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B. Wage Fixing Machinery

1. Rationale for Wage Rationalization

Sec 2, RA 6727 It is hereby declared the policy of the State to rationalize the fixing of minimum wages and to promote productivity-
improvement and gain-sharing measures to:
Ensure a decent standard of living for the workers and their families
Guarantee the rights of labor to its just share in the fruits of production
Enhance the employment generation in the countryside through industry dispersal
Allow business and industry reasonable returns on investment, expansion and growth

The State shall promote collective bargaining as the primary mode of settling wages and other terms and conditions of employment;
and whenever necessary, the minimum wage rates shall be adjusted in a fair and equitable manner, considering existing regional
disparities in the cost of living and other socio-economic factors and the national economic and social development plans.

REASON FOR RATIONALIZING WAGES
a. To provide for full-time boards to police wages round the clock
b. To give boards enough powers to achieve the objective

Congress meant the boards to be creative in resolving the annual question of wages without labor and management knocking on the legislatures
door at every turn. If RA 6727 intended the boards alone to set floor wages, the Act would have no need for a board but an accountant to keep
track of the latest CPI or better, would have Congress done it as the need arises, as the legislature, prior to the Act, has done so for years. Act
sought a thinking group of men and women bound by statutory standards (ECOP v NWPC, 1991).

2. Agencies in Wage Fixing Machinery

a. National Wages and Productivity Commission

Sec 3, RA 6727 Amendment of Art 99 of PD 442 and incorporation of Art 120, 121, 122, 123, 124, 126 and 127

Art 120 Creation of the National Wages and Productivity Commission (NWPC, or Commission) which shall be attached to the DOLE for policy
and program coordination.

Art 121 Powers and functions of NWPC
(a) Act as the national consultative and advisory body to the Pres and Congress on matters relating to wages, incomes and productivity
(b) Formulate policies and guidelines on wages, incomes and productivity improvement at the enterprise, industry and national levels
(c) Prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures at the regional, provincial
or industry levels
(d) Review regional wage levels set by the RTWPB to determine if these are in accordance with prescribed guidelines and national
development plans
(e) Undertake studies, researches and surveys necessary for the attainment of its functions and objectives, and to collect and compile data
and periodically disseminate information on wages and productivity and other related information, including but not limited to,
employment, cost-of-living, labor costs, investments and returns
(f) Review plans and programs of the RTWPB to determine whether these are consistent with national development plans
(g) Exercise technical and administrative supervision over the RTWPB
(h) Call from time to time, a national tripartite conference of representatives of government, workers and employers for the consideration of
measures to promote wage rationalization and productivity
(i) Exercise such powers and functions as may be necessary to implement this Act

Commission shall be composed of:
o Labor Sec as Ex-officio Chairman
o NEDA Director General as Ex-officio Vice Chairman
o 2 members each from workers and employers sector to be appointed by the President of the Philippines upon recommendation
of the Labor Sec (list of nominees submitted by the workers and employers sector; term of 5 years)
o Executive Director of NWPC same rank, salary, benefits and other emoluments as that of the Department Assistant Secretary
o Secretariat
Headed by Executive director
2 Deputy directors (appointed by President of the Philippines, upon recommendation of the Labor Sec) same rank,
salary, benefits and other emoluments as that of a Bureau Director

Art 126 Prohibition against injunction - No preliminary or permanent injunction or TRO may be issued by any court, tribunal or other entity
against any proceedings before the NWPC or the RTWPB.
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b. Regional Tripartite Wages and Productivity Board

Sec 3, RA 6727 Amendment of Art 99 of PD 442 and incorporation of Art 120, 121, 122, 123, 124, 126 and 127

Sec 122, RA 6727 Creation of Regional Tripartite Wages and Productivity Board (RTWPB, or Regional Boards) in all regions, including
autonomous regions as may be established by law. NWPC shall determine the offices/HQ of the respective Regional Boards

2
nd
Par, Sec 122 Powers and functions of RB in their respective territories:
(a) Develop plans, programs and projects relative to wages, incomes and productivity improvement for their respective regions
(b) Determine and fix minimum wage rates applicable in their regions, provinces or industries therein and to issue the corresponding wage
orders, subject to guidelines issued by the Commission
(c) 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) Coordinate with the other RB as may be necessary to attain the policy and intention of this Code
(e) Receive, process and act on application for exemption from prescribed wage rates as may be provided by law or any Wage Order
(f) Exercise such powers and functions as may be necessary to carry out their mandate under this Code

Art 126 Prohibition against injunction - No preliminary or permanent injunction or TRO may be issued by any court, tribunal or other entity
against any proceedings before the NWPC or the RTWPB.

Each RB shall be composed of:
o Regional Director of the DOLE as Chairman
o NEDA and DTI Regional Directors as Vice Chairmen
o 2 members each from workers and employers sector to be appointed by the President of the Philippines upon recommendation
of the Labor Sec (list of nominees submitted by the workers and employers sector; term of 5 years)
o Executive Director of NWPC same rank, salary, benefits and other emoluments as that of the Department Assistant Secretary
o Secretariat

NASIPIT LUMBER CO v NLRC(1998; Panganiban, J.)
QUICK FACTS: 3 logging companies (Anakan, Nasipit and Wallboard) filed joint application for exemption in the Wage Order No. RX-01 on ground of
liquidity problems and business decline in the wood-processing companies. RTWPB granted temporary reprieve. Logging companies appealed to
NWPC which approved the application as to Anakan but denied the two others.
ISSUE: Is a guideline issued by an RTWPB without approval of or worse, contrary to the guidelines promulgated by the NWPC valid?
HELD & RATIO: No. Guidelines issued by the RTWPB without the approval of or, worse, contrary to those promulgated by the NWPC are
ineffectual, void and cannot be the source of rights and privileges. Art 121 (c) and (d) and Art 122 (b) clearly grant the NWPC, not the RTWPB, the
power to prescribe the rules and guidelines for the determination of the minimum wage and productivity measures. While RTWPB has the power
to issue wage orders under Art 122 (b), such orders are subject to the guidelines prescribed by the NWPC (e.g Rules on Minimum Wage Fixing).
NWPC authorized the RTWPB to issue exemptions from wage orders, but subject to its review and approval. NWPC never assented to Guideline No.
3 of RTWPB, the said guideline is inoperative and cannot be used by the latter in deciding or acting on petitioners application for exemption.

3. Standards/Criteria for Minimum Wage Fixing

Sec 3, RA 6727 Provided for the incorporation of Art 124 in LC

Art 124 Standards/Criteria for Minimum Wage Fixing The regional minimum wages to be established by the RB shall be as nearly adequate as
is economically feasible to maintain the 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 RB shall,
among other relevant factors, consider the following:
(a) Demand for living wages
(b) Wage adjustment vis--vis the consumer price index
(c) Cost of living and changes or increases therein
(d) Needs of workers and their families
(e) Need to induce industries to invest in the countryside
(f) Improvements in standards of living
(g) Prevailing wage levels
(h) Fair return of the capital invested and capacity to pay of employers
(i) Effects on employment generation and family income
(j) Equitable distribution of income and wealth along the imperatives of economic and social development

Wages prescribed in accordance with the provisions of this Title (Wages) standard prevailing minimum wages in every region; shall include
wages varying with industries, provinces or localities if in the judgment of the RB, conditions make such local differentiation proper and
necessary to effectuate the purpose of this Title.
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Person, company, corporation, partnership or any other entity engaged in business:
o Shall file and register annually with the appropriate RB, NWPB and NSO office an
Itemized listing of their labor component specifying
o Names of their workers and employees below the managerial level (including learners,
apprentices, disabled/handicapped workers who were hired under the terms prescribed in the
employment contracts and their corresponding salaries and wages

All workers paid by result, including those who are paid on piecework, takay, pakyaw, or task basis, shall receive not less than the prescribed
wage rates per 8 hrs of work a day, or a proportion thereof for working less than 8 hours.

All recognized learnership and apprenticeship agreements shall be considered automatically modified insofar as their wage caluses are
concerned to reflect the prescribed wage rates.

4. Wage Order

Sec 3, RA 6727 Provided for the incorporation of Art 123 and 124 in LC

Art 123 Whenever conditions in the region so warrant, the RB shall investigate and study all pertinent facts; and based on the standards and
criteria herein prescribed, shall proceed to determine whether a WO should be issued. Any such WO shall take effect after 15 days from its
complete publication in at least 1 newspaper of general circulation in the region.

In the performance of its wage-determining functions, the RB shall conduct public hearings/consultations, giving notices to employees and
employers groups, provincial, city and municipal officials and other interested parties.

Any party aggrieved by the Wage Orders issued by the RB may appeal such order to the Commission within 10 calendar days from the
publication of such order. It shall be mandatory for the commission to decide such appeal within 60 calendar days from the filing thereof.

The filing of the appeal does not stay the order unless the person appealing such order shall file with the NWPC an undertaking with a surety
or sureties satisfactory with the NWPC for the payment to the employees affected by the order of the corresponding increase, in the even
such order is affirmed.

7
th
Par, Art 124 Where application of any prescribed wage increase by virtue of a law or wage order issued by any RB results in distortions
of the wage structure within an establishment, the employer and the union shall negotiate to correct the distortions. Any dispute arising
from wage distortion shall be resolved through the grievance procedure under their CBA and, if it remains unresolved, through voluntary
arbitration. Unless otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary arbitrators within then calendar
days from the time said dispute was referred to voluntary arbitration.

If 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 National Conciliation and Mediation Board and if it remains unresolved after 10
calendar days of conciliation, shall be referred to the appropriate branch of the NLRC. It shall be mandatory for the NLRC to conduct to
continuous hearings and decide the dispute within 20 calendar days from the time said dispute is submitted for compulsory arbitration.

Wage distortion 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.

WAGE FIXING PROCEDURE
1. Issuance of Wage Order Within 30 days after conclusion of the last hearing, the RTWPB shall decide on the merits of the petition, and
where appropriate, issue a wage order establishing the regional minimum wage rates to be paid employers, which shall in no case be
lower than the applicable statutory minimum wage rates. The WO may include wages by industry, by province, by locality as may be
deemed necessary by the said Board. Provided, however, that such wage rate shall not be lower than the regional minimum wage rates
unless expressly specified in the WO. RTWPB shall furnish the NWPC a copy of the decision on the petition or the WO.
2. Contents of Wage Order Shall specify the region, province or industry to which the MWR prescribed under the Order shall apply and
provide exemptions, if any, subject to guidelines issued by the NWPC.
3. Frequency of Wage Order May not be disturbed for a period of 12 months from its effectivity, and no petition for wage increase shall
be entertained within the said period. In the event, however, that supervening conditions, such as extraordinary increases in prices of
petroleum products and basic goods/services, demand a review of the MWR as determined by the RTWPB and confirmed by the NWPC,
RB shall proceed to exercise its wage fixing function even before the expiration of the said period
4. Effectivity of the Wage Order Take effect 15 days after its publication in at least one newspaper of general circulation in the region.
5. Implementing Rules/Regulations of the Wage Order Board shall prepare, for approval of the Labor Sec, upon recommendation of the
Commission, the necessary IRR, not later than 10 days from the issuance of the WO.
6. Review of Wage Order Commission may review the WO issued by the Board motu proprio or upon appeal.
Page 4 of 10

Public hearings and publication is mandatory
Compliance with the Wage Order
- DOLE shall conduct inspection as often as possible or necessary, within its manpower constraint, of the payroll and other financial records
kept by the company or business, to determine whether the workers are paid the prescribed minimum wage rates and other benefits
granted by law or any wage order (Sec 9, RA 6727; Sec 18, Chapter 1, IRR).

a. Methods of fixing
i. Floor wage method fixing of determinate amount that would be added to the prevailing statutory MWR. Adopted in earlier wage
orders.
ii. Salary-ceiling method wage adjustment is applied to employees receiving a certain denominated salary ceiling. Used in no less than
eleven issuances mandating the grant of COLA.

EMPLOYERS CONFEDERATION OF THE PHIL (ECOP) v NWPC (1991; Sarmiento, J.)
QUICK FACTS: Validity of Wage Order No. NCR-01-A all workers and employees in private sector already receiving wages above statutory MWR up
to P125 shall also receive an increase of P17.
ISSUE:
HELD & RATIO: Shift from the 1
st
method to the 2
nd
method was brought about by the labor disputes arising from wage distortions, a consequence
of the implementation of the said wage orders. Apparently, the wage order provisions that wage distortions shall be resolved through the
grievance procedure were perceived by the legislators as ineffective in checking industrial unrest resulting from wage order implementations. With
the establishment of the second method as a practice, wage distortion disputes were minimized. Considering the reason behind implementation of
MWR (refer to 5. A. 3.), the statute would have no need for a wage board if the question were simply how much. The state is concerned, in
addition, that wages are not distributed unevenly, and more importantly, that social justice is subserved.

b. Validity

METROBANK v NWPC and RTWPB REGION II (2007; Austria-Martinez, J.)
QUICK FACTS: Metrobank assails applicability of Wage Order No. R02-03 (granting across the board raise of P15 to all employees and workers of
Region 2) to them insofar as they have voluntary adopted the NCR wage to their regional establishments. It went to CA and SC for certiorari asking
for prohibition and nullification of the Wage Order.
ISSUE: Did RTWPB exceed authority when it prescribed an increase without any ceiling or qualification?
HELD & RATIO: Yes, the Wage Order granted additional benefits not contemplated by RA 6727. Sec 1, WO No. R02-03 is void insofar as it grants
wage increase even to employees earning more than the MWR. However, there is no need to refund the wage increase received by employees
because it was given and received in good faith, with honest belief that they were entitled to such wage increase. As to jurisdiction, Sec 13 of the
WO explicitly provides that aggrieved parties may file an appeal with NWPC (by virtue of Art 121 d) within 10 days from publication of Wage Order.

c. Wage distortion

Sec 3, RA 6727 Amendment of Art 99 of PD 442 and incorporation of Art 120, 121, 122, 123, 124, 126 and 127

7
th
Par, Art 124 A situation where are 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.

Significant change occurs at the lowers level of positions in terms of basic wage without a corresponding change in the other level in the
hierarchy of positions, negating as a result thereof the distinction between one level of position from the next higher level and resulting in a
parity between the lowest level and the next higher level or rank, between new entrants and old hires (Prubankers Ass v Prudential Bank,
1999).
WAYS TO CORRECT DISTORTION
- Recognizes validity of negotiated wage increases since the legislative intent encourages the parties to seek solution to the problem of
wage distortions through voluntary negotiation or arbitration rather than strikes, lockouts or other concerted activities of the employees
or management.
PRINCIPLES ABOUT SALARY DISTORTION
(a) The concept of wage distortion assumes an existing grouping or classification of employees which establishes distinctions among such
employees on some relevant or legitimate basis. This classification is reflected in a differing wage rate for each of the existing classes of
employees.
(b) Often the result of government-decreed increases in MWR. Other causes of distortion like merger of two companies (with differing
classification of employees and different wage rates) where the surviving company absorbs all the employees of the dissolved
corporation.
(c) Should a wage distortion exist, there is no legal requirement that, in rectification oft that distortion by readjustment of the wage rates of
differing classes of employees, the gap which had previously or historically existed be restored in precisely the same amount. In other
words, correction of a wage distortion may be done by reestablishing a substantial or significant gap (as distinguished from the historical
gap) between the wage rates of the differing classes of employees.
Page 5 of 10

(d) The reestablishment of a significant difference in wage rates may be the result of resort to grievance procedures or collective bargaining
negotiations.

PRUBANKERS ASSOCIATION v PRUDENTIAL BANK (1999; Panganiban, J.)
QUICK FACTS: Region V and Region VII issued corresponding Wage Orders which increased the MWR of employees in the regions within its scope.
ISSUE: WON a wage distortion resulted from banks implementation of the aforecited Wage Orders?
HELD & RATIO: No. Distinction between Pay 1 and Pay 2 were not eliminated as a result of the implementation of the two WO in the said region. A
disparity in wages between employees holding similar positions but in different regions does not constitute wage distortion as contemplated by
law. It only arises when wage order engenders parity between employees in different rungs of the organizational ladder of the same establishment.
Difference in wages between employees in the same pay scale in different regions is not the mischief sought to be banished by law. RA 6727
recognizes regional disparities in cost of living (Sec 2), in fact, it is necessarily expected.
Uniform national wage structure is antithetical to RA 6727. It was adopted prior to RA 6727, after passage of which Bank was mandated
to regionalize its wage structure.
Equal work, equal pay - Wages in every region must be set by particular wage board based on the prevailing situation therein.
Necessarily, it will not be uniform.
Establishment Sec 13 of RA 6727 IR MWR of workers working in branches or agencies of establishments in or outside the NCR shall
be those applicable in the place where they are sanctioned
o NWPC Guidelines No. 1 (S. 1992) Establishment refers to an economic unit, which engages in one or predominantly one kind
of economic activity with a single fixed location.

4 elements of distortion:
a. Existing hierarchy of positions with corresponding salary rates
b. Significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one
c. Elimination of the distinction between the two levels
d. Existence of the distortion in the same region of the country

5. Freedom to Bargain

Art 125 No wage order shall be construed to prevent workers in particular firms or enterprises or industries from bargaining for higher wages
with their respective employers.

2
nd
Par, Sec 2, RA 6727 The State shall promote collective bargaining as the primary mode of settling wages and other terms and conditions
of employment; and whenever necessary, the minimum wage rates shall be adjusted in a fair and equitable manner, considering existing
regional disparities in the cost of living and other socio-economic factors and the national economic and social development plans.

6. Penalty for Violation

Sec 12, RA 8188 Any person, corporation, trust, firm, partnership, association or entity which refuses or fails to pay any of the prescribed
increases or adjustments in the wage rates made in accordance with this Act shall be punished by a fine not less than Twenty-five
thousand pesos (P25,000) nor more than One hundred thousand pesos (P100,000) or imprisonment of not less than two (2) years nor
more than four (4) years, or both such fine and imprisonment at the discretion of the court: Provided, That any person convicted under
this Act shall not be entitled to the benefits provided for under the Probation Law.

The employer concerned shall be ordered to pay an amount equivalent to double the unpaid benefits owing to the employees: Provided,
that payment of indemnity shall not absolve the employer from the criminal liability imposable under this Act.

If the violation is committed by a corporation, trust or firm, partnership, association or any other entity the penalty of imprisonment shall
be imposed upon the entity's responsible officers, including, but not limited to, the president, vice-president, chief executive officer,
general manager, managing director or partner.


C. Wage Payment and Protection

1. Form of payment

Art 102 No employer shall pay the wages of an employee by means of promissory notes, vouchers, coupons, tokens, tickets, chits or any object
other than the legal tender, even when expressly requested by the employee.
Payment of wages by check or money order shall be allowed:
when such manner of payment is customary on the date of effectivity of this Code or
is necessary because of:
o special circumstances as specified in appropriate regulations to be issued by the Labor Sec or
o as stipulated in a CBA
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Art 1705, CC The laborers wage shall be paid in legal currency.

Sec 1, Rule VIII, Book 3 As a general rule, wages shall be paid in legal tender and the use of tokens, promissory notes, vouchers, coupons or
any other form alleged to represent legal tender is absolutely prohibited even when expressly requested by the employee.

Sec 2, Rule VIII, Book 3 Payment of wages by bank checks, postal checks or money orders is allowed where:
Such manner of wage payment is customary on the date of the effectivity of this Code or
Stipulated in the CBA or
Where all of the following conditions are met
(1) There is a bank or other facility for encashment within a radius of 1 km from the workplace
(2) Employer or any of his agents/representatives, does not receive any pecuniary benefit directly or indirectly from the
arrangement
(3) Employees are given reasonable time during banking hours to withdraw their wages from the bank which time shall be
considered as compensable hours worked if done during working hours
(4) Payment by check is with the written consent of the employees concerned if there is no collective agreement authorizing
the payment of wages by bank checks

Sec 7, RA 6727 Upon written permission of the majority of the employees or workers concerned, all private establishments, companies,
businesses, and other entities with 25 or more employees and located within 1 kilometer radius to a commercial, savings or rural bank shall
pay the wages and other benefits of their employees through any of said banks and within the period of payment of wages fixed by
Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines.

Sec 8, RA 6727 Whenever applicable and upon request of a concerned worker or union, the bank shall issue a certification of the record of
payment of wages of a particular worker or workers for a particular payroll period.

Payment of wages through ATM allowed as per Labor Advisory on Payment of Salaries thru ATM (25 November 1996) provided the
following conditions are met:
1. ATM systems of payment is with written consent of the employees concerned
2. Employees are given reasonable time to withdraw their wages from the bank facility, which time, if done during working hours, shall
be considered as compensable hours worked
3. System shall allow workers to receive their wages within the period or frequency and in the amount prescribed under the LC
4. Bank or ATM facility is within a radius of 1 km to the place of work
5. Upon request of the concerned employee/s, employer shall issue a record of payment of wages, benefits and deductions for
particular period
6. There shall be no additional expenses and no diminution of benefits and privileges as a result of the ATM system of payment
7. Employer shall assume responsibility in case the wage protection provisions of law and regulations are not complied with under the
arrangement

CONGSON v NLRC (1995; Padilla, J.)
QUICK FACTS: Southern Fishing Industry pays regular piece-rate workers P1 per tuna weighing 30-80 kg per movement. They work for 7 days a
week and so complaint was for underpayment of wages, nonpayment of OT pay, 13
th
month pay, holiday pay, rest day pay and 5 day SIL and for
constructive dismissal. LA found him guilty of constructive dismissal and granted monetary claims except for rest day, OT pay and holiday pay. No
records were present with regard to compliance with MWR, LA gave credence to petitheir average income did not exceed P1,000/month.
ISSUE: WON the computation of monetary awards representing salary differentials may include value of tuna livers and intestines he gave them?
HELD & RATIO: No. Art 102 prohibits paying MW by means of legal tender combined tuna liver and intestines.

2. Time of payment

Art 103 Wages shall be paid at least once every 2 weeks or twice a month at intervals not exceeding 16 days. If on account of force majeure
or circumstances beyond the employers control, payment of wages on or within the time herein provided cannot be made, the employer
shall pay the wages immediately after such force majeure or circumstances have ceased. No employer shall make payment with less
frequency than once a month.
The payment of wages of employees engaged to perform a task which cannot be completed in 2 weeks shall be subject to the following
conditions, in the absence of a CBA or arbitration award:
(1) That payments are made at intervals not exceeding 16 days in proportion to the amount of work completed
(2) Final settlement is made upon completion of the work

Sec 3, Rule VIII, Book 3
(a) Wages shall be paid not less often than once every 2 weeks or twice a month at intervals not exceeding 16 days
o UNLESS payment cannot be made with such regularity due to force majeure or circumstances beyond the employer's control,
in which case, the employer shall pay the wages immediately after such force majeure or circumstances have ceased.
Page 7 of 10

(b) In case of payment of wages by results involving work which cannot be finished in 2 weeks, payment shall be made at intervals not
exceeding 16 days in proportion to the amount of work completed. Final settlement shall be made immediately upon completion
of work.

3. Place of payment

Art 104 Payment of wages shall be made AT or NEAR the place of undertaking, except as otherwise provided by such regulations as the Labor
Sec may prescribe under conditions to ensure greater protection of wages.

Sec 2, Rule VIII, Book 3
(a) As a general rule, the place of payment shall be AT or NEAR the place of undertaking.
Payment in a place other than the workplace shall be permissible only under the following circumstances:
(1) When payment cannot be effected at or near the place of work by reason of
a. Deterioration of peace and order conditions
b. Actual or impeding emergencies caused by fire, flood, epidemic or other calamity rendering payment thereat impossible
(2) When the employer provides free transportation to the employees back and forth
(3) Under any other analogous circumstances; provided that the time spent by the employees in collecting their wages shall be
considered as compensable hours worked.
(b) No employer shall pay his employees in
o any bar, night club, drinking establishment, massage clinic, dance hall or other similar places or
o in places where games are played with stakes of money or things representing money except in the case of persons employed
in said places.

4. Person to pay

Art 105 Wages shall be paid directly to the workers to whom they are due, except:
(a) In cases of force majeure rendering such payment impossible or under other special circumstances to be determined by the Labor
Sec in appropriate regulations, in which case, the worker may be paid through another person under written authority given by the
worker for the purpose.
(b) Where the worker has died, in which case, the employer may pay the wages of the deceased worker to the heirs of the latter
without the necessity of intestate proceedings. The claimants, if they are all of age, shall execute an affidavit attesting to their
relationship to the deceased and the fact that they are his heirs, to the exclusion of all other persons. If any of the heirs is a minor,
the affidavit shall be executed on his behalf by his natural guardian or next of kin. The affidavit shall be presented to the employer
who shall make payment through the Labor Sec or his representative. The representative of the Labor Sec shall act as referee in
dividing the amount paid among the heirs. The payment of wages under this Article shall absolve the employer of any further
liability with respect to the amount paid.

Sec 5, Rule VIII, Book 3 Payment of wages shall be made direct to the employee entitled thereto except in the following cases:
(a) Where the employer is authorized in writing by the employee to pay his wages to a member of his family
(b) Where payment to another person of any part of the employees wages is authorized by existing law, including payment for the
insurance premium of the employee and union dues where the right to check-off has been recognized by the employer in
accordance with a collective agreement or authorized in writing by the individual employees concerned
(c) In case of death of the employee, as provided to the succeeding section

Sec 6, Rule VIII, Book 3 The payment of wages of a deceased employee shall be made to his heirs without the necessity of intestate
proceedings.
When the heirs are of age, they shall execute an affidavit:
1. attesting to their relationship to the deceased and
2. the fact that they are his heirs to the exclusion of all other persons
In case any of the heirs is a minor, such affidavit shall be executed in his behalf by his natural guardian or next of kin. Upon presentation
of the affidavit to the employer, he shall make payment to the heirs as representative of the Labor Sec.

BERMISO v ESCANO (1959; Labrador, J.)
QUICK FACTS: Organization of stevedores, manner of payment
HELD & RATIO: RA 602 Sec 10 Par b. Work of stevedoring undertaken not as individuals but as a group. If racketeering was employed by their
leaders, the remedy is not in court but for the group to organize into a closely knitted union which will secure the privileges that the members
desire thru the selection of officers among themselves who will not exploit them.

D. Wage Prohibitions

1. Prohibition against interference in disposal of wages
Page 8 of 10


Art 112 No employer shall limit or otherwise interfere with the freedom of any employee to dispose of his wages. He shall not in any manner
force, compel or oblige his employees to purchase merchandise, commodities or other property from any other person, or otherwise make
use of any store or services of such employer or any other person.

Sec 12, Rule VIII, Book 3 No employer shall limit or otherwise interfere with the freedom of any employee to dispose of his wages and no
employer shall in any manner oblige any of his employees to patronize any store or avail of the services offered by any person.

2. Prohibition against wage deduction

Art 113 No employer shall, 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, where the right of workers or his union to check-off has been recognized by the employer or authorized in writing
by the individual worker concerned
(c) In cases where the employer is authorized by law or regulations issued by the Labor Sec

Sec 13, Rule VIII, Book 3 Deductions from the wages of the employees may be made in any of the following cases:
(a) When the deductions are authorized by law, including deductions for the insurance premiums advanced by the employer in behalf
of the employee as well as union dues where the right to check-off has been recognized by the employer or authorized in writing by
the individual employee himself.
(b) When the deductions are with the written authorization of the employees for a payment to a 3
rd
person and the employer agrees
to do so, provided that the latter does not receive any pecuniary benefit, directly or indirectly, from the transaction.

Deductions for unpaid absences are allowed. If the employee is monthly-paid, the equivalent daily rate should be determined first before
making the condition.
DEDUCTIONS AUTHORIZED BY LAW
1. Deduction for value of meals and other facilities
2. In cases where the employee is insured with his consent by the employer, deductions for the amount paid by the employer, as premiums
on the insurance
3. In cases where the right of the employee or his union to check-off has been recognized by the employer or authorized in writing by the
individual employee concerned
4. In cases where the employee is indebted to the employer, where such indebtedness has become due and demandable (Art 1706 CC)
5. In court awards, wages may be the subject of execution or attachment but only for debts incurred for food, shelter, clothing and medical
attendance (Art 1703 CC)
6. Withholding tax (without consent)
7. Salary deductions of a member of a legally established cooperative (without consent)
8. SSS, Medicare and PAG-IBIG contributions (without consent)

APODACA v NLRC (1989; Gancayco, J.)
QUICK FACTS: Apodaca was an employee and persuaded to buy 1500 shares of the corporation at P150,000. He initially paid P37,500, but resigned
11 years later. He filed a complaint for unpaid wages, COLA and balance of gasoline and representation expenses as well as his bonus
compensation for 1986. InTransPhil admitted he had P17,060 but the same were applied to his unpaid balance of P95,439.95. LA ruled for Apodaca
by virtue of Art 113 (no right to withhold payment of wages already earned). NLRC reversed because a stockholder who fails to pay his unpaid
subscription on call becomes a debtor of corporation and that the set-off of said obligation against the wages and others due to the petitioner is
not contrary to law, morals and public policy.
ISSUE: Whether the nonpayment of stock subscriptions can be offset against any money claim of an employee against the employer?
HELD & RATIO: It was without lawful basis, if not premature. As there was no notice or call for the payment of unpaid subscriptions, the same is not
yet due and payable. NLRC has no jurisdiction over intra-corporate dispute between stockholder and corporation as in the matter of unpaid
subscriptions.

3. Prohibition against requirement to make deposits for loss or damage

Art 114 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, occupation or
business where the practice of making deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor and
Employment in appropriate rules and regulations.

Art 115 No deduction from the deposits of an employee for the actual amount of the loss or damage shall be made unless the employee has
been heard thereon, and his responsibility has been clearly shown.

Sec 14, Rule VIII, Book 3 Where the employer is engaged in a trade occupation or business where the practice of making deductions or
requiring deposits is recognized, to answer for the reimbursement of the loss or damage to tools, machineries or equipment supplied by the
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employer to the employee, the employer may make wage deductions or require the employees to make deposits from which deductions shall
be made, subject to the following conditions:
(a) That the employee concerned is clearly shown to be responsible for the loss or damage
(b) That the employee is given reasonable opportunity to show cause why deduction should not be made
(c) That the amount of such deductions is fair and reasonable and shall not exceed the actual loss or damage
(d) That the deduction from the wages of the employee does not exceed 20% of the employees wages in a week

DENTECH MFG CORP v NLRC (1989; Gancayco, J.)
QUICK FACTS: Welders, upholsterers and painters of the firm (manufactures dental equipment and supplies) dismissed from pursuing union
activities. Required to file a cash bond at the start of their employment. Proceeds of the cash bond had already been given to a certain carinderia to
pay the outstanding accounts of the private respondents therein.
ISSUE: (Main issue delves on 13
th
month pay)
HELD & RATIO: The refund of cash bond is in order because Art 114 prohibits employer from requiring employee to file cash bond or to make
deposits. Also the payment to the carinderia does not merit serious consideration because no receipt were presented and is in fact not proven with
the consent of the employee.

FIVE J TAXI v NLRC (1994; Regalado, J.)
QUICK FACTS: P15 daily deposit which taxi drivers are required to make to defray any shortage in their boundary and car wash payments.
HELD & RATIO: There is no showing that Labor Sec has recognized the making of the deposit as a practice in the taxi industry. Consequently, the
employers act of requiring the drivers to make the deposits is illegal.

4. Prohibition against withholding of wages

Art 116 It shall be unlawful for any person, directly or indirectly,
o to withhold any amount from the wages of a worker or
o to induce him to give up any part of his wages
by force, stealth, intimidation, threat or
by any other means whatsoever without the workers consent.

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

5. Prohibition against deduction to ensure employment

Art 117 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.

6. Prohibition against retaliatory measures

Art 118 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:
o filed any complaint or instituted any proceeding under this Title or
o testified or is about to testify in such proceedings.

7. Prohibition against false reporting

Art 119 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.

Sec 13, Rule 10, Book 3 It shall be unlawful for any employer or any person to make any false statement, report, or record on matters required
to be kept or maintained pursuant to the provisions of this Rule (Administration and Enforcement).

8. Prohibition against keeping of employees records in a place other than the workplace

Sec 11, Rule 10, Book 3 All employment records of the employees shall be kept and maintained by the employer in or about the premises of
such work place. The premises of workplace shall be understood to mean the main or branch office of the establishment, if any, depending
upon where the employees are regularly assigned. The keeping of the employees records in another place is prohibited.

Sec 12, Rule 10, Book 3 All employment records required to be kept and maintained by employers shall be preserved for at least 3 years from
the date of the last entry in the records.


Page 10 of 10

SOUTH MOTORIST ENTERPRISES v TOSOC (1990; Melencio-Herrera, J.)
QUICK FACTS: 46 workers file complaint for nonpayment of ECOLA. Labor Officer conducted employment records. No employment records were
presented because they were allegedly sent to main office in Manila. Company caused resetting of hearing for 5 times.
ISSUE: Is the award valid considering it was just based on a mere Inspection Report? (vis a vis propriety of keeping employment records in places
other than the workplace)
HELD & RATIO: Yes. There is no reason for South Motorist to complain the award to employees base on a mere inspection report as that it was
afforded ample opportunity to present its side. Nevertheless, they failed to present employment records giving as an excuse that they were sent to
Manila office, in violation of Sec 11 of Rule X, Book II of Omnibus Rules.

9. Prohibition against garnishment/execution

Art 1708, CC The laborers wages shall not be subject to execution or attachment, except for debts incurred for:
o food,
o shelter,
o clothing and
o medical attendance.

GAA v CA (1985; Patajo, J.)
QUICK FACTS: Europhil was a tenant in Trinity Building where Rosario Gaa served as the building administrator. Europhil filed action for damages
for trespass upon its rights, cutting electricity and removing its name from building directory and gate passes of its officials and employees. Award
of damages became final and writ of garnishment upon El Grande Hotel (where Gaa is then working) for her salary, commission and/or
remuneration Gaa filed motion to life garnishment by invoking Art 1708 but was denied by lower court. CA affirmed denial saying Gaa was not a
mere laborer as contemplated under Art 1708. Laborer does not apply to one in managerial or supervisory position but only those laborers
occupying the lower strata. Wages pay given as hire or reward to artisans, mechanics, domestics or menial servants and laborers employed in
manufactories, agriculture, mines and other manual occupation.
ISSUE: Interpretion of Art 1708 laborers wages
HELD & RATIO: CA correctly interpreted that wage is not synonymous with salary.
Wages compensation for manual labor, unskilled, paid at stated times, and measured by day, week, month or season; considerable pay for a
lower and less responsible character of employment while Salary higher degree of employment, or a superior grade of services, implies
position of office; suggestive of a larger and more important service