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Title II – WAGES Legal requirements before deducting the value of facility:

Chapter 1 – Preliminary Chapter [Mabeza]


Art. 97 Definitions: 1. proof that such facility are customarily furnished by the
• person trade
• employer 2. provision of deductible facilities must be voluntarily
accepted in writing by employee
• employee
3. facilities must be charged at fair and reasonable value
• agriculture
• employ
• HOWEVER, deduction cannot be more than 70% of the
• wage meals and snacks, provided that such deduction must be
• fair and reasonable value authorized in writing by the employee; remaining 30% has
1. “WAGE” AND “SALARY” DEFINED to be subsidized by the employer
WAGE Lodging facility – value is determined to be the cost of operation
 applies to the compensation for manual labor, skilled or and maintenance, including adequate depreciation plus
unskilled, paid at stated times, and measured by the day, week, reasonable allowance
month, or season
 indicates inconsiderable pay for a lower and less responsible 2.2 Salary Excludes Allowances
character of employment • Allowances are excluded from basic salary or wage in
SALARY computation of the amount of retirement and other benefits
 denotes a higher degree of employment, or a superior grade payable to employee
of services, and implies a position or office
 suggestive of a larger and more permanent or fixed 3. SALARY DISTINGUISHED FROM GRATUITY
compensation for more important office GRATUITY
 something given freely, or without recompense; a gift;
1.1 “Wage” includes sales commissions something voluntarily given in return for a favor or services; a
• wage, pay and salary have the same meaning, commission is bounty; a tip
included in the definition of wage, therefore in the computation  that which is paid to the beneficiary for past services
of separation pay, the salary base should include earned sales rendered purely out of the generosity of the giver or grantor
commission  not intended to pay a worker for actual services rendered
Songco v NLRC → sales commissions and allowances should
be included in computation of separation pay. In the 4. FAIR DAY’S WAGE FOR FAIR DAY’S LABOR
computation of backwages and separation pay, account must • Fair days wage for a fair days labor is a basic factor in
be taken not only of the basic salary of the employee but also of determining employee’s wages.
the transportation and emergency living allowances.
• No work performed then no wage or pay unless laborer
was willing to work but was prevented by management or
1.2 Wage Includes Facilities or Commodities illegally locked out, suspended or dismissed.
• includes facilities (include articles or services for the benefit of
• Failure of workers to work was not due to employer’s fault,
the employee or his family but shall not include tools of the
the burden of economic loss suffered by employee should
trade or articles or service primarily for the benefit of the
not be shifter to employer. Each part bears his own loss
employer or necessary to the conduct of the employer’s
business) or commodities (employer may provide them but he
may deduct their values from the employee’s wages 5. Equal Pay for Equal Work
ISAE vs Quisibing fact that some teachers are foreign and
2. FACILITIES DISTINGUISHED FROM SUPPLEMENTS some local does not serve as a valid classification to justify
Facility unequal salary. Equal pay for equal work. If an employer affords
 include articles or services [board and lodging] for the benefit same position and rank then presumption is that they perform
of employee or his family equal work.
 does not include tools of the trade or articles or services
primarily for the benefit of the employer or necessary to the 6. AGRICULTURAL WORK
conduct of employer’s business. • Agricultural wage rates are generally lower than industrial.
 wage-deductible and required that employee voluntarily Nature of the work that classifies worker as agri or industri
accepts the facility else cant be deducted against wages Agriculture—farming in all its branches, among others, include
 Secretary of Labor and Employment is authorized to fix the cultivation and tillage of the soil, production, cultivation, growing
fair and reasonable value of facilities furnished to employees and harvesting of any agri or horti commodities, raising of
livestock, fish and any activities performed by a farmer or on a
 items of expense necessary for the laborer’s and his family’s farm but does not include manufacturing or processing.
existence and subsistence that they form part of wage since if
not furnished the laborer would spend and pay for them just the • Agri rate applies to farm work from land preparation to
same. harvesting, industrial rate to manufacturing or processing of
farm products.
Supplements
Del Rosario vs CIR the following are deemed industrial
 extra remuneration or special privileges or benefits given to workers: mill, laborers, chemists, fuelmen, oiler, tractor, and
or received by laborers over and above their ordinary earnings truck drivers
or wages
PART V - 1
Art. 98 – Application of Title 2 (Wages) 4.3 Retail and Service Establishment
Not applicable to: • Retail/service establishments regularly employing not more
1. farm tenancy or leasehold than 10 workers may be exempted from Wage
2. domestic services Rationalization Act or minimum wage law
3. persons working in their respective homes in needle work or
any cottage industry
4.4 Other Exemptions
4. workers employed in any establishment duly registered with
the National Cottage Industries and Development Authority • Wage orders allow petitions for exemption from prescribed
5. workers in any duly registered cooperative when so wage rates
recommended by the Bureau of Cooperative Development
6. Barangay micro business enterprise any business entity Art. 100. PROHIBITION AGAINST ELIMINATION OR
engaged in the production, processing, or manufacturing of DIMINUTION OF BENEFITS
products or commodities, including agro-processing, trading Non –diminution rule: benefits being given to employees cannot
and services, whose total assets including those arising from be taken back or reduced unilaterally by the employer because
loans but exclusive of the land on which the particular business the benefit has become part of the employment contract, written
entity’s office, plant and equipment are situated, shall not be or unwritten.
more than P3M.
• Rule against diminution of supplements or benefits is
applicable if it is shown that the grant of benefit is based on
Chapter 2: Minimum Wage Rates an express policy or ripened into a practice over a long
Art. 99 Regional Minimum Wages period of time and practice is consistent and deliberate
• No unlawful diminution if benefit is a contingent or
1. MINIMUM WAGE DEFINITION; RATIONALE conditional benefit whose demandability depends on
• Agri and non agri prescribed by the Regional Tripartite certain pre-conditions
Wages and Productivity Boards
Minimum wage—lowest wage rate fixed by law that an 1. NONDIMINUTION OF BENEFITS
employer can pay his employee. Requisites for application of nondiminution rule:
• Paying less than minimum wage is illegal. Complaint may 1. grant of the benefit is founded on a policy or has ripened into
be brought to DOLE regional office. a practice over a long period
2. the practice is consistent and deliberate
3. the practice is not due to error in the construction or
2. ABILITY TO PAY IMMATERIAL application of a doubtful or difficult question of law
De Rancho vs Municipality of Iligan employer cannot be 4. the diminution or discontinuance is done unilaterally by the
exempted because of poor financial condition of the company; employer
payment of minimum wage is not dependent on employer’s
ability to pay Extent of the Rule
1. 1 food and meal allowances
3. EMPLOYEES NOT ESTOPPED TO SUE FOR 1. 2 noncontributory retirement plan
DIFFERENCE IN AMOUNT OF WAGES 1. 3 monthly emergency allowance
• acceptance by an employee of the wages paid him without 1. 4 Full Thirteenth Month Pay
objection does not give rise to estoppel precluding him from
suing for the difference between the amount received and 3. EXCEPTIONS TO THE NON-DIMINUTION RULE
the amount he should have received pursuant to a valid Jurisprudence recognizes exceptions to the rule illustrated in
minimum wage law the following cases:
1. correction of error
4. EXEMPTIONS 2. Negotiated benefits
4.1 Exemption Under the Implementing Rules: 3. wage order compliance
a. household or domestic helpers including family drivers and 4. benefits on reimbursement basis
persons in the personal service of another 5. reclassification of position
b. homeworkers engaged in needlework 6. contingent benefits or conditional bonus
c.workers employed un any establishment registered with the 7. productivity incentives
National Cottage Industry
d. workers employed in any establishment duly refistered with 3.1 Not Established Practice; Mistake in Application of Law
Bureau of Cooperative Development
3.2 Negotiated Benefits
• Benefits negotiated in CBA are not within prohibition of art
4.1a Cooperatives may still be Exempted from Minimum
100 because it is a prodict of a bilateral contract which can
Wage Law
be diminished billaterally. Prohibited are those that the
employer can do unilaterally
4.2 Exemptions from BMBEs
• BMBE act of 2002 exempts BMBE from coverage of 3.3 Wage Order Compliance
minimum wage law

PART V - 2
• If no salary distortion to cure—previous across the board clear that the bonus is meant to be in addition to legal
mehtod can not be demanded as if it were a legal requirement of 13th month pay. If in lieu of 13 th month then CBA
obligation should say so.

3.4 Benefit on Reimbursement Basis Tax Exemption


• Elimination of existing benefit in exchange for an equal or
better one does not violate art 100 • RA 7833 exempts from income and withholding tax the 13 th
month pay [in the private sector] and other benefits
received by gov and private employees
3.5 Reclassification of Position; Promotion
• Should be done in good faith • Benefits exceeding P30,000 shall be taxable
3.6 Contingent or Conditional Benefits; Bonus
Bonus—is an amount granted and paid to an employee for his 4.1 Nature of the 13th Month Pay
industry and loyalty which contributed to the success of the • issued during the Martial Law, requires all employers to pay
employer’s business and made possible the realization of their rank-and-file employees receiving a basic salary of not
profits; bonus is not a demandable and enforceable obligation more than P1000 a month, regardless of the nature of
BUT it is when made part of the wage or salary or employment, a 13th month pay not later than December 24
compensation of every year
• President Aquino removed the P1000 ceiling, entitled to
3.6a Equity or Long Practice as Basis of Bonus 13th month pay all rank-and-file employees, regardless of
• equity or long practice as basis of bonus – even if bonus is salary rate, but still excluding managerial or supervisory
not demandable; long and regular concession; fixed hope employees

3.6b Services rendered as basis of bonus 4.2 Equivalent or Bonuses May Be Credited as the 13th
Month Pay
• services rendered as basis of bonus – right is not defeated
by a “release and quitclaim” upon termination (Marcos v • “equivalent” (i.e. Christmas bonus, mid-year bonus, profit-
NLRC – redundancy benefits) sharing payments, and other cash bonuses amounting to
not less than 1/12 of the basic salary but shall not include
cash and stock dividends, cost-of-living allowances and all
3.6c No Profit, No Bonus
other allowances enjoyed by the employees, as well as
Traders Royal Bank vs NLRC reduction of bonus not non-monetary benefits) or bonuses may be credited as
diminution of benefits; no profit, no bonus. Granting of bonus is 13th month pay
basically a management prerogative
• Nat’l Federation of Sugar Workers v Ovejera – year-end
productivity bonus of 1/12 of basic salary plus difference
3.7 Productivity Incentives
• employee’s share is in the nature of salary bonus 4.3 When CBA Bonus Deemed Apart from, not “Equivalent”
proportionate to increases in current productivity over the of 13th Month Pay
average for the preceding 3 consecutive years; “bonus” is
• If the CBA did provide for bonus in graduated amounts
not gratuity but the computed result of joint planning and
depending on the length of service of the employee, bonus
effort; claimable only on the basis of predefined output level
provided in the CBA was meant to be in addition to the
legal requirement (Universal Corn Products v NLRC –
4. PD 851 – 13TH MONTH PAY graduated Christmas bonus)
THIRTEENTH MONTH PAY
• Required by PD 851, which is an additional income based 4.4 Thirteenth Month Pay Deemed Written in Contract
on wage but not part of wage • Absence of an express provision in the CBA obligating the
• 1/12 of the total basic salary earned by an employee within employer to pay the employees a 13th month pay is
a calendar year immaterial; PD 851 is mandatory, 13th month pay is
• all employees regardless of designation or employment deemed written in contract
status irrespective of method by which wages are paid,
provided they worked for at least 1 month 4.5 Food, Etc. Not Substitute for 13th Month Pay
• Supplements or other employee’s benefits or favorable
• employee who resigned or terminated at any time before
practice not substitute for 13th month pay
payment of 13th month is entitled to monetary benefit pro
rata
4.6 14th Month Pay Not Legally Demandable
• even piece rate workers are entitled to 13th month pay
• managerial employees are exceed but company policy or 4.7 Computaion of 13th month pay
established practice may cover them • Computation of 13th month pay – 1/12 of basic salary
within a calendar year
• earnings and remuneration which are not part of basic
• Basic salary – include all remunerations or earnings paid
salary is not included in computation of 13th month pay by
by an employer to an employee for services rendered but
PD 851
may not include cost-of-living allowances, profit-sharing
• government employees are not covered payments and all allowances and monetary benefits which
are not considered or integrated as part of the basic salary
Universal Corn Product CBA provides for a bonus in of the employee;
graduated amounts depending on length of service, intention is
PART V - 3
• overtime pay and other remunerations are excluded as part
of basic salary and in the computation of the 13thmonth Art 101. PAYMENT BY RESULTS
pay (San Miguel Corp v Inciong) Piece rate workers are subdivided into 2 categories:
1. those paid piece rates which are prescribed in Piece
4.7b Are Commisions Included in the Computation Rate Orders issued by DOLE
• commissions are included or excluded, depending on what
 wages or earning under this category are determined by
kind of commissions are involved; if wage-or-sales-
multiplying number of pieces produced by the pay rate per
percentage type [intimately related to the extent or energy
piece. Whatever they earn after working for a certain number of
of an employee’s endeavors], includible in the 13thmonth
hours in a particular day shall be their actual earning even if the
pay computation (Phil. Duplicators v NLRC); if profit-
work time exceeds eight hours.
sharing or productivity bonus type [something extra for
which no specific additional services are rendered by any 2. those paid output rates which are prescribed by the
particular employee], excluded (Boie-Takeda Chemicals v employer and are not yet approved by the DOLE
Dela Serna)  under this category the number of pieces produced is
multiplied by the rate per piece as determined by the employer.
4.7c Guaranteed Wage and/or Commission If the amount is equal to or greater than the applicable legal
• employees w/ guaranteed wages/commissions entitled to daily rate in proportion tot eh number of hours worked, worker
13th month pay based on their total earnings during the receives such equal or greater amount. But if amount is lower
calendar year on both their fixed and guaranteed wage and than the legal daily rate, employer must make up the difference.
commissions (Phil. Agricultural and Industrial Workers’ • Piece rate workers are entitled to holiday pay, premium
Union v NLRC – drivers and conductors) pay, 13th month pay, SIL as well as overtime pay
• commissions recompense, compensation, reward of an
employee, agent, salesman, executor, broker or bailee,
when the same is calculated as a percentage on the 1.1 Illustrative Case
amount of his transactions or on the profit of the principal • payment by result not determinative of er-ee rel., only a
method of compensation
4.7d Is Teachers’ Overload Pay Included?
• teacher’s overload pay performed during or within the 8 2. BASIS OF OUTPUT PAY RATE
hours in a day [the load in excess of the normal load of • basis of output rate – the performance of an ordinary
private school teachers as prescribed by DECS or the worker of minimum skill or ability [aka the average worker
policies, rules, and standard of particular private schools; of the lowest producing group representing 50% of the total
work in excess of the regular teaching load; may be number of employees engaged in similar employment in a
performed within or outside 8 hours in a day] part of basic particular establishment, excluding learners, apprentices,
pay for computing 13th month pay and handicapped workers employed therein

4.8 Proportionate 13th Month Pay 3. ENTITLEMENT OF PIECE RATE WORKERS TO NIGHT
• an employee who has resigned or whose services were DIFFERENTIAL AND SIL
terminated at any time before the time for payment of the • unsupervised piece-rate workers are not entitled to night
13th month pay is entitled to this monetary benefit in differential pay and service incentive leaves
proportion to the length of time he worked during the year, • re: yearly commutation or cash conversion of the service
reckoned from the time he started working during the incentive leave based on their average daily earnings of
calendar year up to the time of his resignation or piece-rate workers during the particular year of service
termination from service (Int’l School of Speech v NLRC) which can be derived by dividing the amount earned during
the year by the actual number of working days or the
4.9 Distressed Employer statutory minimum rate, whichever is higher
• distressed employer may be exempt from paying the 13th • in the absence of any agreement which provides otherwise,
month pay only upon prior authorization from Labor Sec the amount earned during the year may exclude COLA,
(Dentech Manufacturing Corp v NLRC) overtime pay, and premium pay, holiday pay, night
differential pay and company fringe benefits
4.10 Non-Strikeable
• difference of opinion on how to compute the 13th month 4. ENTITLEMENT TO HOLIDAY PAY
pay does not justify a strike • piece rate worker entitled to holiday pay
• nonpayment of 13th month pay is not an issue of unfair
labor practice but one of money claim 5. ENTITLEMENT TO 13TH MONTH PAY
• to be entitled piece rate worker should have rendered
4.11 Exclusion: Government Employees at least 1 mont work or service during calendar year
• PD 851 only applies to private employers and their
employees; no intention to cover persons working in the
govt service (Alliance of Govt Workers v Minister of Labor
and Employment)

4.12 Seafarers
• Seafarers are contractual not regular this not entitled to 13th
month pay
PART V - 4