6
months?
Then, he starts asking around. Ikaw, how long have you been
working here? Gahapon ra ko sir. Ah, wa kay labot 
Ikaw, pila na ka katuig? Pila man imong sweldo? Minimum sir.
Pila man nang minimum? Basta minimum sir. Ah, kani, naa na niy
instruction.
Mukuha na siya sa listahan.
Ipasa na niya ang report sa Department of Labor.
The report has 2 parts:
a. Findings of facts
b. Recommendations
What will the Regional Director do? The Regional Director will
issue a compliance order. By the powers granted to my office under
Article 128 of the Labor Code and in view of the findings of facts and
recommendations of the Labor Inspection Officer, you are hereby
directed:
a. to pay the following specified amounts by way of backwages and
underpayment of minimum wage:
Juan dela Cruz P 1,600
After the compliance order, you will receive enforcement order –
writ of execution. Ang imong bank account, wala na, frozen. Dili na
ka makawithdraw sa bank until you comply with the orders.
The only way that you can stop the writ of execution is after you
have received the compliance order, you must produce documentary
evidence which were not considered in the course of inspection.
The procedure has been lately affirmed by the Supreme Court in the
case of EX BATAAN VETERANS’ SECURITY AGENCY vs. LAGUESMA
537 SCRA 651 (2007).
It says that in order to divest the Regional Director of his
representative jurisdiction, the following elements must be present:
a. That the employer contests the findings of the Labor Relations
Officer and raises issues thereon
b. That in order to resolve such issues, there is a need to examine
evidentiary matters
c. That such matters are not verifiable in the normal course of
investigation
When that happens, the regional director has not choice but to
endorse it to the Labor Arbiter. And now, there will be an adversarial
proceeding because that is such a time where the Regional Director will be
divested of his visitorial powers.
That is enforcement of the law. That is like contempt. In order for
the court to continue its business, kinahanglan na pahilomun ka o ipagawas
ka.
Ang pulis mag-han-ay ug traffic. Ikaw nagapagubot. Mao pahawaon
ka, tagaan ka ug ticket, kuhaon ang imong lisensiya to enforce an order.
That is not yet adversarial. If you contest that, kita mo sa traffic (?) court.
So, you contest it in court. Mudaog ka kay dili man muadto ang pulis.
Tua man gatrabaho. Hearing mo kausa, kaduha. Sa ikatulo, move to
dismiss on the ground on my right to speedy trial. 
This is the same. How can the Regional Director be divested of its
visitorial power? The employer protests. Second, there is a need to
examine evidentiary matters. Unsa man to? Matters that are documentary
that have been presented by the employer and such matters are not
verifiable in the normal course of inspection.
You read the EX BATAAN VETERANS’ SECURITY vs. LAGUESMA!
EX-BATAAN VETERANS SECURITY AGENCY vs. LAGUESMA
Nov. 20, 3007
FACTS: Ex-Bataan Veterans Security Agency, Inc. (EBVSAI) is in the
business of providing security services while private respondents are
EBVSA’s employees assigned to the National Power Corporation at
Ambuklao Hydro Electric Plant.
Private respondents instituted a complaint for underpayment of wages
against EBVSAI.
The Regional Office conducted a complaint inspection at the Ambuklao
Plant where the following violations were noted: (1) non-presentation of
records; (2) non-payment of holiday pay; (3) non-payment of rest day
premium; (4) underpayment of night shift differential pay; (5) non-payment
of service incentive leave; (6) underpayment of 13 th month pay; (7) no
registration; (8) no annual medical report; (9) no annual work accidental
report; (10) no safety committee; and (11) no trained first aider.
EBVSAI was ordered by the Regional Director to pay the deficiencies.
EBVSAI filed a MFR and alleged that the Regional Director does not
have jurisdiction over the subject matter of the case because the money
claim of each private respondent exceeded P5,000. EBVSAI pointed out that
the Regional Director should have endorsed the case to the Labor Arbiter.
It was denied.
On appeal, CA dismissed the petition.
ISSUES: Whether the Secretary of Labor or his duly authorized
representatives acquired jurisdiction over EBVSAI
Whether the Secretary of Labor or his duly authorized representatives
have jurisdiction over the money claims of private respondents which
exceed P5,000.
HELD: The Secretary of Labor has jurisdiction.
Notices and copies of orders shall be served on the parties or their
duly authorized representatives at their last known address or, if they are
represented by counsel, through the latter. The rules shall be liberally
construed and only in the absence of any applicable provision will the Rules
of Court apply in a suppletory character.
EBVSAI does not deny having received the notices of hearing. The
Regional Director validly acquired jurisdiction over EBVSAI. EBVSAI can no
longer question the jurisdiction of the Regional Director after receiving the
notices of hearing and after appearing before the Regional Director.
In Allied Investigation Bureau, Inc. v. Sec. of Labor, we ruled that:
While it is true that under Articles 129 and 217 of the Labor Code, the Labor
Arbiter has jurisdiction to hear and decide cases where the aggregate
money claims of each employee exceeds P5,000.00, said provisions of law
do not contemplate nor cover the visitorial and enforcement powers of the
Secretary of Labor or his duly authorized representatives. Rather, said
powers are defined and set forth in Article 128 of the Labor Code (as
amended by R.A. No. 7730).
Article 128 explicitly excludes from its coverage Articles 129 and 217 of
the Labor Code by the phrase “Notwithstanding the provisions of Articles
19
129 and 217of this Code to the contrary x x x” thereby retaining and
further strengthening the power of the Secretary of Labor or his duly
authorized representatives to issue compliance orders to give effect to
the labor standards provisions of said Code and other labor legislation
based on the findings of labor employment and enforcement officer or
industrial safety engineer made in the course of inspection.
This was further affirmed in our ruling in Cirineo Bowling Plaza,
Inc. v. Sensing, where we sustained the jurisdiction of the DOLE
Regional Director and held that the visitorial and enforcement
powers of the DOLE Regional Director to order and enforce
compliance with labor standard laws can be exercised even
where the individual claim exceeds P5,000.
However, if the labor standards case is covered by the exception
clause in Article 128(b) of the Labor Code, then the Regional Director
will have to endorse the case to the appropriate Arbitration Branch of
the NLRC. In order to divest the Regional Director or his
representatives of jurisdiction, the following elements must be present:
(a) that the employer contests the findings of the labor regulations
officer and raises issues thereon;
(b) that in order to resolve such issues, there is a need to examine
evidentiary matters; and
(c) that such matters are not verifiable in the normal course of
inspection.
The rules also provide that the employer shall raise such
objections during the hearing of the case or at any time after receipt of
the notice of inspection results.
In this case, the Regional Director validly assumed jurisdiction
over the money claims of private respondents even if the claims
exceeded P5,000 because such jurisdiction was exercised in
accordance with Article 128(b) of the Labor Code and the case does
not fall under the exception clause.
EBVSAI did not contest the findings of the labor regulations
officer during the hearing or after receipt of the notice of inspection
results. It was only in its supplemental motion for reconsideration
before the Regional Director that EBVSAI questioned the findings of
the labor regulations officer and presented documentary evidence to
controvert the claims of private respondents. But even if this was the
case, the Regional Director and the Secretary of Labor still looked into
and considered EBVSAI’s documentary evidence and found that such
did not warrant the reversal of the Regional Director’s order.
The pieces of evidence presented by EBVSAI were verifiable in
the normal course of inspection because all employment records of the
employees should be kept and maintained in or about the premises of
the workplace, which in this case is in Ambuklao Plant, the
establishment where private respondents were regularly assigned.
AUGUST 6, 2008
This visitorial power is no longer limited by amount. For as long
as it is an exercise of visitorial powers, Article 129 is no longer limited
in amount.
What limits the exercise of visitorial power? The limitation comes
in only when the employer controverts the findings of the Labor
Inspector and produces documentary proofs for evidence not
otherwise considered in the course of inspection.
In which case, according to EX BATAAN VETERANS’
SECURITY AGENCY vs. LAGUESMA, the case should be moved to
the Labor Arbiter for the latter’s adjudication because it has become
adversarial in nature.
The requirements as enunciated:
a. The employer contests the findings of the Labor Relations Officer
b. Raises issues and in order to resolve such issues, there is a need
to examine evidentiary matters
c. That such evidentiary matters are not verifiable in the normal
course of inspection.
Aside from that, the Regional Director of Labor under Article 128
has quasi-judicial jurisdiction. This is adversarial. What are the
requirements?
Requirements for the exercise of jurisdiction on the part of
Regional Director of Labor under Article 128:
1. Complainant is either a domestic, agricultural, industrial
or commercial worker
2. That his complaint that does not contain any prayer for
reinstatement. It means that he has not been severed or
terminated
3. The aggregate individual monetary claim does not exceed
P5,000. So, if it is only P5,000, it is still with the Regional
Director’s jurisdiction. If it is above P5,000, it is no longer under
the jurisdiction of the Regional Director even if there is no
prayer for reinstatement.
The Regional Director of Labor has the power to rule on that
money claims dispute.
Q: What happens if there are several of them who files a
money claims complaint and all of them, except for one, has a
money claim less than P 5,000? And there is one who is in
excess of P5,000. What happens to the complaint of all the
workers? Will the complaint of the employees consisting of less than
P5,000 individual monetary claim remain with Regional Director and
the one in excess passed on to the Labor Arbiter?
The answer is all of them go together. And where is that? To
the Labor Arbiter. Why? To prevent conflict of rulings and decisions. The
Labor Arbiter may rule that the employer must pay. But then, the Regional
Director might say that the employer does not have pay. And the only
difference between these two is actually just the amount of the claim. And
yet, they have the same factual conditions of employment. That is not
desirable in law. How will they be reconciled?
So, if there is one whose money claim is in excess of P5,000, then, the
entire group of employees similarly situated will be moved to the Labor
Arbiter.
ATTORNEY’S FEES
ARTICLE 111. Attorney's fees. — (a) In cases of unlawful
withholding of wages the culpable party may be assessed attorney's fees
equivalent to ten percent of the amount of wages recovered.
(b) It shall be unlawful for any person to demand or accept, in any judicial
or administrative proceedings for the recovery of the wages, attorney's
fees, which exceed ten percent of the amount of wages recovered.
Case: TRADER’S ROYAL BANK EMPLOYEES’ UNION vs. NLRC
269 SCRA 733 (1997)
The Trader’s Royal Bank Union entered into an agreement with a
lawyer. First, for a general retainer of a monthly compensation of P 1,000,
he would give them legal advice and he will be notarizing all their legal
documents.
And in the contract of retainership, there was this second part. The
second part says that there is a litigation and the services of the lawyer will
needed (?), that would be under a separate agreement or billing, which will
be paid on case to case basis.
There was a dispute as whether or not Trader’s Royal Bank was under
obligation to pay several amounts in 13 th month pay, overtime and premium
pay.
They went (?) into grievance adjustment. There was no movement or
agreement. Finally, it was submitted to voluntary arbitration.
So, they called upon their lawyer to submit position papers and to
attend the hearings called by the voluntary arbitrator.
The lawyer was able to win on the voluntary arbitrator. He won the
award for 13th month, overtime and premium pay.
Trader’s Royal Bank appealed to the CA. The CA reversed the
voluntary arbitrator and just awarded the 13 th month pay. The rest, they
forgot.
The union got another lawyer.
Sure enough, the Supreme Court affirmed the 13 th month award and
the non-award of overtime and premium pay and other benefits. So, the
same ruling as the CA.
Judgment of the Supreme Court became final and executory. It is
remanded to the Labor Arbiter for execution. Once the case is filed with the
Labor Arbiter for execution, here comes the motion of the lawyer that has
been dismissed, the motion for attorney’s fees.
The union said no way are we going to pay attorney’s fees. Why did
you not raise it in the Supreme Court before it became final and executory?
Why are you just raising it now?
The Labor Arbiter said that I have the power to grant it. The Labor
Arbiter granted what the dismissed lawyer was asking. He was just asking
10% of the awarded amount.
So, the union went back to the Supreme Court for certiorari. So,
ikaduha na ning balik sa Supreme Court. So, the issue before the Supreme
Court is kanus-a man ka mufile ug motion sa imong attorney’s fees? Can
you file even after the judgment has become final and executory?
Is what is being asked by the dismissed lawyer 10% of the award
should be granted? What is the correct amount? The union was saying dili
na. We have been paying you P1,000 a month for 5 years during the CBA
effectivity. Sometimes, you did not have any papers to notarize. Unya
gabayad gihapon mi niya.
How did the Supreme Court ruled?
First, as to the timeliness of the motion, this is not Labor Law. The
Supreme Court says there are two ways to recover attorney’s fees before an
ungrateful client. Either:
1. You will file an independent action – a separate action to recover
attorney’s fees
2. Or by a mere motion, file it within the same case
The question is when. Can you file it after the judgment has become
final and executory?
The Supreme Court said YES, you can still file for as long as the
monetary award has not been executed.
So, you are not yet late. Even when it is remanded to the court for
execution, for as long as it is not yet executed yet, your motion is not too
late.
20
 Should 10% be awarded? This is where the Supreme Court takes
back what it has granted to the lawyer.
The 10% mentioned in Article 111 in the Labor Code is an upper
limit. It is the maximum that can be granted as attorney’s fees in a
labor dispute involving monetary claims. It means that the Court can
reduce the amount of attorney’s fees.
And that is where the Supreme Court said in this case, we
deemed it proper and reasonable that P 10,000 be granted to the
lawyer.
TRADERS ROYAL BANK vs. NLRC (March 14, 1997)
FACTS: Traders Royal Bank Employees Union and private respondent
Atty. Emmanuel Noel A. Cruz entered into a retainer agreement
whereby the former obligated itself to pay the latter a monthly retainer
fee of P3,000.00 in consideration of the law firm’s undertaking to
render the services enumerated in their contract.
During the existence of that agreement, petitioner union referred
to private respondent the claims of its members for holiday, mid-year
and year-end bonuses against their employer, Traders Royal Bank
(TRB). After the appropriate complaint was filed by private
respondent, the case was certified by the Secretary of Labor to the
NLRC. NLRC awarded those differentials to the employees. The SC
modified the decision of the NLRC by deleting the award of mid-year
and year-end bonus differentials while affirming the award of holiday
pay differential.
After private respondent received the above decision of the
Supreme Court, he notified the petitioner union, the TRB management
and the NLRC of his right to exercise and enforce his attorney’s lien
over the award of holiday pay differential. He filed a motion for the
determination of his attorney’s fees, praying that 10% of the total
award for holiday pay differential computed. The Labor Arbiter
granted such motion. NLRC affirmed such decision.
Petitioner union contends that the award for attorney’s fees
should have been incorporated in the main case and not after the
Supreme Court had already reviewed and passed upon the decision of
the NLRC. Since the claim for attorney’s fees by private respondent
was neither taken up nor approved by the Supreme Court, no
attorney’s fees should have been allowed by the NLRC.
ISSUE: Whether or not attorney’s fees should not have been allowed
by the NLRC.
HELD: Private respondent is entitled to attorney’s fees.
The present controversy stems from petitioner’s apparent
misperception that the NLRC has jurisdiction over claims for attorney’s
fees only before its judgment is reviewed and ruled upon by the
Supreme Court, and that thereafter the former may no longer
entertain claims for attorney’s fees. It would obviously have been
impossible, if not improper, for the NLRC in the first instance and for
the Supreme Court thereafter to make an award for attorney’s fees
when no claim therefor was pending before them.
Private respondent’s present claim for attorney’s fees may be filed
before the NLRC even though or, better stated, especially after its
earlier decision had been reviewed and partially affirmed. It is well
settled that a claim for attorney’s fees may be asserted either in the
very action in which the services of a lawyer had been rendered or in a
separate action.
Private respondent was well within his rights when he made his
claim and waited for the finality of the judgment for holiday pay
differential, instead of filing it ahead of the award’s complete
resolution.
A general retainer, or retaining fee, is the fee paid to a lawyer to
secure his future services as general counsel for any ordinary legal
problem that may arise in the routinary business of the client and
referred to him for legal action. The fees are paid whether or not
there are cases referred to the lawyer.
A special retainer is a fee for a specific case handled or special
service rendered by the lawyer for a client.
Evidently, the P3,000.00 monthly fee provided in the retainer
agreement between the union and the law firm refers to a general
retainer, or a retaining fee, as said monthly fee covers only the law
firm’s pledge, or as expressly stated therein, its “commitment to
render the legal services enumerated.” The fee is not payment for
private respondent’s execution or performance of the services listed in
the contract, subject to some particular qualifications or permutations
stated there. Hence, the retainer agreement cannot control the
measure of remuneration for private respondent’s services.
Private respondent is entitled to an additional remuneration for
pursuing legal action in the interest of petitioner before the labor
arbiter and the NLRC, on top of the P3,000.00 retainer fee he received
monthly from petitioner.
However, the value of private respondent’s legal services should
not be established on the basis of Article 111 of the Labor Code alone.
In the first place, the fees mentioned here are the extraordinary
attorney’s fees recoverable as indemnity for damages sustained by and
payable to the prevailing part. In the second place, the ten percent
(10%) attorney’s fees provided for in Article 111 of the Labor Code and
Section 11, Rule VIII, Book III of the Implementing Rules is the maximum
of the award that may thus be granted. Article 111 thus fixes only the limit
on the amount of attorney’s fees the victorious party may recover in any
judicial or administrative proceedings and it does not even prevent the
NLRC from fixing an amount lower than the ten percent (10%) ceiling
prescribed by the article when circumstances warrant it.
The measure of compensation for private respondent’s services as
against his client should properly be addressed by the rule of quantum
meruit long adopted in this jurisdiction. Quantum meruit, meaning “as
much as he deserves,” is used as the basis for determining the lawyer’s
professional fees in the absence of a contract, but recoverable by him from
his client. The doctrine of quantum meruit is a device to prevent undue
enrichment based on the equitable postulate that it is unjust for a person to
retain benefit without paying for it.
You have to read that case because there is a very good discussion
about general retainer and special retainer. General retainer is a monthly
sum that you pay a lawyer to secure his services in the future. Not only for
services he rendered to you, but also compensate him for the cases he can
no longer attend to because he is defending you. From there on, once you
are his client, he can no longer be a lawyer to any and all of your
opponents because that would be contrary to legal ethics. That would be
contradicting.
A special retainer is in relation to a case. When the minds agree upon
a special retainer may still be revised. For instance, a lawyer in a contract
of special retainer, without fully realizing the amount of work that he would
have to do in the case, then, the agreed amount should be revised.
What is the measuring stick now? That is what is called in legal ethics
as quantum meruit – as much as the reasonable value of the services.
That is what the Supreme Court said in TRADER’S ROYAL BANK
EMPLOYEES’ UNION vs. NLRC.
Technically speaking, in contracting and subcontracting cases, the only
way the indirect employer or principal can defend himself against unwanted
obligations as an employer in case the contractor fails to pay or underpays
his employees, the only protection (?) is to require contractor to put up a
bond.
Why does, in Philippine setting, this contractor or subcontractor very
seldom put up a bond? Because you just raise the cost to be paid by
requiring him to put up a bond. He will have to spend for the premium of
the bond. Samot musaka ang iyang presyo.
SPECIAL GROUPS OF EMPLOYEES : TITLE III
1. Minors
2. Domestics
3. Women
4. Homeworkers
They are called Special Groups of Employees.
ARTICLE 130. Nightwork prohibition. — No woman regardless of
age, shall be employed or permitted or suffered to work with or without
compensation:
(a) In any industrial undertaking or branch thereof between ten o'clock at
night and six o'clock in the morning of the following day; or
(b) In any commercial or non-industrial undertaking or branch thereof,
other than agricultural, between midnight and six o'clock in the morning of
the following day; or
(c) In any agricultural undertaking at nighttime unless she is given a
period of rest of not less than nine (9) consecutive hours.
WOMEN
There is a general rule here of nightwork prohibition of women. If and
when this shows up in the bar examinations, I do not think it will be in a
way that describes the rules on women. They will ask you whether or not
this provision is discriminatory to women.
Whether or not prohibition against nightwork that is applied to women
is discriminatory to women. In other words, if it is unjustifying (?) to
women the opportunities to earn money because they are prohibited at
least 10 hours from earning money.
Is it discriminatory?
When you are asked, you must give an answer.
There are exceptions to the rule. Are the exceptions sufficient to cover
most of the opportunities open to women?
ARTICLE 131. Exceptions. — The prohibitions prescribed by the
preceding Article shall not apply in any of the following cases:
(a) In cases of actual or impending emergencies caused by serious
accident, fire, flood, typhoon, earthquake, epidemic or other disasters or
calamity, to prevent loss of life or property, or in cases of force majeure or
imminent danger to public safety;
21
(b) In case of urgent work to be performed on machineries
equipment or installation, to avoid serious loss which the employer
would otherwise suffer;
(c) Where the work is necessary to prevent serious loss of perishable
goods; xxx
Those are all the exceptions that make up the grounds for
overtime. But the last 4 are particular to women:
(d) Where the woman employee holds a responsible position of
managerial or technical nature, or where the woman employee has
been engaged to provide health and welfare service;2
(e) Where the nature of the work requires the manual skill and
dexterity of women workers and the same cannot be performed with
equal efficiency by male workers;
(f) Where the women employees are immediate members of the
family operating the establishment or undertaking; and
(g) Under other analogous cases exempted by the Secretary of Labor
and Employment in appropriate regulations.
What are those exempted by the Secretary of Labor? That is call
center. Dili man na manual dexterity. Vocal dexterity man na.
That is covered by the Special Memorandum by the Secretary.
You know of course that call centers are now required to have
temporary rest accommodation according to gender. So, if you say
your time off is 2:00 in the morning and there is no transportation
provided to you by the company or if there is, it would entail that you
will walk where there are hostile people before you reach your home.
You can choose to avail of that and have the rest of the night or the
morning in the temporary accommodation.
They are required to have that. The call center business must
have those types of accommodation. That is in view of the safety of
women because the night work condition for women is for the sake of
the safety of women.
Other progressive groups of women are saying that in this day
and age, where there is already electricity, light and communication,
we should not condone or justify the continued existence of unsafe
place for women but preventing them from working at night. They say
abolish the law and make all places safe for women. That is what
those progressive groups are saying.
This makes the government to make all places safe for women at
any time of the day or night. If the government is doing its job, there
should be no place unsafe for women.
So, by continuing to institute this law, you are perpetuating
unsafe places. Remove this and the government will be forced to
make all places safe for women. That is their basis.
Whatever your position is, be sure you know what the meaning
(?) of that position is. You know what argument to use whichever
your stand is.
ARTICLE 132. Facilities for women. — The Secretary of Labor
shall establish standards that will insure the safety and health of
women employees. In appropriate cases, he shall, by regulations,
require any employer to:
(a) Provide seats proper for women and permit them to use such
seats when they are free from work and during working hours,
provided they can perform their duties in this position without
detriment to efficiency;
(b) To establish separate toilet rooms and lavatories for men and
women and provide at least a dressing room for women;
(c) To establish a nursery in a workplace for the benefit of the
women employees therein; and
(d) To determine appropriate minimum age and other standards for
retirement or termination in special occupations such as those of flight
attendants and the like.
Separate facilities for women – you know that already.
Maternity Leave Benefits for women – this is social legislation.
This is not labor legislation. This is placed here to make sure that the
employer complies with the obligation to enroll its workers with SSS.
Take note that the way the maternity benefits are given is the
employer advances the benefits. Then, the employee signs a waiver
after granting the power of attorney to management to collect her
maternity benefits.
Actually, by advancing the maternity benefits, the employer shells
out more than what it actually receives because the maternity benefits
is slightly lower than the monthly wage of the woman employee.
Why is it lower? Wala pa na napangutana sa examination.
Precisely because it is a system of insurance. In insurance, you never
get the full cost of the amount or the value of the damage which was
insured against. There is always a share on the part of the insured.
That is the coefficient of insurance. Why is that? So, you will not
be tempted to take advantage of the insurance.
That is the same system as health insurance.
2
So, nurses and managerial employees who are women
By the way, the more expensive the insurance, the higher the co-
insurance is.
To discourage them from doing that, there is a system of co-insurance.
You get more if it is caesarian.
ARTICLE 133. Maternity leave benefits. — (a) Every employer
shall grant to any pregnant woman employee, who has rendered an
aggregate service of at least six (6) months for the last twelve (12) months,
maternity leave of at least two (2) weeks prior to the expected date of
delivery and another four (4) weeks after normal delivery or abortion with
full pay based on her regular or average weekly wages. The employer may
require from any woman employee applying for maternity leave the
production of a medical certificate stating that delivery will probably take
place within two weeks.
So, 6 weeks.
Remember, you do not have to be married. Why? Because the law
says “any pregnant woman employee”. All you have to be is a woman,
from birth ha. Not because of any intervention.
(b) The maternity leave shall be extended without pay on account of
illness medically certified to arise out of the pregnancy, delivery, abortion,
or miscarriage, which renders the woman unfit for work, unless she has
earned unused leave credits from which such extended leave may be
charged.
(c) The maternity leave provided in this Article shall be paid by the
employer only for the first four (4) deliveries by a woman employee after
the effectivity of this Code.
Paternity leave – How many days is paternity leave? 7.
Please take note that paternity leave is not a labor legislation. So that,
any doubts arising from paternity leave is not interpreted in favor of labor
because it applies both to public and private employment. It is not labor
legislation.
The requirement is you must be a husband.
If your spouse gives birth up to 4 times, and the spouse is the one you
are cohabiting with, should you be separated from your spouse, you can no
longer claim paternity benefits. So, you must be living with your spouse.
Stipulation against marriage. You all know that is discriminatory.
ARTICLE 136. Stipulation against marriage. — It shall be unlawful
for an employer to require as a condition of employment or continuation of
employment that a woman employee shall not get married, or to stipulate
expressly or tacitly that upon getting married a woman employee shall be
deemed resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by reason of
her marriage.
What happens if the employer, one of his criteria in hiring you is that
you must be married? He does not hire anybody who is single.
It is my submission that that is not discriminatory because there is no
law that prohibits it. There must first be a law to make that discriminatory.
Timex – As much as possible, they require you to be married. If you
are married, especially if you have one child, you will want to work for the
sake of your child. You do not want to absent yourself. That is their
findings. That is why the requirement is you have to be married.
MINORS
ARTICLE 139. Minimum employable age. — (a) No child below
fifteen (15) years of age shall be employed, except when he works directly
under the sole responsibility of his parents or guardian, and his employment
does not in any way interfere with his schooling.
(b) Any person between fifteen (15) and eighteen (18) years of age may
be employed for such number of hours and such periods of the day as
determined by the Secretary of Labor in appropriate regulations.
(c) The foregoing provisions shall in no case allow the employment of a
person below eighteen (18) years of age in an undertaking which is
hazardous or deleterious in nature as determined by the Secretary of Labor.
What is the youngest age? 15
Exceptions: if it is employment with parents or there is a contract
sanctioned by the Department of Labor and the education of the minor is
not sacrificed and you are not in danger physically and morally.
You are not employed in dangerous workplaces like those involving
explosives and chemicals.
And in case must you be employed, if you are employed in media or
entertainment, involving in the exhibition and promotion of tobacco and its
derivatives or alcohol and its derivatives. So, you are not allowed to
endorse those substances.
Remember that there must be a written contract approved by the
Department of Labor.
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AUGUST 7, 2008
We have discussed women workers, especially maternity benefits
granted under RA 7322, now provided under Section 14-A of the Social
Security Law (RA 8282). This benefit is granted to all pregnant
women, whether married or unmarried.
There is a requirement for entitlement of maternity benefits that
you must report as early as possible your pregnancy. The employer is
supposed to keep an SSS maternity benefits record book that records
the time which the pregnancy is reported and states the estimated
time of the inception of the pregnancy.
What is the purpose of that report? It is to prevent simulated
pregnancies. To prevent that, there is supposed to be this log book.
And that is required. That is why it is not an empty formality when the
SSS Law requires that the pregnant employee shall have notified her
employer of her pregnancy and the probable date of her childbirth.
If you report the probable date, then, you have already computed
the time when the pregnancy began.
We discussed the Paternity Leave Act of 1996. This is not a labor
legislation law because it covers both public and private employment.
That is RA 8187, which became effective March 13, 1997. 7 leave
days with full pay to all married male employees for the first four
deliveries of the legitimate spouse with whom he is cohabiting.
Stipulation against marriage – we have taken that up.
Another special law which we have to take up is the Anti-Sexual
Harassment Act of 1995. That is RA 7877. This became effective on
February 14, 1995.
What are the acts prohibited?
1. Sexual harassment in the educational institution or training
related or in the workplace
We are more interested in the workplace.
What are the acts in the workplace that constitute sexual
harassment?
(1) The sexual favor is made as a condition in the hiring
or in the employment, re-employment or continued
employment of said individual, or in granting said individual
favorable compensation, terms, conditions, promotions, or
privileges;
Sexual favor is made a condition for the granting of any
employment benefit or consideration.
I am not granted overtime work unless I yield to the sexual
demands. That is using sexual favor as a condition.
or the refusal to grant the sexual favor results in
limiting, segregating or classifying the employee which in any
way would discriminate, deprive or diminish employment
opportunities or otherwise adversely affect said
employee;
When you refuse, there is a negative effect. Either you are
not given what is due you as an employee or you are not given a
promised privilege or promotion, etc.
(2) The above acts would impair the employee's rights or
privileges under existing labor laws; or
(3) The above acts would result in an intimidating,
hostile, or offensive environment for the employee.
You are not necessarily deprive but it will result in a hostile,
intimidating, offensive environment.
This last one, in the United States, it has been considered as
a sexual harassment if the supervisor in his office has all these
pictures or photographs of naked women clustered all over his desk.
That subjects to an intimidating or hostile environment.
What exactly is intimidating or hostile environment? I guess
it will depend on the circumstances.
Let us say you are the supervisor of the sales ladies of SM.
So, all your subordinates are female and you are male. And in your
office, there are all these pictures of naked women. You are
subjecting them to a hostile or intimidating environment.
But if you are a curator of a museum and in that particular
section of the museum, the theme (?) African feminine art. So,
that is not intimidating. That is the subject matter of your work.
So, it all depends.
But the above acts would result in an intimidating, hostile
and offensive environment, that is prohibited by the Anti-Sexual
Harassment Act of 1995.
There are already cases where the Supreme Court said that
offenses under the Anti-Sexual Harassment Act can be a ground for
dismissal, even though it is not one of the grounds listed in the Labor Code.
That has already been passed by the Supreme Court. It can also be a
ground for suspension or a lesser form of disciplinary action on the part of
the management.
What are the duties of the employer with respect to the Anti-Sexual
Harassment Act?
SECTION 4. Duty of the Employer or Head of Office in a
Work-related, Education or Trainings Environment. — It shall be the
duty of the employer or the head of the work-related, educational or
training environment or institution, to prevent or deter the commission of
acts of sexual harassment and to provide the procedures for the resolution,
settlement or prosecution of acts of sexual harassment. Towards this end,
the employer or head of office shall:
(a) Promulgate appropriate rules and regulations in consultation
with and jointly approved by the employees or students or trainees, through
their duly designated representatives, prescribing the procedure for the
investigation of sexual harassment cases and the administrative sanctions
therefor.
Administrative sanctions shall not be a bar to prosecution in the proper
courts for unlawful acts of sexual harassment.
The said rules and regulations issued pursuant to this subsection (a)
shall include, among others, guidelines on proper decorum in the workplace
and educational or training institutions.
These rules and regulations have something to do with the prescription
of the proper attire, the rules on decorum in the workplace. And the
procedure that is to be followed or made known to the employees if they
have complaints relating to sexual harassment.
So, the employees are supposed to be informed of the steps that they
are going to take. That is part of the obligation of the employer – to
promulgate rules and regulations in consultation and jointly approved by the
employees as to the procedure to be followed in case there are complaints.
And these rules should include the guidelines on the proper decorum in the
workplace.
(b) Create a committee on decorum and investigation of cases on
sexual harassment. The committee shall conduct meetings, as the case
may be, with officers and employees, teachers, instructors, professors,
coaches, trainors and students or trainees to increase understanding and
prevent incidents of sexual harassment. It shall also conduct the
investigation of alleged cases constituting sexual harassment.
In the case of a work-related environment, the committee shall be
composed of at least one(1) representative each from the management, the
union, if any, the employees from the supervisory rank, and from the rank
and file employees.
In the case of the educational or training institution, the committee
shall be composed of at least one (1) representative from the
administration, the trainors, teachers, instructors, professors or coaches and
students or trainees, as the case may be.
The employer or head of office, educational or training institution shall
disseminate or post a copy of this Act for the information of all concerned.
This committee must be well-represented, not just management but
rank-and-file employees and supervisors must be represented in the
committee.
What is the consequence if the employer fails to comply with
these duties?
SECTION 5. Liability of the Employer, Head of Office,
Educational or Training Institution. — The employer or head of office,
educational or training institution shall be solidarily liable for damages
arising from the acts of sexual harassment committed in the employment,
education or training environment if the employer or head of office,
educational or training institution is informed of such acts by the offended
party and no immediate action is taken thereon.
Please take note that the employee does not have to complain in
writing. The employee does not have to complain verbally. If it is proven
that the employer knows but fails to do anything, then, he becomes
solidarily liable for damages arising from such act if he is informed and
there is no immediate action taken thereof.
SECTION 6. Independent Action for Damages. — Nothing in
this Act shall preclude the victim of work, education or training-related
sexual harassment from instituting a separate and independent action for
damages and other affirmative relief.
So, if you have been the victim of sexual harassment, you can also file
criminal cases like acts of lasciviousness or attempted rape or whatever.
That does not preclude you from filing such cases, together with or
independent of cases filed on the basis of the anti-sexual harassment law.
What are the penalties?
23

SECTION 7. Penalties. — Any person who violates the
provisions of this Act shall, upon conviction, be penalized by
imprisonment of not less than one (1) month nor more than six (6)
months, or a fine of not less than Ten thousand pesos (P10,000) nor
more than Twenty thousand pesos (P20,000), or both such fine and
imprisonment at the discretion of the court.
Any action arising from the violation of the provisions of this Act
shall prescribe in three (3) years.
The right of action prescribed in 3 years from the time the right of
action accrues.
That is Anti-Sexual Harassment.
We discussed employment of minors, especially this act
prohibiting the employment of minors below 15 years of age in public
or private undertakings amending for this purpose Section 12, Article
VIII, Republic Act 7610. This act was approved November 9, 1993
and supersedes paragraph (a) of Article 139 of the Labor Code.
But the domestic works in the home of her employer, which is a
natural household. And his work consists in ministering the personal
comfort and safety of the members of the household.
But the homeworker works not in the home of an employer but in
his or her own home. But here tasks are not domestic chores but normally,
handicraft manufacturing because they receive materials from their
employer and they are supposed to transform these material according to a
particular pattern, a sample of which has been given them.
Further difference – a domestic is not an agricultural, industrial or
commercial worker. A homeworker is not a domestic but an industrial
worker.
One thing you have to keep in mind is that if a homeworker fails to
come up with the standards as presented to him or her through a sample,
he or she can be made to undo her work according to the standard, at no
extra cost or payment.
Gitagaan siya ug buri (?) na kalo. Unya ang kalo na iyang gihimo,
kana mang sakayan-sakayan, dili lingin. Gipausab niya. Now, he or she
cannot demand more payment because she is made to undo the work that
she has already done because she was given a sample.

Children below 15 years of age cannot be employed Now, they are normally paid on a piece-rate basis. The piece-rate
except: basis cannot be used in order to circumvent the minimum wage law. So,
these homeworkers can ask the Secretary of Labor or his duly authorized
If the child works directly under the sole responsibility of his representative to conduct time and motion studies to determine whether or
parents or legal guardian, and where all the members of the not the piece rate system is used by their employer to escape the burdens
employer’s family are employed, provided, however, that his of minimum wage because normally, they are piece-rate.
employment neither endangers his life, safety, health or morals nor
impairs his normal development. Provided, further, that the parent or So, those are the special workers.
legal guardian shall provide the said minor with the prescribed primary
and/or secondary education. ITEMS OF PAY
Take a look at this circus. They pass it on for generations, from
the great grandfather all the way to the fourth generation. The high- We have already dealt with the computation of pay. How do you
wire walking act. Astang mga gagmay na mga bata. Is that a compute if you are given the daily rate? If you are given the daily rate,
violation? Basta they are employed together with the parents and only how do you know that this is the monthly gross pay of someone who is paid
members of the family. Most of them are members of the family the correct minimum daily wage rate?
there. And then, they are given education, primary and secondary
education. In between acts, they have their own system of literacy. Applicable Actual # of Working Applicable
And then, under the sole responsibility of his parents or Daily Rate x Days in a Year = Monthly Rate
guardians. ----------------------------------------------
12
When the child’s employment involves participation in public
entertainment or information through cinema, theater, radio, or The big variable is the actual number of working days.
television, then, there are these further requirements:
365 calendar days in a year
1. That there must be an employment contract which is concluded - 52 weeks (rest days minimum for a calendar year 3)
by the child’s parents or legal guardian with the express agreement of -----------
the child and the approval of the Department of Labor and 313
Employment and the following conditions must be included in the - 11 regular holidays
written agreement: -----------
(a) The employer shall ensure the protection, health, safety and 302 Normal Actual # of Working Days
morals of the child;
(b) the employer shall institute measures to prevent the child's If you have somebody who works everyday of the year, mausab na sad ang
exploitation or discrimination taking into account computation ana, like a security guard who works everyday of the year.
the system and level of remuneration, and the duration Ang mahitabo ana:
and arrangement of working time; and;
(c) The employer shall formulate and implement, subject to the 365 calendar days in a year
approval and supervision of competent authorities, + 22 regular holidays (200%)
a continuing program for training and skill acquisition + 67.60 (52 x 1.30)
of the child. ---------------
The employer shall first secure, before engaging such child, a 454.60 Actual # of Working Days if you are a security guard
work permit from the Department of Labor and Employment which
shall ensure observance of the above requirement. If you are given a monthly pay, and you are asked, is he receiving a
And then, there is this prohibition on the employment of the child minimum wage? So, you have to arrive at the applicable daily rate.
as models or participants in commercials or advertisements promoting
alcoholic beverages, intoxicating drinks, tobacco and its byproducts Applicable Applicable
and violence. Monthly Rate x 12 = Daily Rate
That is with respect to minors. -------------------------------------
Total # of Working Days
With respect to domestics, we have already discussed this.
HOMEWORKERS What are the elements/items of compensation?

Who are homeworkers?

Whether or not it is included
ARTICLE 153. Regulation of industrial homeworkers. — Comp Comp Comp for More
The employment of industrial homeworkers and field personnel shall Elements/Items of for for 13th Income than 1
be regulated by the Government through appropriate regulations Compensation Overtime Month Tax Employer
issued by the Secretary of Labor to ensure the general welfare and
protection of homeworkers and field personnel and the industries 1. Regular Wage   4 
employing them.

Suppose you are asked to distinguish between a house helper (a 3

domestic) and a home worker. What is the distinction?
When you are asked to distinguish, first, you have to mention
what is in common. Both workers work in a home. They both work in
a home. The domestics work in a home. The homeworkers work in a
home.
Remember that the right to rest day comes after every 6 consecutive working
days.
4
This is included, although there is new legislation that if you just receive
minimum wage, you are exempt. But precisely, you have determine whether you
are minimum wage by the use of regular wage. So, it is included. It is the basis for
the computation of income tax.
24
 2. ECOLA x x x 
 if
higher
than
3. 13th Month Pay x  P20,000 

4. Premium Pay x5 x  

5. Overtime Pay  x  

if
Christmas
bonus, it
should
not be
higher
than
P20,000,
including
13th
month
pay, so as
to be
6. Bonus x x excluded x

ECOLA – In Region XII, the aggregate number is P265 na karon.

The daily ECOLA now is P 30. The regular wage is P235. But by
September, the regular wage will be P250 because P15 of the old
ECOLA will now be integrated into regular age, by September 1. What
would be left is P250 regular wage and P15 of ECOLA to make it P265.

More or less, those are all the necessary figures (?) to remember.

Take note 13th month pay – If you are dismissed or terminated in

the middle of the year, you are entitle to proportionate 13 th month pay
at the time of severance, even at the time of resignation.
How is the 13th month pay computed? Gross regular pay of the
year divided by 12. If you only served 6 months, your regular wage
for that 6 months divided by 12, that is your 13 th month pay. At the
time you are dismissed from the 6 th month or at the time you are
terminated because of retrenchment, that is what you are entitled.

We are thru with Labor Standards 

- End -

5
As a general rule, NO, unless it is overtime during the day that premium
pay is paid. Patrabahuon ka sa Domingo, rest day nimo. Nisobra ka 8 hours
na trabaho. So, ang premium pay ana apil sa pagcompute sa imont overtime
kanang adlawa. Pero patrabahuon ka ordinary working day, wala man nay
premium because premium pay is additional compensation for work done on
days when work is not required.
25