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LABOR LAW REVIEW

Atty. Jefferson Marquez School Year 2001-2002

LABOR STANDARDS
INTRODUCTION Sources of Labor Laws 1. The Labor Code of the Philippines (Presidential Decree 442, as amended) It is the law governing Labor Standards. This law took effect on November 1, 1974. Since then, the Labor Code has undergone several amendments. The most substantial amendment is RA 6715 (March 1989). 2. Judicial Decisions Article 8, Civil Code: Judicial decisions applying or interpreting the laws or the Constitution shall form part of the legal system of the Philippines. 3. Rules and Regulations issued by administrative agencies Have the force and effect of laws. Provided, however, that these rules and issuance will not expand the law or strip the law. Otherwise, under the rules on statutory construction, these will be considered void. e.g. Policy Instruction No. 54-88 (issued by former Sec. Franklin Drilon) has been declared void by the Supreme Court because this has expanded Art. 83 of the Labor Code on Employment of Health Personnel by erroneously interpreting that health employees are entitled to a full weekly wage for 7 days if they have completed the 40-hour/5day workweek. To recapitulate: The Labor Laws will not only include PD 442, as amended, but as well as all decisions of the Supreme Court which interpret these laws. Including as well, rules and regulations issued by the appropriate government agencies. E.g. Department of Labor and Employment. LABOR STANDARDS The minimum requirements prescribed by existing laws, rules and regulations and other issuances relating to wages, hours of work, cost of living allowances and other monetary and welfare benefits, including those set by occupational safety and health hazards. (Section 7, Rule I, Rules on the Disposition of Labor Standards Cases September 16, 1987) EMPLOYER - EMPLOYEE, DEFINITION AND DISTINCTIONS Employer Includes any person directly or indirectly in the interest of an employer in relation to an employee and shall include the Government and all its branches, subdivision and instrumentalities, all government-owned or controlled corporations and institutions, as well as non-profit private institutions, or organizations. (Article 97 b) The employer may be a natural or juridical person. May be a single proprietor, a partnership or a corporation. Example: Dumon Sari-sari Store (single proprietorship). Who is considered the employer? Wilbert Dumon will be the employer, because the sari-sari store does not have a separate juridical personality. So, if Dumon is made a defendant in a labor case, the caption will be - Employee vs. Wilbert Dumon, doing business under the name and style of Dumon Sari-sari Store. The Government is an employer within the meaning of the Labor Code in Labor Standards. So, a government agency with an original charter contracts with a security agency to supply security guards, and this security agency is unable to pay the wages of its guards. Issue: Is principal government agency considered jointly and severally liable with the security agency? Will Article 106-109, LC apply to them? Can the guards file with the labor complaint with the nearest arbitration branch of the NLRC and sue both the security and government agency? YES, the Labor Code will govern. The government agency cannot move

for the dismissal of the complaint for lack of jurisdiction on the part of the Labor Arbiter and say that they are governed by the Civil Service Law Rules and Regulations. The government agency contracted the services of an independent contractor, so they are considered principals. Therefore the LC will govern regarding the monetary gains of the security guards. A motion to dismiss filed by the government agency in the above-cited example will not prosper on the ground that the Labor Arbiter has no jurisdiction, because the term Employer includes government agencies. It does not make any qualifications whether it is one with or without original charter.
Philippine Fisheries Development vs. NLRC 213 SCRA 21 The SC had the occasion to interpret the term Employer so as to include the government including their subdivisions as well as instrumentalities. Notwithstanding that the petitioner is a government agency, its liabilities, which are joint and solidary with that of the contractor, are provided in Article 106, 107 and 109 of the Labor Code. This places the petitioners liabilities under the scope of the NLRC. Moreover, Book III, Title II on Wages specifically provides that the term EMPLOYER includes any person acting directly or indirectly in the interest of an employer in relation to an employee and shall include the Government and all its branches, subdivisions and instrumentalities, all governedowned or controlled corporations and institutions as well as non-profit private institutions. The NLRC, therefore, did not commit grave abuse of discretion in assuming jurisdiction to set aside the Order of dismissal by the Labor Arbiter.

Employee Includes any individual employed by an employer. (Article 97c) Only a natural person can qualify as an employee. Natural persons may include Filipino citizens and Foreigners. Q: Is there a provision in the Labor Code governing the hiring of a Foreigner? A Filipino? A: For Foreigners, Art 40-42 of PD 442 on employment of nonresident aliens by domestic or foreign employer. In case of a Filipino, there is none because the Constitution and the Labor Code encourages the employment of Filipinos. Foreign Investments Act There are industries that can be the subject of investment of full equity for foreign nationals. There are certain activities where foreign companies can invest on. Thus, the employer may be foreigner. In other words, there are corporations that are fully owned by foreigners of which is limited to a certain percentage, like 60-40. Please take note of the Constitutional limitations on Foreign investments in the Philippines. If they want to employ an alien to be their employee in the Philippines, the law requires that such domestic or foreign companies should obtain a permit from the DOLE. Here is a company fully owned by foreigners in an area permissible for full ownership by foreign entities. It may hire a person who is not a Filipino at its employee. It may happen that a domestic corporation decides to hire an alien. Example: Hotels that wish to hire chefs. Arts. 40-42 of the Labor Code shall govern. Such that the employer must obtain a work permit from the DOLE (nearest regional office that covers the particular place). This work permit is what is called the ALIEN EMPLOYMENT PERMIT (AEP). The process is that the employer (domestic or foreign), before admitting this alien to be its employee, will have to file an application with DOLE for the issuance of AEP, submitting therein certain documents t o justify that there is a need for the employment of such alien. Q: Is there any other requirement? A: Yes. There must be a determination of the non-availability of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired. Purpose: To protect the Filipinos. The employer has to justify to the DOLE that it needs this person (alien) because he has special expertise in this particular field that no other Filipino in the country is able, willing and competent to discharge. The employer has the burden of proving with the DOLE. Failure to do so warrants the denial of the application for AEP.

If employer employs an alien without complying with the above requirement, then a case may be filed against it for violation of the Labor Code. ILLUSTRATION: Foreigner who wishes to be employed in a hotel establishment as a cook or chef. He can enter the Philippines if he has a VISA (as to what kind of VISA, check Philippine Immigration Act of 1940) but usually, it is a 9-G VISA or a PRE-ARRANGED VISA. Together with such requirement under the Philippine Immigration Act, is the requirements are distinct because different laws provide them for. Employer-Employee Relationship vs. Principal-Agent Relationship Employee is governed by the LC, while the agent is governed by the CC. AGENT in Article 1868, Civil Code: By the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. It is the principal who selects the agent in a principal-agent relationship. An agent is compensated under the contract of agency for services rendered. An agent is disciplined by the principal as in the case of an employee, because the agent is under the authority of the principal. The principal controls the means and methods of the work of an agent. In the principal-agent relationship, there is only one party. The agent is merely an extension of the principal. They are regarded as one. So, if there is a contractor relationship, it is not between 3 parties, but is between the principal or the agent as an extension of the principal and the other party. To make a distinction between a principal-agent relationship from a employer-employee relationship, the Four-Fold Test will not be used because the agent is also selected by the principal and is also compensated by the principal and most oftentimes, the principal also substitutes his own judgment for that of the agent.
Maraginot vs. NLRC 284 SCRA 539 (Contracting) The SC had the occasion to determine the existence of an agent-principal relationship. The relationship between VIVA and its producers or associate producers seems to be that of agency, as the latter make movies on behalf of VIVA, whose business is to "make" movies. As such, the employment relationship between petitioners and producers is actually one between petitioners and VIVA, with the latter being the direct employer. The employer-employee relationship between petitioners and VIVA can further be established by the "control test." While four elements are usually considered in determining the existence of an employment relationship, namely: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee's conduct, the most important element is the employer's control of the employee's conduct, not only as to the result of the work to be done but also as to the means and methods to accomplish the same. These four elements are present here. It may not be ignored, however, that private respondents expressly admitted that petitioners were part of a work pool; 31 and, while petitioners were initially hired possibly as project employees, they had attained the status of regular employees in view of VIVA's conduct. A project employee or a member of a work pool may acquire the status of a regular employee when the following concur: 1) There is a continuous rehiring of project employees even after cessation of a project; and 2) The tasks performed by the alleged "project employee" are vital, necessary and indispensable to the usual business or trade of the employer. However, the length of time during which the employee was continuously re-hired is not controlling, but merely serves as a badge of regular employment. A work pool may exist although the workers in the pool do not receive salaries and are free to seek other employment during temporary breaks in the business, provided that the worker shall be available when called to report for a project. Although primarily applicable to regular seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the employer and employee for it prevents the unjust situation of "coddling labor at the expense of capital" and at the same time enables the workers to attain the status of regular employees. Clearly, the continuous rehiring of the same set of employees within the framework of the Lao Group of Companies is strongly indicative that private respondents were an integral part of a work pool from which petitioners drew its workers for its various projects.[Tomas Lao Construction Case]

Employer-Employee Relationship vs. Principal-Contractor Relationship

Contractor Carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility, according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof. (Department Order No. 9) In the principal-contractor relationship, the principal selects the contractor. The contractor is compensated for services rendered. The contractor is not under the discipline of the principal. The contractor is not under the control of the principal. The definition says that aside from engaging in a business separately distinct from the principal, the performed job, work or service is, according to his own means or methods, free from the control and direction of the principal except as to the results thereof. Contractor may be an individual, or corporate or juridical contractor. Principal-contractor relationship also exists in a situation under Article 106 wherein the principal will engage the services of a security agency to render security services. That person rendering such services will also qualify as a contractor. Article 1713, Civil Code: By contract for a piece of work the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. The contractor may either employ only his labor or skill, or also furnish the material. Important!! Please note: the distinctions on Employer-employee relationship vs. Principal-agent relationship Employer-employee relationship vs. Principal-contractor relationship

FOUR-FOLD TEST IN DETERMINING THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP 1. The selection and engagement of the employee 2. The payment of wages or salaries for services 3. The power of dismissal or to impose disciplinary actions 4. The employers power to control the employee with respect to the means and methods by which the work is to be accomplished. It is the so-called control test that is the most important element. FIRST TEST: The SELECTION and engagement of the employee MANAGEMENT PREROGATIVE Strictly speaking, the employer has no right to hire a person as his employee. The matter of selecting a person as ones employee is more appropriately described as a prerogative. It is not a right in which you can go to court and enforce the right to hire a person otherwise it will violate the constitutional provision against involuntary servitude if one is compelled to be anothers employee: No person can be compelled against his will to do an act whether illegal or illegal. Thus, an employer cannot go to court and get an injunction to compel a person to become his employee. If at all, the employer can only exercise the prerogative to invite that person and to hire him if he so desires. In that sense, the right to hire is essentially a management prerogative. MANAGEMENT PREROGATIVE An act of the employer according to his own judgment or discretion to regulate his business. This includes hiring, transfer, dismissal, etc. The exercise of the right or prerogative to hire is not absolute. It is regulated by law. LIMITATIONS OR RESTRICTIONS ON THE RIGHT TO HIRE (PRIOR TO HIRING) A. Under the Labor Code: 1. Prohibition against gender discrimination Article 135. Discrimination Prohibited. It shall be unlawful for any employer to discriminate against any woman employee with respect to terms and conditions of employment solely on account of her sex. The following are ACTS OF DISCRIMINATION:

(a) Payment of lesser compensation, including wage, salary or other form of remuneration or fringe benefits, to a female employee as against a male employee, for work of equal value; and (b) Favoring a male employee over a female employee with respect to promotion, training opportunities, study and scholarship grants solely on account of their sexes. Criminal liability for the willful commission of any unlawful act as provided in this article or any violation to the rules and regulations issued pursuant to Section 2 hereof (RA 6725) shall be penalized as provided in Articled 288 and 289 of this Code. Provided, that the institution of any criminal action under this provision shall not bar the aggrieved employee from filing an entirely separate and distinct action for money claims, for damages and other affirmative reliefs. The actions hereby authorized shall proceed independently of each other. Article 135 prohibits discrimination against women employees as regards terms and conditions of employment on account of employment on account of sex. A recent development in this area is the passage of RA 7192 (An Act Promoting the Integration of Women as Full and Equal Partners of Men in Development and Nation Building). 2. Prohibition against stipulation of marriage 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 separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage. This provision covers women who are not yet married.
PT&T vs. NLRC 272 SCRA 596 In the case at bar, PT&Ts policy of not accepting or considering as disqualified from work any woman worker who contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all women workers by our labor laws and by no less than the Constitution. xxx Art 136 is not intended to apply to only women employed in ordinary occupations, or it should have categorically expressed so. The sweeping intendment of the law, be it on special or ordinary occupations, is reflected in the whole text and supported by Art 135 that speaks of non-discrimination on the employment of women. Petitioners policy is not only in derogation of Art 136 of the Labor Code on the right of the woman to be free from any kind of stipulation against marriage in connection with her employment, but it likewise assaults good morals and public policy, tending to deprive a woman of freedom to choose her status, a privilege that by all accounts inheres in the individual as an intangible and inalienable right.

3. Prohibition against child discrimination Article 140. Prohibition Against Child Discrimination. No employer shall discriminate against any person in respect to terms and conditions of employment on account of his age. 4. Minimum Employable Age Article 139. Minimum Employable Age. (a) No child below 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 15 and 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 18 years of age in an undertaking which is hazardous or deleterious in nature as determined by the Secretary of Labor.
Note: Sec. 12 of RA 7610 amended Art 139 and provides instances where children below 15 years old may be employed. (see below under Special Laws)

Situation: In a construction business, can the employer hire a person 15 years of age?

The implementing rules explain that any person, regardless of sex, between ages 15 and 18 may be employed in any non-hazardous work. It follows that in any hazardous work, the employable age is 18 and up. NON-HAZARDOUS WORK OR UNDERTAKING One where the employee is not exposed to any risk which constitutes imminent danger to his safety and health. Hazardous Workplaces Section 8, Rule I, Book IV The Bureau of Labor Standards shall, with the approval of the Secretary of Labor, issue from time to time a detailed list of hazardous workplaces for purpose of this Rule, in addition to the following: (a) Where the nature of the of the work exposes the workers to dangerous environment elements, contaminants or work conditions including ionizing radiations, chemicals, fire, flammable substances, noxious components and the like. (b) The workers are engaged in construction work, logging, fire-fighting, mining, quarrying, blasting, stevedoring, dock work, deep sea fishing and mechanized farming. (c) Where the workers are engaged in the manufacture or handling of explosive and other pyrotechnic products. (d) Where the workers use or are exposed to heavy or power-driven machinery or equipment. (e) Where workers use or are exposed to power-driven tools. Note: There is no prohibition for employment of a person 18 years old and above. The age of majority is 18 years old under the Family Code. Before the Family Code took effect, it was 21. As regards the employment of a person 15, 16, 17 years old, you have to make a qualification whether the undertaking or establishment is hazardous or not. How do we know that it is hazardous or not? See Department Order No. 4-1999 (for the new rules including karaoke bars)
Department Order No. 4-1999 shows what establishments have been classified by

the DOLE as hazardous. Therefore, if the establishment is classified as hazardous, a person 15-below 18 years of age cannot be employed. Technical Guidelines for Classifying Hazardous and Non-Hazardous Establishments, Workplaces and Work Processes (DOLE Memorandum Circular No. 2-1998) Section 3. Criteria for Classifying Hazardous Establishments or Workplaces. An establishment or workplace may be classified as hazardous if any of the conditions provided under Rule 1013 of the OSHS has been confirmed, as follows: (a) Where the nature of the of the work exposes the workers to dangerous environment elements, contaminants or work conditions including ionizing radiations, chemicals, fire, flammable substances, noxious components and the like; (b) Where the workers are engaged in construction work, logging, fire-fighting, mining, quarrying, blasting, stevedoring, dock work, deep sea fishing and mechanized farming; (c) Where the workers are engaged in the manufacture or handling of explosives and other pyrotechnic products; (d) Where the workers use or are exposed to power-driven or explosive powder actuated tools; and (e) Where the workers are exposed to biologic agents like bacteria and fungi, viruses, protozoa, nematodes and other parasites. Example: Employment in a Karaoke Bar. It was not considered hazardous before, but it is considered hazardous workplace now. Therefore, the owner of the karaoke bar should not employ persons below 18 otherwise they would violate the department order above-mentioned.

Employment of persons below 15: Consult RA 7610, because that is the law, which tells us the 2 instances an employer, can employ a person below 15. Note: the qualifications and the minimum employable age. 5. Yellow Dog Contract The employer commits Unfair Labor Practice if he imposes as a precondition for hiring that an employee shall not join or attempt to foster a union during their period of employment and shall resign from the union to which they belong. B. Under Special Laws: 1. RA 7610, which amended Article 139 of the LC Article VII, Section 12. Children below 15 years of age shall not be employed, except: (1) When a child works directly under the sole responsibility of his parents or legal guardian and where only members of the employers family are employed; Provided: (a) His employment neither endangers his life, safety, health and morals, nor impairs his normal development; (b) The parent or legal guardian shall provide the said minor child with the prescribed primary and secondary education; (c) The employer shall first secure, before engaging such child a work permit from DOLE which shall ensure observance of the above requirements. (2) When the childs employment or participation in public and entertainment or information through cinema, theater, radio or television is essential; Provided: (a) The employer shall ensure the protection, health, safety, and morals of the child; (b) The employer shall institute measures to prevent the childs exploitation or discrimination taking into account the system and level of remuneration, and the duration and arrangement of working time; (c)The employer shall formulate and implement, subject to the approval and supervision of competent authorities, a continuing program for training and skills acquisition of the child; (d) The employer shall first secure, before engaging such a child, a work permit from DOLE which shall ensure observance of the above requirements; (e) The employment contract is concluded by the childs parents or legal guardian with the express agreement of the child concerned, if possible. Article VII, Section 14. No person shall employ child models in all commercials or advertisements promoting alcoholic beverage, intoxicating drinks, tobacco and its by-products and violence. 2. RA 7877 or the Anti-Sexual Harassment Act of 1995 Section 3(a). In a work-related environment, sexual harassment is committed when: (1) A sexual favor is made as a condition in the hiring or in the employment, reemployment, or continued employment of said individual. (2) xxx This prohibits the employer from asking sexual favor as a condition for employment. Thus restricting the employers right to hire. 3. RA 7277 or the Magna Carta of Disabled Persons Sec 32. Discrimination on Employment. No entity, public or private, should discriminate against qualified disabled person in terms of job application procedures, hiring, promotion, discharge, compensation and other benefits. Sec. 5. Equal Opportunity for Employment. - No disable person shall be denied access to opportunities for suitable employment. A qualified disabled employee shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able bodied person.

Mandates that qualified disabled persons be granted the same terms and conditions of employment as qualified able-bodied employees. Once they have attained the status of regular workers, they should be accorded all the benefits granted by law, notwithstanding written or verbal contracts to the contrary.
BERNARDO vs. NLRC G.R. No. 122917, 12 July 1999 The fact that the employees were qualified disabled persons necessarily removes the employment contracts from the ambit of Article 80. Since the Magna Carta accords them the rights of qualified able-bodied persons, they are thus covered by Article 280 of the Labor Code. x x x In rendering this Decision, the Court emphasizes not only the constitutional bias in favor of the working class, but also the concern of the State for the plight of the disabled. The noble objectives of Magna Carta for Disabled Persons are not based merely on charity or accommodation, but on justice and the equal treatment of qualified persons, disabled or not. In the present case, the handicap of petitioners (deaf-mutes) is not a hindrance to their work. The eloquent proof of this statement is the repeated renewal of their employment contracts. Why then should they be dismissed, simply because they are physically impaired? The Court believes, that, after showing their fitness for the work assigned to them, they should be treated and granted the same rights like any other regular employees.

4. RA 8791 or the General Banking Laws of 2000 Section 55.4. No bank shall employ casual or non-regular personnel or too lengthy probationary personnel in the conduct of its business involving deposits. There is a possibility on the part of the mentioned employees to disclose confidentiality of bank deposits. They have no security of tenure. Provisions under the Labor Code which restrict the rights of the employer DURING EMPLOYMENT 1. Article 135 Stipulation Against Marriage 2. Article 136 Discrimination Prohibited

SECOND TEST: The PAYMENT OF WAGES or salaries for services WAGE Paid to any employee; shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. Fair and reasonable value shall not include any profit to the employer or to any person affiliated with the employer. (Article 97f) As defined, the WAGE is remuneration for services rendered and includes the fair and reasonable value of facilities as may be determined by the Secretary of Labor. So it is not limited to cash payment for an employees services. Note: Article 97 also defines the different Methods of Fixing Compensation: 1. Time (daily and monthly paid workers) 2. Commission 3. Job or task basis 4. Piece-rate basis (payment by results) These are very important in relation to persons or employees who are exempted from enjoying the benefits under the Labor Code. Because under Article 82, workers paid by results are exempted from overtime pay, service incentive leave, etc. (Conditions of Employment)

 Concept of Wage and Salary

WAGES as distinguished from SALARY applies to the compensation for manual labor, skilled or unskilled, paid at stated times, and measured by the day, week, month, or season, while SALARY denotes a higher degree or employment, or superior grade of services, and implies a position or office. By contrast, the term WAGES indicates considerable pay for a lower and less responsible character of employment, while SALARY is suggestive of a larger and more permanent or fixed compensation for more important service.

Songco vs. NLRC 183 SCRA 618 Wage and salary have the same etymology. While they have the same concept, distinctions have to be made. WAGE is compensation more for skilled or unskilled manual laborers. SALARY pertains to white collar workers and those of a higher or grade of employment, superior grade of services and position of office. Labor Law; Commissions; The nature of the work of a salesman and the reason for such type of remuneration for services rendered demonstrate clearly tat commissions are part of petitioners wage or salary. We agree with the Solicitor General that granting, in gratia argumenti, that the commissions were in the form of incentives or encouragement, so that the petitioners would be inspired to put a little more industry on the jobs particularly assigned to them, still these commissions are direct remunerations for services rendered which contributed ti the increase of income of Zuellig. COMMISSION is the recompense, compensation or reward of an agent, salesman, executor, trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit to the principal. The nature of the work of a salesman and the reason for such type of remuneration for services rendered demonstrate clearly that commissions are part of petitioners wage or salary. We take judicial notice of the fact that some salesmen do not receive any basic salary but depend on commissions and allowances or receive any basic salary but depend on commissions and allowances or commissions alone, although an employer-employee relationship exists. Iran vs. NLRC 289 SCRA 433 (1998) Workers were paid based on commission, not on time spent. Issue: whether or not that commission is considered wage. The SC ruled that commission are considered wage because Article 97 defines wage as to include payment of remuneration in the form of commission. Petitioner Iran is engaged in softdrinks merchandising and distribution in Mandaue City, Cebu, employing truck drivers who double as salesmen, truck helpers, and non-field personnel in pursuit thereof. As part of their compensation, the driver/salesman and truck helpers of the petitioner received commissions per case of softdrinks sold. The definition of WAGES in Article 97 (f) explicitly includes commissions as part of wages. While commissions are indeed, incentives or forms of encouragement to inspire employees to put a little more industry on the jobs particularly assigned to them, still these COMMISSIONS are direct remunerations for services rendered. In fact, commissions have been defined as the recompense, compensation or reward of an agent, salesman, executor, trustee, receiver, factor, broker or bailee, when the same is calculated as a percetage on the amount of his transactions or on the profit to the principal. The nature of the work of a salesman and the reason for such type of remuneration for services rendered demonstrate clearly that commissions are part of a salesmans wage or salary. Gaa vs. CA 140 SCRA 304 Sc ruled that the wage of the employee is exempt from garnishment. Under the Civil Code, there is a provision on the exemption of the employees wage from garnishment. The SC was able to apply this provision. Article 1708 of the Civil Code which exempts laborers wage from attachment or execution does NOT apply to a responsibly placed employee, supervisory or managerial employee, but only to rank-and-file. Article 1708 used the word WAGES and not SALARY in relation to LABORER when it declared what are to be exempted from attachment and execution. The term WAGES as distinguished from SALARY, applies to the compensation for manual labor, skilled or unskilled, paid at stated times, and measured by the day, week, month, or season, while SALARY denotes a higher degree of employment, or a superior grade of services, and implies a position of office; by contrast, the term WAGES indicates a considerable pay for a lower and less

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responsible character of employment. While SALARY is suggestive of a larger and more important service. The distinction between wages and salary was adverted to in Bell vs. Indian Livestock Co., wherein it was said: WAGES are the compensation given to a hired person for service, and the same is true of SALARY. The words seem to be synonymous, convertible terms, though we believe that use and general acceptation have given to the word salary a significance somewhat different from the term wages in this: that the former is understood to relate to a position of office, to be compensation given for official or other service, as distinguished from wages, the compensation for labor.

Concept of Facilities and Supplements FACILITIES are items of expense necessary for the laborers and his familys existence and subsistence. Requisites for FACILITIES to be considered as an integral part of an employees wage: 1. Must be customarily furnished by the employer to the employees; 2. Must be charged at a fair and reasonable value; and 3. The provision on deductible facilities must be voluntarily accepted by the employee in writing. (Mabeza vs. NLRC, 271 SCRA 670)
Mabeza vs. NLRC 271 SCRA 670 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 private respondents hotel. Millares vs. NLRC 305 SCRA 501 Defines FACILITIES and the term CUSTOMARY. CUSTOMARY is founded on long-established and constant practice connoting regularity. The receipt of an allowance on a monthly basis does not ipso facto characterize it as a regular and forming part of salary because the nature of the grant is a factor worth considering. We agree with the observation of the Solicitor General that the subject allowances were, temporarily, not regularly, received by the petitioners because In the case of housing allowance, once a vacancy occurs in the company-provided housing accommodations, the employee concerned transfers to the company premises and his housing allowance is discontinued x x x x On the otherhand, the transportation allowance is in he form of advance for actual transportation expenses subject to liquidation x x x given only to employees who have personal cars. The Bislig allowance is given to Division managers and corporate officers assigned in Bislig, Surigao del Norte. Once the officer is transferred outside Bislig, the allowance stops. Section 5, Rule VII, Book III, of the Implementing Rules gives meaning to the term FACILITIES as including articles or services for the benefit of the employee or his family but excluding the tools of the trade or articles or services primarily for the benefit of the employer or necessary to the conduct of the employers business. The Secretary of Labor under Section 6, Rule VII, Book III, may from time to time fix in appropriate issuances the fair and reasonable value of the board, lodging and other facilities customarily furnished by an employer to his employees. Petitioners allowances do not represent such fair and reasonable value as determined by the proper authority simply because the Staff/Managers allowance and transportation allowance were amounts given by the employer in lieu of actual provisions for housing and transportation needs whereas the Bislig allowance was given in consideration of being assigned to the hostile environment then prevailing in Bislig.

SUPPLEMENTS constitute extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. The classification of an item of expense as a facility or a supplement will depend on the purpose, and not on the kind. So, if it is principally or mainly for the benefit of the employee, classify as facilities, and the fair and reasonable value of that can be considered as deductible from the employees wage. An employer can validly pay the employee in the form of cash or in kind. And that kind refers to facilities. If the requisites are all present, that facilities may take the place of the cash payment of the employees wage. This is one exception to the requirement that an employees wage shall be paid in legal tender; you cannot pay it in kind.

 11 If it classifies under facilities, it shall include the fair and reasonable value of board, lodging, etc. as long as it is mainly and principally for the benefit of the employee. WAGE RATIONALIZATION ACT (RA 6767) Importance: This law, which amended the Labor Code, will tell us the different government agencies involved in the fixing of wages, and also, how to resolve wage distortion. Purpose: was intended to rationalize wages FIRST, by providing for full-time boards to police wages round-the-clock. SECOND, by giving the boards enough powers to achieve this objective. Policies: (a) To rationalize the fixing of the minimum wage. (important) It has been rationalized because Article 124 provides for the standards and criteria that should guide the agency of government when it comes to fixing the minimum wage. It is noted that under the standard criteria, that the Congress has tried to weigh the factors involving the employers, as well as the factors involving the laborers when it comes to fixing of employees wage in order to rationalize it. Before RA 6727, it was only Malacaang, through a Presidential Decree, that dictates how much should be the minimum wage in the Philippines. Most often than not, those employers in the far-flung areas are adversely affected because the fixing of minimum wage is not rationalized. It does not take into consideration, for example, the capitalization of the employer, the profit expected, the cost of living in a particular area. With the advent of RA 6727, the law deems it necessary that there shall be standard criteria in fixing the employees wage. Article 124. Standards or Criteria for Minimum Wage Fixing. a. The demand for living wages; b. Wage adjustment vis--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. (b) To promote productivity-improvement and gain-sharing measures to ensure a decent standard of living for the workers and their family. (c) To guarantee the rights of labor to its just share in the fruits of production. (d) To enhance employment generations in the countryside through industry dispersal. (e) To allow business and industry reasonable returns on investment, expansion and growth.
(f) The state shall also promote collective bargaining as the primary mode of setting

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. (important) This is an important policy because it promotes collective bargaining as a mode of settling labor disputes.
Ilaw at Buklod ng Manggagawa vs. NLRC 198 SCRA 586 (1991)

The policy of the state is promoting collective bargaining as a mode of settling labor dispute. There was a wage distortion affecting the establishment and what the employees did was to stage a strike in order to compel the employer to solve wage distortion. The SC said NO. If RA 6727 is examined, strike is not provided as a solution in resolving wage distortion. It should be through collective bargaining.

 12 Therefore, the SC declared the strike as illegal because the Rules Implementing RA 6727 provides for a specific and detailed approach on how to resolve wage distortion short of strike or lockout. Among the rights guaranteed to employees by the Labor Code is that of engaging in concerted activities in order to attain their legitimate objectives. Article 263 of the Labor Code, as amended, declares that in line with the policy of the State to encourage free trade unionism and free collective bargaining, xx (w)orkers shall have the right to engage in concerted activities for purposes of collective bargaining or for their mutual benefit and protection. A similar right to engage in concerted activities for mutual benefit and protection is tacitly and traditionally recognized in respect of employers. The more common of these concerted activities as far as employees are concerned are: i. strikes the temporary stoppage of work as a result of an industrial or labor dispute; ii. picketing the marching to and fro at the employers premises, usually accompanied by the display of placards or other signs, making known the facts involved in a labor dispute; and iii. boycotts the concerted refusal to patronize an employers goods or services and to persuade others to a like refusal. On the other hand, the counterpart activity that management may licitly undertake is the lockout the temporary refusal to furnish work on account of a labor dispute. In this connection, the same Article 263 provides that the the right of legitimate labor organizations to strike and picket, and of employer to lockout, consistent with the national interest, shall continue to be recognized and respected. The legality of these activities is usually dependent on the legality of the purposes sought to be attained and the means employed therefore.

Cagayan Sugar Milling vs. Secretary or Labor G.R. No. 128399. January 15, 1998 The record shows that there was no prior public consultation or hearings and newspaper publication insofar as Wage Order No. RO2-02-A (Amended) is concerned (in violation of Art. 123 of the Labor Coe). In fact, these allegations were not denied by public respondents in their comment. The Sec. of Labors position is that there was no need to comply with the legal requirements of consultation and newspaper publication as Wage Order No. RO2-02-A merely clarified the ambiguous provision of the original wage order. We are not persuaded. To begin with, there was no ambiguity in the provision of Wage Order RO2-02 as it provided in clear and categorical terms for an increase in statutory minimum wage of workers in the region. Hence, the subsequent passage of RO2-02-A providing instead for an across the board increase in wages did not clarify the earlier Order but amended the same. In truth, it changed the essence of the original Order. In passing RO2-02-A without going through the process of public consultation and hearings, the Regional Board deprived petitioner and other employers of due process as they were not given the opportunity to ventilate their positions regarding the proposed wage increase. In wage-fixing, factors such as fair return of capital invested, the need to induce industries to invest in the countryside and the capacity of employers to pay are, among others, taken into consideration. Hence, our legislators provide for the creation of Regional Tripartite Boards composed of representatives from the government, the workers and the employers to determine the appropriate wage rates per region to ensure that all sides are heard. For the same reason, Article 123 of the Labor Code also provides that in the performance of their wage-determining functions, the Regional Board shall conduct public hearings and consultations, giving notices to interested parties. Moreover, it mandates that the Wage Order shall take effect only after publication in a newspaper of general circulation in the region. It is a fundamental rule, borne out of a sense of fairness, that the public is first notified of a law or wage order before it can be held liable for violation thereof. In the case at bar, it is indisputable that there was no public consultation or hearing conducted prior to the passage of RO2-02-A. Neither was it published in a newspaper of general circulation as attested in the February 3, 1995 minutes of the meeting of the Regional Wage Board that the non-publication was by consensus of all the board members. Hence, RO202-A must be struck down for violation of Article 123 of the Labor Code.

REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARD (RTWPB) An agency of Government responsible for fixing the minimum wage Composition of the Board: 1)Regional Director of the DOLE as Chairman 2)Regional Directors of NEDA and DTI as Vice Chairmen

 13 3)2 members each from the workers and employers sector who shall be appointed by the President of the Philippines, upon recommendation of the Secretary of the DOLE 4)Each Regional Board to be headed by its Chairman shall be assisted by a Secretariat (7 members-please check wage order signatories) Two Major Functions of the Board: (1) It has the power to receive, act and process application for wage increase and adjustment. (2) The power to act, process and approve application for exemption from the wage orders. These are the two most important functions of the board as far as lawyers are concerned. Because that is where lawyers play an active role in representing the parties: 1) on the matter of application of wage increase, and 2) on the matter of granting wage exemption or exemption from the minimum wage.

Get a copy of the Revised Rules of Procedure on Minimum Wage Fixing. (1990)

NATIONAL WAGES AND PRODUCTIVITY COMMISSION (NWPC) An appellate agency. This is not the same as the NLRC. REVISED RULES OF PROCEDURE ON MINIMUM WAGE FIXING: The procedure will tell us that you can file a petition for a wage increase with the RTWPB. Also, that the Board can Motu Proprio fix the minimum wage or can act on the application for a minimum wage increase or reduction. Ordinarily, the Board will not act motu proprio. It will wait until an application for a wage increase is files before it. Modes to initiate the fixing of the minimum wage: 1) Motu Proprio by the RTWPB 2) Wage fixing by virtue of a petition filed Rule II. Section 3. Procedures in Minimum Wage Fixing:
(a) Motu Proprio by the Board

Whenever conditions in the region, province or industry so warrant, the Board may, motu proprio on its own initiative, or as directed by the Commission (NWPC), initiate action or inquiry to determine whether a wage order should be issued. The Board shall conduct public hearings. The Board may also conduct consultations with concerned sectors/industries. (b) By Virtue of a Petition Filed 1) Form and Content of Petition Any party may file a verified (subscribed and sworn to) petition for wage increase with the appropriate Board in 10 legible copies, which shall contain the following: a) Names and addresses of petitioners and signatures of authorized officials b) Grounds relied upon to justify the increase being sought c) Amount of wage increase being sought d) Area and/or industry covered. PROPER PARTY: Any party may file the petition to increase the wage or fix the minimum wage, provided: The petitioner is a legitimate organization of workers duly registered with the DOLE The employers are with substantial interest and are affected by the decision of the order of the Board If employed in an establishment, the employee cannot go to court and file a petition for a wage increase because the employee is not considered a proper party. It must be an employer or a legitimate labor organization. 2) Board Action The Board must first examine if the formal and substantial requirements are complied with and are completed. If the petition conforms with the substantial requirements, the Board shall conduct public hearings in the manner prescribed, to determine whether a wage order

 14 should be issued. The Board may also conduct consultations with concerned sectors/industries. 3) Publication of Notice of Petition/Public Hearing The notice shall be published in a newspaper of general circulation in the region and/or posted in public places as determined by the Board. The publication or posting shall be made at least 15 days before the date of initial hearing and shall be in accordance with the suggested form. The notice of petition and/or public hearing shall include The names and addresses of the petitioners The subject of the petition The date, place and time of the hearings This is posted or published before the hearing of the petition. 4) Opposition Any party may file his opposition to the petition on or before the initial hearing, copy furnished to the petitioners. The opposition shall be filed with the appropriate Board in 10 typewritten legible copies, which shall contain the following: a) Names and addresses of the oppositors, and signatures of authorized officials; b) Reasons or grounds for the opposition; and c) Relief sought 5) Consolidation of Petitions If there is more than one petition filed, the Board may motu proprio or on motion of any party, consolidate these for purposes of conducting joint hearings or proceedings to expedite resolutions of petitions. Petitions received after publication of an earlier petition need not go through the publication or posting requirement. 6) Assistance of Other Government and Private Organizations The Board may enlist the assistance and cooperation of an government agency or private person or organization to furnish information in aid of it wage fixing function. Rule III. Conduct of Hearings. In the performance of its wage-fixing functions, the Board shall conduct public hearings or consultations, giving notices to employees and employers groups, provincial, city and municipal officials and other interested parties. Hearings may be conducted by the Board en banc or by a duly authorized committee thereof. The Board shall determine the date, place and time of the hearing which shall be open to the public except as otherwise requested by the party and so determined by the Board. Order of Hearing (Section 3) As much as practicable, the petitioners shall present their evidence first, followed by the oppositors, the Board may then call on other persons to present their views and submit position papers and other supporting documents. Manner and Duration of Hearings (Section 4) Public hearing shall be conducted in each province in the region as far as practicable. Hearings shall be concluded within 45 days from the date of initial hearing except when conditions in the region warrant otherwise. Records of Proceedings (Section 5) The Board Secretariat shall keep records or minutes of all Board proceedings, duly noted by the members of the Board. Non-Applicability of Technical Rules (Section 6) The Board shall not be bound strictly by technical rules of evidence and procedures. Prohibition Against Injunction (Section 7)

 15 NO preliminary or permanent injunction or temporary restraining order may be issued by any court, tribunal or any other entity against any proceeding before the Commission or Board. On the date of hearing, the Board will sit as a collegial body and will hear the petition, first from the petitioner presenting their position paper and after that from the oppositors. And thereafter, the Board will then determine whether to grant the petition or not. Whether to grant the wage increase or not, and how much. In effect, the Board will fix the minimum wage and this will be done through the issuance of a wage order. Rule IV. Wage Order. Issuance of Wage Order (Section 1) Within 30 days after conclusion of the last hearing, the Board shall decide on the merits of the petition, and where appropriate, issue a wage order establishing the regional minimum wage rates to be paid by employers, which, shall in no case be lower than the applicable statutory minimum wage rates. The Wage Order may include wages by industry, province or locality as may be deemed necessary by the Board, provided, however, that such wage rates shall not be lower than the regional minimum wage rates unless expressly specified in the Wage Order. The Board shall furnish the NWPC a copy of the decision on the petition or the Wage Order. Effectivity (Section 4) A Wage Order shall take effect 15 days after its publication in at least 1 newspaper of general circulation in the region Upon issuance of the Wage Order, it does not immediately become effective. It has to be published and takes effect 15 days after its publication. Frequency of Wage Order (Section 3) General Rule: Any Wage Order issued by the Board 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. Exception: In the event, however, that supervening conditions (such as extraordinary increase in prices of petroleum products and basic goods and services), demand a review of the minimum wage rates as determined by the Board and confirmed by the Commission, the Board shall proceed to exercise its wage fixing function even before the expiration of the period (12 months). Reason: The petitions would clog the Board dockets unreasonably. The rules prohibit any interested party from filing a wage increase petition within 12 months from the effectivity of a wage order. Please note the exception. Absent such circumstance, there will be no disturbance of the Wage Order within 12 months from its effectivity. That is why the date of effectivity of a Wage Order is important. Remedy on the part of the aggrieved party from a Wage Order? Rule V. Appeal. Appeal to the Commission (NWPC) (Section 1) Any party aggrieved by a Wage Order issued by the Board may appeal such Order to the Commission by filing a verified appeal with the Board in 3 typewritten legible copies, not later than 10 days from the date of publication of the Order. The appeal shall be accompanied by a Memorandum of Appeal which shall state the grounds relied upon and the arguments in support of the appeal. The Board shall serve notice of the appeal to concerned parties. So watch out for the date of the publication of the Wage Order because that is when the 10 calendar days will start to run. Not from the effectivity, but from the date of publication. Grounds for Appeal (Section 2) (a) Non-conformity with prescribed guidelines and/or procedures (b) Questions of law (Rule 45) (c) Grave abuse of discretion (Rule 65) The NWPC has established guidelines on the fixing of the minimum wage. If the Board, for instance, did not conduct a hearing, that contravenes the guidelines, therefore, constituting the first ground. As for instance, the Board is confronted with an issue on a question of law and the Board erred in interpreting the law, this will fall under the second ground.

 16 As when the Board acts arbitrarily, capriciously or whimsically in issuing the wage order, this will constitute grave abuse of discretion. Period to Act on Appeal (Section 4) The Commission shall decide on the appeal within 60 days from the filing thereof. Effect of Appeal (Section 5) The filing of the appeal does not operate to stay the Order unless the party appealing such Order shall file with the Commission an undertaking with a surety or sureties satisfactory to the Commission for payment to employees affected by the Order of the corresponding increase, in the event such Order is affirmed. Instance when the appeal will stay the Wage Order: In case the employer will post a surety bond. The Wage Order fixes the minimum wage. The employer has to comply with that, unless the employer is exempted from complying with the Wage Order. The employer, however, as an aggrieved party, can appeal from the Wage Order on grounds provided by the law or by the rules. If he does appeal, that appeal will not stop the employer from complying with the Wage Order. That means, he has to still pay his employees. He can only refrain from paying his employees or giving them the minimum wage if he posts a cash or surety bond in an amount equivalent to the wage increase. On the condition that the bond will answer in case his appeal is dismissed by the NWPC. Is the Regional Board under the DOLE? It is not. It is only an attached to the department for policy and correlation purposes. The decision of the Board is appealable to the NWPC. From the decision of the NWPC, does the aggrieved party have any remedy? YES. Remedy from the decision of the NWPC: No appeal from the decision of the NWPC. The legal remedy is by means of Special Civil Action of Certiorari under Rule 65 to the Court of Appeals within the period of 60 days.
St. Martins Funeral Home vs. NLRC G.R. 130856, September 16, 1998 Under the Principle of hierarchy of courts, the certiorari should be filed not directly to the Supreme Court, but to the Court of Appeals. Senate Bill No. 1495, speech of Roco: The Judiciary Reorganization Act, BP 129, reorganized the Court of Appeals and at the same time expanded its jurisdiction and powers. Among others, its appellate jurisdiction was expanded to cover not only the final judgment of the RTC, but also all final judgments, decisions, resolutions, orders, or awards of quasi-judicial agencies, instrumentalities, boards and commissions, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of BP 129 and of subparagraph 1 of the third paragraph and subparagraph 4 of Section 17 of the Judiciary Act of 1948. The purpose of the law is to ease the workload of the Supreme Court by the transfer of some of its burden of review of factual issues to the Court of Appeals, however, whatever benefits that can be derived from the expansion of the appellate jurisdiction of the Court of Appeals was cut short by the last paragraph of Section 9 of BP 129 which excludes from its coverage the decisions and interlocutory orders issued under the Labor Code and by the Central Board of Assessment Appeals. There is a growing number of labor cases being elevated to this Court which, not being a trier of fact, has at times been constrained to remand the case to the NLRC for resolution of unclear or ambiguous factual findings; that the Court of Appeals is procedurally equipped for that purpose; aside from the increased number of its component divisions; and that there is undeniably an imperative need for expeditious action on labor cases as a major aspect of constitutional protection to labor. Therefore, all references in the amended Section 9 of BP 129 to supposed appeals from the NLRC to the Supreme Court are interpreted and hereby declared to mean and refer to petitions for certiorari under Rule 65. Consequently, all such petitions should henceforth be initially filed in the Court of Appeals in strict observance of the Doctrine of Hierarchy of Courts as the appropriate forum for the relief desired.

Under Rules of Civil Procedure, the Court of Appeals and the Supreme Court, shares original and concurrent jurisdiction over Certiorari, including Prohibition, Mandamus, Quo Warranto, etc.

 17 In Certiorari, there should be no other appeal, no other plain, speedy remedy in the course of law that is why a motion for reconsideration should be filed from the decision of the NWPC. If a motion for reconsideration is filed, the period for filing it will not be considered in determining the 60-day period for filing the Certiorari. So, from the denial of the motion for reconsideration, there is still 60 days to file for Certiorari. It is the prevailing rule that even is a motion for reconsideration is filed; there is still 60 days to file a Petition for Certiorari from receipt of the denial of the motion for reconsideration. Under the old rule, the SC said that there will only be a balance, but a most recent Supreme Court Circular has repealed that. So, with or without a motion for reconsideration, there is 60 days to file the Petition for Certiorari. This should be grounded on grave abuse of discretion amounting to lack or excess of jurisdiction. Remedy from the decision of the Court of Appeals: From the decision of the Court of Appeals ruling on the denial of the petition for certiorari, a motion for reconsideration can still be filed within 15 days. If denied by the CA, the legal remedy is Rule 45 to the Supreme Court on question of law. Summary: The decision of the NWPC becomes final and executory. There is no appeal from the decision of the NWPC, but there is still a remedy of Certiorari to the Court of Appeals within 60 days. From the decision of the CA, a motion for reconsideration can be filed And if the motion for reconsideration is denied, can file a Petition for Review on Certiorari or Appeal by Certiorari under Rule 45 to the Supreme Court. Meanwhile, the decision of the CA will not become final and executory. It can be reviewed by the SC. Of course, the decision of the NWPC becomes final and executory upon the denial of motion for reconsideration. If it becomes final and executory, it could be subject on execution. And the only way to prevent the enforcement of the decision of the CA would be to file a Petition for Certiorari and simultaneous or subsequent therewith, apply for the issuance of a Temporary Restraining Order and/or a Writ of Preliminary Injunction. Without the TRO and/or WPI, the decision of the NWPC cannot be enjoined and therefore, it should be executed. If the NWPC affirms the Wage Order and there is no more review or there is no more remedy availed of by the aggrieved party, then the decision and the Wage Order will have to be complied with. Prevailing Wage Order: Wage Order No. 8, as of today, November 12, 2001. P190, covering the Cities of Cebu, Lapulapu and Mandaue. Another round of increase of P5 will take effect on December 1, 2001. EXEMPTION FROM MINIMUM WAGE 1) By operation of law 2) By application for wage exemption Who are exempted from the minimum wage by operation of law? Article 98. Application of Title. This title (Wages) shall NOT apply to farm tenancy or leasehold, domestic service and persons working in their respective homes in needle work or in any cottage industry duly registered in accordance with law. Relate this to Employment of Homeworkers, Article 159-155. If a homeworker performs needlework in or at his home, that person is exempted from employing the minimum wage by operation of law. So employers of these employees are not obliged to comply with the minimum wage. If you are employing a househelper, you are not covered by the minimum wage by operation of law. That means, you do not have to file an application for exemption. And you do not have to comply with the P190 prevailing minimum wage. Revised Guidelines on Exemption from Wage Orders NWPC Guidelines No. 01-1996 Section 2. Criteria for Exemptible Establishments. Exemption of establishments from compliance with the wage increases and cost of living allowances prescribed by the Boards may be granted in order to (1) Assist establishments experiencing temporary difficulties due to losses to maintain the financial viability of their businesses and continued employment of their workers; (2) Encourage the establishment of new businesses and the creation of more jobs, particularly outside the National Capital Region and Export Processing Zones, in line with the policy on industry dispersal; and (3) Ease the burden of micro establishments, particularly in the retail and service sector, that have a limited capacity to pay.

 18 Types of Employers Eligible for Exemption from the Applicable Minimum Wage: 1) Distressed Establishments 2) New Business Enterprises (NBEs) 3) Retail or Service Establishments employing not more than 10 workers 4) Establishments adversely affected by natural calamities Exemptible categories outside of the above-mentioned list may be allowed only if they are in accord with the rationale for exemption reflected above. The concerned Regional Board shall submit strong and justifiable reasons for the inclusion of such categories which shall be subject to review or approval by the Commission. Note: Please check the guidelines for the documentary requirements that must be submitted in order to process and secure approval of the application for wage exemption. SERVICE ESTABLISHMENT refers to one principally engaged in the sale of services to individuals for their own or household use and is generally recognized as such. RETAIL ESTABLISHMENT refers to one principally engaged in the sale of goods to end users for personal or household use. Cases: Wage Exemption
RCPI vs. National Wages Council 207 SCRA 581

The purpose of wage exemptions is to help financially distressed companies meet their labor costs without endangering the existence or viability of the firm upon which both management and labor depend for a living. Under the spirit of Wage Order No. 6, it is the actual ability of a firm to spend for its current needs and costs and not how the assets and liabilities of a firm may appear in the technical jargon of higher accounting principles which is important. True, the retained earnings account constitutes a company's accumulated profits of losses. However, it is not enough to treat said earnings as "earnings" in the real sense of the word for purposes of wage exemptions. To a company striving to meet daily payrolls, it is not of any comfort to say that the "appraisal increment transferred to retained earnings" represents actual earnings which were previously deducted from the actual net income figure through additional depreciation expense resulting from appraisal. In purely technical accounting terms, they may be considered as merely being returned not to the net income account but to the retained earnings balance to which the net income account is ultimately closed. This is to keep the books straight. For purposes of compliance with the law on wage exemptions, however, the retained earnings arising from appraisal increment do not represent hard cash but merely theoretical increases resulting from upward valuations of old fixed assets. There is no income or profit from the sale of goods or services. No income is realized from the reappraisal of fixed assets until such a time as the machinery, equipment, and other fixed assets are sold or disposed of in the event of a liquidation of assets. The NWC ruling treats the revaluation increment as similar to the sale of fixed assets. In the same way, however, that machinery and equipment should not be sold in order to meet increases in the wages of workers (for this would destroy not only the company but the employment of the workers themselves) so should a similar attitude be adopted when machinery or equipment is not sold but merely revalued. On December 16, 1986, the NWC, through then Secretary Augusto B. Sanchez - its chairman, approved the application for exemption of RCPI and stated, among other things, that: "The Executive Committee, therefore, recognizes the necessity to set aside technicalities required by existing criteria under NWC Policy Guidelines Nos. 6 and 8 and bestow greater significance to the actual financial condition of RCPI." NWC decided to give RCPI a breathing spell because of numerous obligations that the company had to meet. Under a compromise agreement, RCPI bound itself to pay 30% of whatever was due the employees under PD 1713 for the mandatory third year increases and Wage Order No. 1 for the first and second year. The balance of 70% was subject to negotiations. (See G.R. No. 77503, Buklod ng Manggagawa v. Sanchez, supra, Rollo, p. 168). NWC found that RCPI's compliance with the Wage Orders would result in the company's financial dislocation and, accordingly, granted it the prayed for exemption. We see no reason from the records why a different treatment should apply in the following year. Simply because there were changes or transfers of the same items to differently named accounts in the books of the company, it does not follow that it thereby ceased to be entitled to exemptions. (Distressed Establishment) Joy Brothers vs. NWPC 273 SCRA 622 NWPC Revised Guidelines provides that it may be exempted upon application and due determination by the board. The criteria for exemption for Distressed Establishments are as follows: (a) In case of a stock corporation, partnership, single proprietorship, non-stock, non-profit organization or cooperative engaged in a business activity or charging fees for its services a.1 When accumulated losses for the last 2 full accounting periods and interim period, if any, immediately preceding the effectivity of the Order have impaired by at least 25% the:

 19
-- Paid-up capital at the end of the last full accounting period preceding the effectivity of the Order, in case of corporations. -- Total invested capital at the beginning of the last full accounting period preceding the effectivity of the Order in the case of partnerships and single proprietorships. a.1.1 Establishments operating for less than 2 years may be granted exemption when accumulated losses for said period have impaired by at least 25% the paid-up capital or total invested capital, as the case may be. Section 8, paragraph a, of the Rules Implementing Wage Order No. NCR-03 provides that exemption from compliance with the wage increase may be granted to distressed establishments whose paid-up capital has been impaired by at least 25% or which registers capital deficiency or negative net worth. The Revised Guidelines on Exemption expressly require interim quarterly financial statements for the period immediately preceding December 16, 1993. it is clear that the financial statements worthy of consideration are those of the three quarters prior to December 16, 1993, the third quarter ending on September 30, 1993. Thus, petitioner manifestly errs in claiming that said interim period is up to December 15, 1993 or December 31, 1993. (Retail Establishment) C. Planas Commercial vs. NLRC 303 SCRA 49 Petitioners invoke the exemption provided by law for retail establishments which employ not more than 10 workers to justify their non-liability for the salary differentials in question. They insist that PLANAS is a retail establishment leasing a very small and cramped stall in the Divisoria Market which cannot accommodate more than 10 workers in the conduct of its business. The SC is unconvinced. The records disclose de los Reyes clear entitlement to salary differentials. Well-settled is the rule that factual findings of labor officials who are deemed to have acquired expertise in matters within their jurisdiction are generally accorded not only respect but even finality and bind this Court when supported by substantial evidence or that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. Section 4 (c) of RA 6727 categorically provides: Retail or service establishments regularly employing not more than 10 workers may be exempted from the applicability of this Act upon application with and as determined by the appropriate Regional Board in accordance with the applicable rules and regulations issued by the Commission. Whenever an application for exemption has been duly filed with the appropriate Regional Board, action on any complaint for alleged non-compliance with this Act shall be deferred pending resolution of the application for exemption by the appropriate Regional Board. In the event that the applications for exemptions are not granted, employees shall receive the appropriate compensation due them as provided for by this Act plus the interest of 1% per month retroactive to the effectivity of this Act (emphasis supplied). Nasipit Lumber vs. NWPC 289 SCRA 667 The power to prescribe guidelines is lodged in the NWPC, not in the RTWPB. This is clearly provided for in Article 121 of RA 6727, amending the Labor Code. it grants the NWPC, not the RTWPB, the power to prescribe rules and guidelines for the determination of minimum wage and productivity measure. While the RTWPB may issue wage orders under Article 122(b) of the Labor Code, such orders must be under the guidelines of the NWPC. However, the NWPC has the power not only to prescribe guidelines to govern wage but also to issue exemptions therefrom, as the said rule provides that whenever a wage order provides for an exemption, application thereto must be filed with the appropriate Board which shall process the same, subject to guidelines which the RTWPB implements. Significantly, the NWPC authorized the RTWPB to issue exemptions from wage orders, but subject to its review and approval. Since the NWPC never assented to Guideline No.3 of the RTWPB, the said guideline is inoperative and cannot be used by the latter in deciding or acting on petitioners application for exemption.

Reason for Exemption A wage exemption is intended to assist financially beleaguered companies to meet their labor cost without endangering the viability of the company. WAGE DISTORTION WAGE DISTORTION 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 embodies in such wage structure based on skills, length of service, or other logical bases of differentiation. (Article 124)

 20 The definition of Wage Distortion as aforequoted, shows that such distortion can so exist when, as a result of an increase in the prescribed wage rate, an elimination or severe contraction of intentional quantitative differences in wage or salary rates would occur 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. When does wage distortion happen? It happens when the employer grants an increase only to a certain group of employees drastically reducing or eliminating the normal salary differential or gap. Possible 1) 2) 3) 4) Causes of Wage Distortion: Government decreed increase thru wage orders Merger of establishments (confusion or elimination of the status of employee) Increase granted by employers Passage of RA 6727 or the Wage Rationalization Act

1) Government decreed increases through issuance of Wage Orders 2 Kinds of Wage Orders: (a) The Congress provides for a statutory minimum wage (during the martial law era) and an increase is given and added to the daily wage. (b) With the passage of RA 6727, instead of providing for a fixed amount for an increase, the wage order now fixes a minimum wage below which the wages cannot fall. 2) Merger of two establishments whereby the employees of the dissolved company are absorbed by the surviving company Example: Casual Permanent Magnolia P160 P190 Nestle P190 P200

Magnolia-Nestle Casual -- P190 Permanent -- P190 There will be wage distortion. 3) Employer granted increases to the workers of an establishment The employer grants an increase affecting only a certain group of employees thereby reducing drastically or totally eliminating the salary gap between such group and the next higher level. 4) Passage of RA 6727 Example: SM Company Casual -- P145 a wage order is passed = Casual -- P190 Permanent -- P180 particularly Wage Order = Permanent P195 #8, increasing the minimum wage distortion wage to P190 now exists

Effects on Existing Wage Structure. (Section 16, IRR of RA 6727) Where the application of the wage increase prescribed herein results in DISTORTIONS in the wage structure within an establishment which gives rise to dispute therein, such dispute shall: (a) First be settled voluntarily between the parties (b) In the event of deadlock, such dispute shall be finally resolved through compulsory arbitration by the Regional Arbitration Branch of the NLRC having jurisdiction in the workplace.

Correction of Wage Distortion: (brought about by the enactment or passage of a wage order)

 21 The Court has pointed out that through Article 124, the law recognizes the validity of NEGOTIATED WAGE INCREASES to correct wage distortion. A. IF UNIONIZED
(a)

(b) (c) (d)

The employer and the union should first negotiate to correct the distortion (contemplates the absence of a grievance procedure) If negotiations fail, the matter should be brought to the grievance (machinery) procedure under their CBA If no settlement is arrived at, the dispute should be submitted to voluntary arbitration (voluntary arbitrators or panel of voluntary arbitrators) If still unresolved, or parties are unsatisfied, an appeal may be made to the appropriate branch of the NLRC.

B. IF NOT UNIONIZED (a) (b) (c) The employer and the workers should negotiate to correct the distortion. If negotiations fail, the matter should be brought to the National Conciliation and Mediation Board (NCMB). If no settlement is arrived at after 10 calendar days of conciliation, the dispute should be brought to the appropriate branch of the NLRC, which shall conduct continuous hearings and decide the dispute within 20 calendar days from the time said dispute is submitted for compulsory arbitration.

Grievance Machinery or Procedure (Article 260) The parties to a collective bargaining agreement shall establish a machinery for the adjustment and resolution of grievances arising from: The interpretation or implementation of CBA The interpretation or enforcement of company personnel policies (the voluntary arbitrator shall have exclusive and original jurisdiction to hear and decide such grievances which remain unresolved after exhaustion of grievance procedure) All grievances submitted to the grievance machinery which are not settled within 7 calendar days from the date of its submission shall automatically be referred to VOLUNTARY ARBITRATION prescribed in the CBA. For this purpose, parties to a CBA shall Name and designate in advance a Voluntary Arbitrator or panel of Voluntary Arbitrators, or Include in the agreement a procedure for the selection of such Voluntary Arbitrator or panel of Voluntary Arbitrators, preferably from the listing of qualified Voluntary Arbitrators duly accredited by the Board. In case the parties fail to select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the Board shall Designate the Voluntary Arbitrators, as may be necessary, pursuant to the selection procedure agreed upon in the CBA, which shall act with the same force and effect as if the Arbitrator or panel of Arbitrators has been selected by the parties as prescribed. The judge in voluntary arbitration is called ARBITRATOR while that in compulsory arbitration is called LABOR ARBITER. A Petition for Certiorari under Rule 65 of the Revised Rules of Court will lie where A grave abuse of discretion or An act without or in excess of jurisdiction on the part of the voluntary arbitrator is clearly shown. LABOR ARBITRATION reference of a labor dispute to a third party for determination on the basis of evidence and arguments presented by such parties, who are bound to accept the decision. Arbitration may be classified on the basis of obligation on which it is based, it may either be:
(a) VOLUNTARY ARBITRATION a contractual proceeding whereby the parties to

any dispute or controversy in order to obtain a speedy and inexpensive final disposition of the matter, select a judge of their own choice and by consent, submit their controversy to him for determination (this is pursuant to a voluntary arbitration clause in the CBA)

 22 The judge is called ARBITRATOR whose determination is a final and binding resolution. The power of the Voluntary Arbitrator to try and decide the case if the same as that of a Labor Arbiter. VOLUNTARY ARBITRATOR means (1) Any person accredited by the Board as such, or (2) Any person named or designated in the CBA by the parties to act as their voluntary arbitrator, or (3) One chosen, with or without the assistance of the NCMB, pursuant to a selection procedure agreed upon in the CBA, or (4) Any official that may be authorized by the Secretary of Labor to act as voluntary arbitrator upon the written request and agreement of the parties to a labor dispute.
(b) COMPULSORY ARBITRATION process of settlement of labor disputes by a

government agency (or by other means provided by the government) which has the authority to investigate and to make award which is binding on all the parties. Parties are compelled to forego their right to strike. A disinterested person or third party is usually appointed by the state. It is compulsory because the law declares the dispute subject to arbitration, regardless of the consent of the parties. Done by the Regional Arbitration branch of the NLRC (please refer to Article 217) It is an adversarial proceeding initiated by a complaint (usually by the union) for wage distortion before the Labor Arbiter. The other party is entitled to answer. The parties can agree to select a Labor Arbiter as a Voluntary Arbitrator because it is as to the agreement between the parties. ORGANIZED ESTABLISHMENT refers to a firm or a company where there is a recognized or certified exclusive bargaining agreement. UNORGANIZED ESTABLISHMENT where there is no recognized union or collective bargaining agreement. What should be contained in a CBA? (1) Terms and conditions of employment (2) Wages (3) Hours of Work (4) Procedure for resolving grievances Organized or unionized establishments may: (a) Meet and sit down and discuss the wage adjustment (b) In case of disagreement, the matter is elevated to the top executives (c) Company grants an increase if it be proven that wage distortion exists (this increase may be called a NEGOTIATED WAGE INCREASE)

In case of organized or unionized establishments who submit to voluntary arbitration, the mutual consent of the parties governs the selection of a common arbitrator, usually from a list found in the National Conciliation and Mediation Board (Sanciangko) [it is a listing of qualified voluntary arbitrators duly accredited by the Board]. If one of the parties does not agree with the other partys selection of a voluntary arbitrator, parties will have to submit to compulsory arbitration.

Section 16 of Implementing Rules of RA 6727: Any issue involving wage distortion shall not be a ground for strike or lockout. STRIKE any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. LOCKOUT is the temporary refusal of an employer to furnish work as a result of an industrial or labor dispute.

 23 Reasons why a STRIKE or LOCKOUT is prohibited: (1) RA 6727 provides for a procedure in settling disputes (Article 124) (2) RA 6727 (Section 2) provides that it is the policy of the state to promote collective bargaining as the primary mode of settling wages and other terms and conditions of employment. (Ilaw at Buklod ng Manggagawa vs. NLRC, 198 SCRA 586) National Federation of Labor vs. NLRC, 234 SCRA 311 Correction of a wage distortion may be done by reestablishing a substantial or significant gap between the wage rates of the differing classes of employees. It must be a reasonable but NOT necessarily a historical gap. Should a wage distortion exist, there is not legal requirement that, in the rectification of that distortion by readjustment of the wage rates of the 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 differing classes of employees. No law obligates the employer to restore the historical gap because: (1) Adjustment of wage rates as mandated by law (RA 6727 and as the policy of the state) is not by way of compulsion but through negotiation or CBA. (2) Not all employers can afford to grant the same wage increase to all its employee (financial capacity and the company has to be taken into consideration) The law is based on equity between the employer and employee.

The employer, thru his own initiative (unilateral act) may correct wage distortion. The usual way though is through negotiations between the employer and the employee or through CBA. PROCEDURE FOR RESOLVING WAGE DISTORTION A. WAGE DISTORTION in an UNORGANIZED ESTABLISHMENT: Situation: In a company, there are 3 classes of employees: A 200 (2 years or more) Wage Order No. 8 = 190 B 195 (1 year to 2 years) December 1, 2001 + 5 C 190 (newly hired) 195 A wage order is issued fixing the minimum wage at P190. which group will be affected? Only class C because they are the minimum wage earners (unlike before when the wage orders provided for an across-the-board increase which affected everybody). Under Wage Order No. 8, only C is entitled to the wage adjustment come December 1, 2001. It will not apply equally to A and B. A and B cannot validly demand a similar wage adjustment by virtue of the wage order because the wage order only applies to those employees receiving the minimum wage. As a result, B and C will receive the same salary of P195 come December 1. B now complains, what should he do? Procedure for Resolving Wage Distortion in an UNORGANIZED ESTABLISHMENT: (1) The employers and the workers should negotiate for the adjustment of the wage rates Should the employer refuse to grant an adjustment, then B should file a complaint with the NCMB on the ground of wage distortion. (2) The dispute should be referred to the NCMB for conciliation. HOW IS THIS DONE? (a) This procedure is initiated by the filing of a complaint with the NCMB (Sanciangko) on the ground of wage distortion. (b) Just fill up the complaint form provided by the NCMB (c) The Regional Director of the NCMB will now issue a NOTICE OF HEARING directed to the employer inviting him to meet with them at a designated time, date, and place.

 24 (d) At the NCMB, the complainant B and the employer will have to be present. This proceeding will be supervised by an NCMB Hearing Officer. This is entirely different from the first step because the third person (NCMB Hearing Officer) now interferes and asks the employers How much can you afford? And to the employees How much increase do you want? In so doing, in takes into consideration the financial capacity of the employer and the need of the workers.

(e) The NCMB will try to settle the dispute through AMICABLE SETTLEMENT. Example: Employer wants to pay P1 increase. Employee wants P5 increase. NCMB will settle for P3 and suggests this solution to both parties.

(f) Should the employer refuse to accede to the remedy suggested by the NCMB, the NCMB cannot make negotiations to bind both parties because the main purpose of NCMB is to conciliate and it will suggest that the parties submit to VOLUNTARY ARBITRATION. (3) If not settlement is arrived at, then the dispute shall be referred to the Regional Arbitration Branch of the NLRC for COMPULSORY ARBITRATION. This is presided over by Labor Arbiters (Article 217). The proceeding is usually adversarial in character because it is initiated by a complaint before the Labor Arbiter and the other party is required to answer. So, there will be a full-blown hearing to resolve wage distortion. Any decision coming out of the Labor Arbiter shall be binding on both parties, whether they like it or not.

Note: in the case of UNORGANIZED ESTABLISHMENTS

Prior to the time the parties submit their dispute to the NCMB, they could resort to VOLUNTARY ARBITRATION. VOLUNTARY ARBITRATION is not compulsory; the parties will have to give their consent if they want to submit their dispute to Voluntary Arbitration. They will be given a LIST of voluntary arbitrators from which they will pick out those which they have chosen to be the arbitrators. However, most often than not, the parties do not submit their dispute to voluntary arbitration because most of them do not trust the Voluntary Arbitrators. The decision of the Voluntary Arbitrator is BINDING upon the parties. Why? This is a contractual proceeding and the contract is the law of the parties. In resolving wage distortions, you do not always consider monetary matters. You also have to take into consideration the length of service, the skills. Is the decision of the Voluntary Arbitrator appealable to the NLRC? NO, unless it becomes final and executory.

The legal remedy to the decision of the Voluntary Arbitrator (1) To the Court of Appeals by way of Petition for Review under Rule 43 (QuasiJudicial Agency) within 15 days Luzon Stevedoring Employees Union If APPEAL, will that stay the decision of the Voluntary Arbitrator? NO, because the decision of the Voluntary Arbitrator is final and inappelable, but Temporary Restraining Order and a Writ of Preliminary Injunction may be applied for.

So, use Petition for Review with Motion to Stay, because of its final and executory nature. (2) Then to the Supreme Court under Rule 45 on questions of law (Appeal by Certiorari) 15 days from receipt of the decision of the Court of Appeals or receipt of the denial of the motion for reconsideration.

 25

Before the St. Martins Funeral Homes Case (in the past), from the decision of the Voluntary Arbitrator, the aggrieved party would go directly to the Supreme Court.

Cases: Wage Distortion

Prubankers Association vs. Prudential Bank and Trust Company 302 SCRA 74 WAGE DISTORTION presupposes an increase in the compensation of lower ranks in an office hierarchy without a corresponding raise for higher-tiered employees in the same region of the country, resulting in the elimination or the severe diminution of the distinction between the two groups. Such distortion does not arise when a wage order gives the employees in one branch of a bank higher compensation than that given to their counterparts in other regions occupying the same pay scale, who are not covered by the said wage order. In short, the implementation of the wage orders in one region but not in others does not in itself necessarily result in wage distortion. Employees Confederation vs. NWPC 201 SCRA 759 The NWPC noted that the determination of wages has generally involved 2 methods, the floor wage method and the salary-ceiling method. RA 6727 was intended to rationalize wages, first, by providing for full-time boards to police wages round-the-clock, and second, by giving the boards enough powers to achieve this objective. The Act is meant to rationalize wages, that is, by having permanent boards to decide wages rather than leaving wage determination to Congress year after year and law after law. The court used the salary ceiling method to minimize wage distortions. The court is not convinced that the board is decreeing the across the board hike, performed an unlawful act of legislation. Though the wage fixing like rate fixing constitutes an act of Congress, the latter may also delegate the power to fix rate provided there are sufficient standards. Metrobank vs. NLRC 226 SCRA 268 WAGE DISTORTION as defined under RA 6727 means a situation where an increase in prescribed wage rate result in the elimination as severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinction embodied in such wage structure based on skill, length of service, or other logical basis of differentiation. Whether it exists is mainly a question of fact the determination of which is the statutory function of the NLRC. In this case majority of the members of the NLRC agree that there is a wage distortion arising from the banks implementation of a P25 wage increase. NOTE: From a P900 salary difference to only P150, the SC said there is a distortion as there is SEVERE CONTRACTION, not necessarily elimination. Metro Transit Organization vs. NLRC 245 SCRA 767 A wage distortion existed when salaries of rank and file employees were increased by P500. The defense of management prerogative that if it is not obligated to grant supervisory employee a salary increase whenever rank and file employees are granted an increase is unavailing. BONUS is an act of gratuity or an act of liberality wherein the recipient has no right to demand as a matter of right. A bonus however is demandable or an enforceable obligation when it is made part of the wage or salary of an employee. If it is an additional compensation which the employer promised and agreed to give without any conditions such as success in business or increase in output, then it is part of the wage. But if it is paid only if profits are realized or if a certain level of productivity is achieved, it cannot be considered as part of the wage. Where it is not payable to all but only to some employees ans only when their labor becomes more efficient or productive, it is only an inducement for efficiency, a prize thereof not a part of wage. The demanded increase of SEAM is not a bonus and is an enforceable obligation as far as supervisory employees of Metro are concerned. The wage distortion had been corrected. A substantial gap or difference had been reestablished between rank and file and supervisory employees. Capitol Wireless vs. Bate 246 SCRA 249 Petitioner and private respondent NAFLU signed a CBA with duration of 5 years. Included in the CBA is a provision stating that should there be any government mandated wage increase allowance, the same shall be over and above the benefit granted.

 26
The wage orders did not give across the board wage increases to all employees in the National Capital Region but limited such increase only to those already receiving not more than P125/day. Since the wage order specified those who among the employees are entitled to the statutory wage increases, then the increases applied only to those mentioned. The provisions of the CBA should be read in harmony of the wage order whose benefit be given only to the employees entitled thereby.

B. WAGE DISTORTION in an ORGANIZED ESTABLISHMENT:

Most often than not, when there is a union, there is a CBA. And the most important matter in the CBA is WAGES. The union has more bargaining power than the ordinary employee; it can demand for better labor standards (can even demand to see the president of the company). The CBA provides usually for wage increases which are usually across-the-board (for the benefit of all employees in the bargaining unit). However, a wage order may be passed offsetting the increase given by the employer, so there is a WAGE DISTORTION. Procedure for Resolving Wage Distortion in an ORGANIZED ESTABLISHMENT: (1) The employer and the union shall negotiate to correct the wage distortion. (2) If the negotiations fail, then the dispute is settled through the grievance procedure under their CBA. GRIEVANCE MACHINERY is simply a detailed procedure of how the parties would resolve a dispute arising from: i. The interpretation or implementation of the CBA and ii. Those arising from the interpretation or enforcement of company personnel policies. (3) If the dispute in unresolved, the matter is submitted for VOLUNTARY ARBITRATION (which is not always the case because parties cannot be compelled to submit to it). (4) The matter is also resolved through the NCMB by filing a complaint; MEDIATION is done by the NCMB through its Hearing Officer, advising the parties to submit their dispute to a voluntary arbitrator. If both or one of the parties is unwilling to submit to Voluntary Arbitrator, then the matter becomes unresolved. (5) The matter is submitted to the Regional Arbitration Branch of the NLRC for COMPULSORY ARBITRATION. How is this done? By filing a complaint with the Regional Arbitration Branch The decision will be binding upon the parties. From the decision of the Labor Arbiter, the matter would be brought to the NLRC, then the CA, and even up to the SC.

Common Procedure in Unorganized and Organized Establishments: If negotiations fail, the matter shall be referred to the National Conciliation and Mediation Board (NCMB). Now, the Hearing Officer of the NCMB will try to conciliate and mediate between the parties so that they will reach an AMICABLE SETTLEMENT. If an amicable settlement is not reached, the Hearing Officer of the NCMB will advise the parties to submit the matter to VOLUNTARY ARBITRATION. So, there is Voluntary Arbitration for both organized and unorganized establishments. o National Conciliation and Mediation Board:
Main Office: DOLE, Intramuros, Manila Executive Director: Rolando Rico C. Olalia

 27
Region VII: Sanciangko, near UC, Coliseum Director II: Isidro L. Sepeda

In settling disputes, strikes and lockouts are impliedly excluded as a mode of settlement because there is a very detailed procedure provided for by the law in resolving wage distortions (Article 124). The authority on this matter is Ilaw at Buklod at Mangagawa vs. NLRC. Main Reason for Negotiations: Wage Adjustments Does the procedure provided in Article 124 preclude the company from initiating a solution to the problem of wage distortion? Say, the employer himself believes that with the passage of a certain wage order, a wage distortion is created. Can he take action to solve it? YES, because law through Article 124 has recognized the validity of negotiated wage increases. The company can even provide for a unilateral wage increase to immediately solve the problem of wage distortion.

Note: The other level of employees receiving wages way above the minimum allowable by law cannot legally compel the company to provide a similar rate of increase provided by the wage order for minimum wage earners. Why? (1) RA 6727 as well as the policy of the state requires that in the adjustment of wage rates, the same must not be done by compulsion but through negotiation or CBA. (2) Not all employers can afford the same amount of increase to all employees at the same time. (National Federation of Labor vs. NLRC)

National Federation of Labor vs. NLRC 234 SCRA 311 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. The remedy contemplated by the Wage Orders and Article 124, as a practical matter, ordinarily meant a wage increase for one or more of the affected classes of employees so that some gap or differential would be re-established. The NLRC is not authorized unilaterally to impose, directly or indirectly, under the guise of rectifying a wage distortion, upon an employer a new scheme of classification of employees where none has been established either by management decision or by collective bargaining.

Two Methods of Minimum Wage Adjustment:

1.

Floor Wage Method involves the fixing of a determinate amount that would be added to the prevailing statutory minimum wage. Salary-ceiling Method whereby the wage adjustment is applied to employees receiving a certain denominated (minimum) salary ceiling.

2.

The first method was adopted in the earlier wage orders, while the latter method was used in RA 6640 and RA 6727. The shift from the first method to the second method was brought about by labor disputes arising from wage distortions, a consequence of the implementation of the wage orders. The shift from the first to the second method was due to the fact that the latter minimized wage distortion disputes.

Penal Provision for Non-compliance with the Wage Order:

Section 12, RA 6727 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

 28
punished by a fine not exceeding P25,000 and/or imprisonment of not less than 1 year nor more than 2 years: Provided, that any person convicted under this Act shall not be entitled to the benefits under the Probation Law. If the violation is committed by a corporation, trust or firm, partnership, association or any other entity, the penalty of imprisonment shall be imposed on the entitys responsible officers, including, but not limited to, the president, vice-president, chief executive officer, general manager, managing director or partner.

However, RA 8188 Amended Sec. 12 of RA6727

RA 8188 (June 11, 1996): An Act Increasing The Penalty And Imposing Double Indemnity For Violation of the Prescribed Increases or Adjustments in the Wage Rates, Amending for the Purpose Section 12 of RA 6727:

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 P25,000 nor more than P100,000 or imprisonment of not less than 2 years nor more than 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 on the entitys responsible officers, including, but not limited to, the president, vice-president, chief executive officer, general manager, managing director or partner.

Penalty for Violation of the Prescribed Increase or Adjustment in the Wage Rate (RA 8188): 1. Payment of a fine of not less than P25,000 nor more than P100,000 2. Imprisonment for not less than 2 years nor more than 4 years, the imprisonment being nonprobationable (The case should therefore be filed with the MTC pursuant to BP 129 as amended by RA 7691, see below) 3. Both imprisonment and fine, at the discretion of the Court 4. Paying double the unpaid benefits/amounts owing the employees, provided that the Payment of Indemnity shall not absolve the employer from criminal liability imposable under the Labor Code.

Republic Act 7691

 29

March 25, 1994

Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Criminal Cases. - Except in cases falling within the exclusive original jurisdiction of Regional Trial Courts and of the Sandiganbayan, the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise:

(2)

Exclusive original jurisdiction over all offenses punishable with imprisonment not exceeding six

(6) years irrespective of the amount of fine, and regardless of other imposable accessory or other penalties, including the civil liability arising from such offenses or predicated thereon, irrespective of kind, nature, value or amount thereof: Provided, however, That in offenses involving damage to property through criminal negligence, they shall have exclusive original jurisdiction thereof.

Aside from the penal provision provided under RA 6727, there are provisions in the Labor Code on the enforcement and recovery of minimum wage provisions. There are general two provisions for the enforcement and recovery of minimum wage provisions Articles 128 and 129. Remember that the minimum wage is fixed by a wage order and there is a built in mechanism in the Labor Code which provides the so-called enforcement tools for the recovery of wages, particularly the minimum wage provisions.

Article 128 enforcement machinery in aid of the visitorial power of the Secretary of Labor. This is described as inquisitorial. Why? Because the SOLE inquires ask for documents, investigate, etc.

Article 129 machinery of wage recovery via the administrative process initiated by a complaint. This is described as adversarial. Why? Because it requires a complaint for its initiation.

Article 128. Visitorial and Enforcement Power. (a) The Secretary of Labor or his duly authorized representatives, including labor regulation officers, Shall have access to employers 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

 30 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. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises the issues supported by documentary proofs which were not considered in the course of inspection. ]-EXCEPTION CLAUSE An order issued by the duly authorized representative of the Secretary of Labor and Employment [Regional Director] under this Article may be appealed to the latter. In case said order involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the SOLE in the amount equivalent to the monetary award in the order appealed from.

(c) The SOLE may likewise order stoppage of work or suspension of operations of
any unit or department of an establishment when non-compliance with the law or implementing rules and regulations poses grave and imminent danger to the health and safety of workers in the workplace. Within 24 hours, a hearing shall be conducted to determine whether an order for stoppage of work or suspension of operations shall be lifted or not. In case the violation is attributable to the employer, he shall pay the employees concerned their salaries or wages during the period of such stoppage or work or suspension of operation. ]- CROSS REFER TO ARTICLE 286 ON CONSEQUENCE OF SUSPENSION OF OPERATIONS

(d) It shall be unlawful for any person or entity to obstruct, impede, delay or otherwise
render ineffective the orders of the SOLE or his duly authorized representatives issued pursuant to the authority granted under this Article, and no inferior court or entity shall issue temporary or permanent injunction or restraining order or otherwise assume jurisdiction over any case involving the enforcement orders issued in accordance with this Article.

(e) Any government employee found guilty of violation of, or abuse of authority, under
this Article shall, after appropriate administrative investigation, be subject to summary dismissal from the service.

(f) The SOLE may, by appropriate regulations, require employers to keep and maintain
such employment records as may be necessary in aid of his visitorial and enforcement powers under this Code.

Scope of the Visitorial Power of the Secretary of Labor Under the visitorial power, the SOLE or his duly authorized representative is given the right (1) To inspect and copy pertinent records and documents, (2) To interview any employee and (3) Investigate any fact, condition or matters at the premises of an employer,
At any time of the day or night, whenever work is undertaken therein, for the purpose of determining whether an employer is complying with labor standards.

Does the Labor Code confer this Visitorial Power to be Exercised by the Regional Director? YES. The Regional Director is the duly authorized representative of the SOLE.

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Enforcement Power as regards Health and Safety of Workers Article 128 (c). This provision does not refer to violation of minimum wage laws. It refers to the instance that when the non-compliance with the law or implementing rules and regulations poses grave and imminent danger to the health and safety of workers in the workplace, the SOLE can issue an order for the stoppage of work or the suspension of operations of any unit or department in an establishment.

Illustration: When there is a leak in a chemical plant, there is hazard to the employees. The SOLE can order suspension of operation.

Is the power of SOLE to order suspension of operation similar to Article 286 on bona fide suspension of operations? NO. They are different. In Article 286, it is the employer who suspends the operations while on the other hand, Article 128 speaks of suspension by the Secretary of Labor.

Example, for causes attributable to the employer and in the interest of health and safety of the workers, the Regional Director orders the suspension of the companys operation. The logical question there is What is the consequence of that? Will the employees be paid their wages?

In Article 286, for example, if the employer decides to suspend his operations unilaterally, will the employees be entitled to their daily wages?

What is being inquired in Article 128 is whether or not the employer complies with labor standards laws, rules and regulations, as well as social legislations. The power to visit the

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employers premises is so broad enough as to enable the SOLE or his duly authorized representative to make a finding after making such inspection. Since what will be involved would be inquiring on violations of labor standard laws as well as wage orders, it would be important for us to know the step-by-step procedure in the conduct of inspection under Article 128. And since what is involved would be labor standard provisions such as the minimum wages laws or rules is the employer obliged to maintain a payroll? YES. The employer is obliged to maintain a payroll pursuant to the power of the SOLE under Article 128 (f) to issue such rules and regulations pertinent thereto. Under implementing rules, see Section 6, Rule X, Book III.

In the exercise of the visitorial power, can the SOLE be interfered with by the courts? NO. This is pursuant to Article 128 (d). If the SOLE or the Regional Director, for that matter, decides to inspect the employers premises, then no entity can lawfully interfere, obstruct or delay the exercise of that authority; otherwise they would be penalized under that provision of the LC. That is how comprehensive and that is how strong the visitorial and enforcement power of the SOLE is.

Enforcement Machinery under Article 128: (a) There is a report on the non-compliance of the employer with the minimum wage law. (b) Upon receipt of the Regional Director of this information, there will be an ORDER OF INSPECTION. The SOLE or the Regional Director. The order of inspection will simply state that this person is authorized to conduct an inspection on this date, place and time. (c) This inspection authority will then be implemented by a Labor and Employment Officer of the DOLE. And this person will visit the employers premises and then conduct an inspection. He will inspect the payroll to determine if indeed there was underpayment of wages, inspect the employers premises, interview and ask the employees themselves if they are indeed paid such amount of wages, compare the payment records and confer with the employees. (d) If the inspector finds that there is a violation or underpayment of wages, he will make an INSPECTION REPORT Usually embodied in a NOTICE OF INSPECTION RESULTS. All violations that the Labor Employment Officer will find in the employers premises will be enumerated and be put as his findings in the notice. (e) The employer is first informed of the results of the inspection. (f) The employer is given the opportunity to comply within 7 days or (g) The employer may contest the notice of inspection results and raise issues which cannot be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection.

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HOW SOON? The employer shall raise such objections during the hearing of the case or at any time after the receipt of the notice of inspection results. (h) If on the other hand, the employer does not or fails to contest the notice of inspection result, as well as fails to comply with such notice. The Regional Director will issue an ORDER OF COMPLIANCE. The order of compliance will basically be based on the notice of inspection results, so if the inspection says that you are underpaying 10 workers or just paying them P100, the RD will issue an order of compliance ordering this time the employer to pay the following workers the following sums of money. (i) Remedy of the employer from the order of compliance. The order of compliance can be questioned within 10 calendar days. Then the employer will file a motion for reconsideration with the RD within 7 calendar days. If the employer files it beyond 7 days but not beyond 10 days, that will be considered an appeal from the RD to the SOLE. (j) If the employer will not file a motion for reconsideration, what will happen to the order of compliance? It becomes final and executory. The SOLE or RD can issue a WRIT OF EXECUTION, then it will levy. Pursuant to Rule 39 in Civil Procedure, the final judgment can be subject of execution and the RD can levy on the properties of the employer to satisfy the judgment or the order of compliance. Note: that this is if there is no obedience to the order of compliance or there is no contesting done or no motion for reconsideration resorted to by the employer in that regard. (k) On the other hand, if the employer validly contests by raising issues supported by documentary proofs which were not considered in the course of inspection what will happen? Can the RD still proceed with the case? NO. The RD will endorse the case to the appropriate Arbitration Branch of the NLRC. Why? It is no longer a summary proceeding. It now becomes an adversarial proceeding which the RD is not equipped to handle. RD has no other recourse but to endorse it to the Arbitration Branch of the NLRC.

Note: It is very important that you be able to contest the notice of inspection results within the time frame authorized by the RULES ON DISPOSITION OF LABOR STANDARDS CASES. Because if you fail or if you contest but the wrong way, or you fail to contest it at all, then the RD will have no recourse but to issue an order of compliance. And then your remedy therefore is no longer to contest but to a motion for reconsideration or probably an appeal to the SOLE. In case you still fail to do that, then that order of compliance will become final and executory for which the SOLE or the Rd for that matter is now authorized to issue a writ of execution. Then that is the end of the case.

If you decide to file a motion of reconsideration from the order of compliance and the RD denies it, can you still appeal to the SOLE? YES, within 10 days from the receipt of the order of denial.

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From the decision of the SOLE, is it final already? No more appeal? No more appeal, but there is a remedy of Special Civil Action of Certiorari under Rule 65 to the Court of Appeals. Then from the Court of Appeals to the Supreme Court under Rule 45.

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RULES IN THE DISPOSITION OF LABOR STANDARDS CASES

COMPLAINTS INVOLVING MONEY CLAIMS Arising from alleged violations of labor standards. COMPLAINT INSPECTION All such complaints shall immediately be forwarded to the Regional Director who shall refer the case to the appropriate unit in the Regional Office for assignment to a Labor Standards and Welfare Officer for field inspection.

INSPECTION REPORT The LSWO shall conduct the necessary investigation and submit a report thereof to the Regional Director, through the Chief of the Labor Standards Enforcement Division (LSED), within 24 hours after the investigation or within a reasonable period as may be determined by the Regional Director. The report shall specify the violations discovered, if any, together with his recommendations and COVERAGE OF COMPLAINT INSPECTION Shall not be limited to the specific allegations or violations raised by the complaints/workers but shall be a thorough inquiry into the verification of the compliance by employer with existing labor standards and shall cover all workers similarly situated NOTICE OF INSPECTION RESULTS COMPLIANCE CONTEST THE FINDINGS OF

SUMMARY INVESTIGATION
When the field inspection does not produce the desired results, the Regional Director shall summon the parties for summary investigation to expedite the disposition of the case.

REGIONAL DIRECTOR
The investigation shall be concluded within 15 calendar days from the date of the first hearing and a proposed Order disposing of the case shall be submitted to the Regional Director within 3 calendar days from the conclusion of the investigation.

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COMPLIANCE CONTEST FINDINGS OF LSWO

RESTITUTION a) Restitutions may be effected at the plant-level within 5 calendar days from receipt of the inspection results by the employer or his authorized representative. b) Plant-level restitutions may be effected for money claims not exceeding P50,000. c) Restitutions in excess of the aforementioned amount shall be effected at the Regional Office or at the worksite subject to the prior approval of the Regional HEARING Where no proof of compliance is submitted by the employer after 7 calendar days from receipt of the inspection results, The Regional Director shall summon the employer and the complainants to a summary investigation. The proceedings before the Regional Office shall be summary and non-litigious in nature. Subject to the requirements of due process, the technicalities of law and procedure and the rules governing admissibility and sufficiency of evidence obtaining in the courts of law shall not strictly apply thereto. The Regional Office may, however, avail of all reasonable means to ascertain the

CONTESTED CASES The employer contests the findings of the LSWO and the issues cannot be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection REGIONAL ARBITRATION BRANCH The Regional Director shall endorse such case to the appropriate Arbitration Branch of the NLRC.

Note: The employer shall raise such objections during the hearing of the case or at any time after the receipt of the notice of inspection results. The issue of whether or not the case shall be endorsed to the NLRC shall be resolved by the Regional Director in the final

COMPLAINCE ORDER If the Regional Director finds after hearing that violations have been committed, he shall issue an Order directing the employer to restitute the amount due the workers or institute other corrective measures within 10 calendar days upon receipt of the Order and to submit proof of compliance. The Order shall specify the amount due each worker and shall include the computations on which the CONTEST ORDER OF REGIONAL DIRECTOR

FAILURE TO APPEAR Where the employer or the complainant fails or refuses to appear during the investigation, despite proper notice, without justifiable reasons, the hearing officer may recommend to the Regional Director the issuance of a compliance order based on the evidence at hand or in an order of dismissal of the complaint as the case may be.

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CONTEST ORDER OF REGIONAL

MOTION FOR RECONSIDERATION The aggrieved party may file a motion for reconsideration of the Order of the Regional Office within 7 calendar days from receipt by him of a copy of said order. The Regional Director shall resolve the motion for reconsideration within 10 calendar days from receipt thereof. A motion for reconsideration filed beyond the 7-day reglementary period shall be treated as an APPEAL if filed within the 10-day reglementary period for appeal, but subject to the requirements for the perfection of an appeal.

APPEAL The Order of the Regional Director shall be final and executory unless appealed to the SECRETARY OF LABOR AND EMPLOYMENT within 10 calendar days from receipt thereof. GROUNDS FOR APPEAL (a) There is a prima facie evidence of abuse of discretion on the part of the Regional Director; (b) The Order was secured through fraud, coercion or graft and corruption; (c) Serious errors in the findings of facts were committed which, if not corrected, would cause grave and irreparable damage or injury to the appellant. WHERE TO FILE The appeal shall be filed in 5 legible typewritten copies with the Regional Office which issued the Order. Subject to the requisites of appeal, the appeal shall not be deemed perfected if it is filed with any other office or entity. REQUISITES OF APPEAL (a) The appeal shall be filed within the reglementary period. It shall be under oath with proof of service of a copy thereof to the other party and shall be accompanied by a Memorandum of Appeal which shall state the date appellant received the Order and the grounds relied upon and arguments in support thereof; (b) The appellee may file with the Regional Office his reply or opposition to the appeal within 10 calendar days from the receipt thereof. Failure on the part of the appellee to file his reply or opposition within the said period shall be construed as a waiver on TRANSMITTAL OF RECORDS ON APPEAL Within 3 calendar days after the filing of the reply or opposition of the appellee or after the expiration of the period to file the same, the entire records of the case, together with the Memorandum of Appeal, shall be transmitted by the Regional Office concerned to the Office of the SOLE.

In addition: (a) Should the company lawyer file a motion for reconsideration and in the same motion he only denies the findings of the LSWO, the Regional Director should deny it. (b) Once denied, the Regional Director will now issue a writ of execution, which can be carried out by levying upon the properties, personal and real, of the company. So if the company has money in the bank, the bank account will be garnished by the writ. Here, the banks can no longer dispose of the funds. (c) Assuming that the Regional Director believes the lawyer of the company after he has raised the issues supported by the new payroll and other documentary proofs not considered in the course of inspection and the lawyer filed a timely motion for reconsideration, the case will now be passed to the Regional Arbitration Branch of the NLRC. The Regional Director will lose jurisdiction over the case and the writ of execution will no longer be executed. (d) It goes to the Regional Arbitration Branch of the NLRC because it has become an adversarial proceeding. The parties now present evidence and offer arguments before the Labor Arbiter (Article 217). The proceeding undertaken before the Regional Director is merely summary. That before the Arbitration Branch is adversarial and bound by certain rules of procedure in resolving cases.

 38 Issuance of writ:
(a) If no appeal is perfected within the reglementary period, as evidenced by proof of service, the Regional Director shall, motu proprio or upon motion by any interested party, issue the writ of execution which shall be served by the Regional Sheriff. In the enforcement of the writ of execution, the assistance of the law enforcement authorities may be sought; (b) A writ of execution may be recalled subsequent to its issuance, if it is shown that an appeal has been perfected in accordance with these rules.

Execution before Perfection of Appeal or Pending Appeal: During the period of appeal and before an appeal is perfected, or during the pendency of an appeal, execution may, upon proper motion, also issue where it is shown that compliance with the order of the Regional Director cannot be secured unless this is done. The writ may be stayed at the instance of the losing party by the filing of a supersedeas bond in an amount which is adequate to protect the interests of the prevailing party, subject to the approval of the Regional Director before the perfection of the appeal, or the SOLE during the pendency of the appeal. Execution after Motion for Reconsideration: The compliance order shall be executory after 10 calendar days from receipt of the resolution of such motion. Finality of the Decisions of the SOLE: The decisions, orders or resolutions of the SOLE shall become final and executory after 10 calendar days from receipt of the records of the case. The Regional Director shall issue a writ of execution to enforce the order or decision of the SOLE. The filing of a petition of certiorari before the Supreme Court shall not stay the execution of the order or decision unless (a) The aggrieved party secures a temporary restraining order from the Court within 15 calendar days from the date of finality of the order or decision or (b) Posts a supersedeas bond in an amount which is adequate to protect the interests of the prevailing party subject to the approval of the SOLE.

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Article 129. Recovery of Wages, Simple Money Claims and other benefits. Upon complaint of any interested party, the Regional Director of the DOLE or any of the duly authorized hearing officers of the Department is empowered, through summary proceeding and after due notice, to hear and decide any matter involving the recovery of wages and other monetary claims and benefits, including legal interest, owing to an employee or person employed in domestic or household service or househelper under this Code, arising from employer-employee relations: Provided, That such complaint does not include a claim for reinstatement: Provided further, That the aggregate money claims of each employee or househelper does not exceed P5,000. The Regional Director or hearing officer shall decide or resolve the complaint within 30 calendar days from the date of the filing of the same. Any sum recovered on behalf of any employee or househelper pursuant to this Article shall be held in a special deposit account by, and shall be paid on order of, the SOLE or the Regional Director directly to the employee or househelper concerned. Any such sum not paid to the employee or househelper, because he cannot be located after diligent and reasonable effort to locate him within a period of 3 years, shall be held as a special fund of the DOLE to be used exclusively for the amelioration and benefit of workers. Any decision or resolution of the Regional Director or the hearing officer pursuant to this provision may be appealed on the same grounds provided in Article 223, within 5 calendar days from receipt of a copy of said decision or resolution, to the NLRC which shall resolve the appeal within 10 calendar days from the submission of the last pleading required or allowed under its rules. The SOLE or his duly authorized representative may supervise the payment of unpaid wages and other monetary claims and benefits, including legal interest, found owing to any employee or househelper under this Code.

This is the second method of the enforcement and recovery of minimum wage provisions, which refers to simple money claims. Requisites for a Valid Exercise of Adjudicatory Power: (a) The claim should be filed by an employee or person employed in domestic or household service, or househelper; (b) The claimant no longer being employed does not seek reinstatement; and (c) The aggregate claim of the employee does not exceed P5,000. (d) The claim arises from employer-employee relationship. Under Article 128, the claim arises from employer-employee relationship. It is a requisite under Article 128 that there is still an employer-employee relationship existing. On the otherhand, in Article 129, the claim arises from an employer-employee relationship. In Article 129, the claim is not limited to the claim of househelpers. Article 129 speaks of claims of (1) employees or (2) persons employed in domestic or household service or (3) househelpers. The claim shall not exceed P5,000 under Article 129 and there must be no claim for reinstatement by a claimant who is no longer employed. The limit of P5,000 under Article 129 is not applicable in Article 128 because of the amendatory provision of RA 7730, further strengthening the visitorial power of the Secretary of Labor. The SOLE can issue compliance order regardless of the amount of the money involved in the violation of the labor standard provisions. If through an inspection made by the RD, it is found out that each employee in certain establishment has not been paid the total sum of P100,000, that is within the visitorial and enforcement power of the SOLE under Article 128.

Cases: Articles 128 and 129

Rajah Humabon Hotel vs. Trajano 226 SCRA 394 This case is still the authority which enumerates for us the requisites before the Regional Director can exercise jurisdiction over simple money claims.

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There is no doubt that the Regional Directors under RA 6715 can try money claims only if the following requisites concur: (1) The claim is presented by an employee or person employed in domestic or household service, or househelper under the code; (2) The claimant, no longer being employed, does not seek reinstatement; and (3) The aggregate money claim of the employee or housekeeper does not exceed P5,000. Verily, further discussion on the retrospective operation of RA 6715 to the cause initiated by herein private respondents on March 14, 1989 is now a futile exercise in exegesis considering that the application of the recent legislation to pending cases have been recognized in the South Motorist case, along with other kindred cases, especially so when the private respondents explicitly acknowledged in their Comment that curative statutes have long been considered valid. On the supposed restrictive application of Article 217(6) of the Labor Code only to domestic workers, it may be recalled that the DOLE emphasized that said proviso is inapplicable to private respondents since the latter are not domestic workers. But the prefatory statement of Article 217 speaks loudly about the original and exclusive jurisdiction of the Labor Arbiters over all workers, whether agricultural or non-agricultural, subject to particular cases specified therein. Guico vs. SOLE 298 SCRA 666 This explains that under the amendment to Article 128, the SOLE can now award claims even more than P5,000. This is a case involving the exercise of the Regional Director of his visitorial power in investigating the company of the petitioner Copylandia Service and Trading for violation of Labor Standard laws. Petitioner alleged that the Regional Director has no jurisdiction over the instant case since the individual monetary claims of the 21 employees exceed P5,000. The Supreme Court sustained the jurisdiction of the respondent Secretary. As the respondent correctly pointed out, the SCs ruling in the Servando case that the visitorial power of the SOLE to order and enforce compliance with labor standard laws cannot be exercised where the individual claim exceed P5,000 can no longer be applied in view of the enactment of RA 7730 amending Article 128(b) of the Labor Code. Article 128(b) clearly provides that the appeal bond must be in the amount equivalent to the monetary award in the order appealed from. The record shows that the petitioner failed to post the required amount of the appeal bond. His appeal was therefore not perfected. M. Ramirez Industry vs. SOLE 266 SCRA 111 A reiteration of the requirements. The Regional Director has the power to decide the cases involving money claims of laborers where the following requisites concur: (1) The claim must arise from employer-employee relationship; (2) The claimant does not seek reinstatement; and (3) The aggregate money claim of each employee does not exceed P5,000. On the other hand, if the individual claims of employees exceed P5,000 and, even if they do not, if they include claims for reinstatement, the matter falls within the original and exclusive jurisdiction of the Labor Arbiter. Moreover, petitioner is estopped from questioning the jurisdiction of the Regional Director, having previously invoked it by filing a motion to dismiss. As has been held: a party cannot invoke the jurisdiction of a court to secure affirmative relief against his opponent and, after obtaining or failing to obtain such relief, repudiate or question that same jurisdiction. The Regional Director may not be divested of jurisdiction over these claims, unless the following elements are present: (a) That the petitioner (employer) contests the findings of the labor regulation officer and raises issues thereon; (b) That in order to resolve such issues, there is need to examine evidentiary matters; and (c) That such matters are not verifiable in the normal course of inspection. Batong Buhay Gold vs. de la Cerna, 312 SCRA 28

If the 3 requisites are not present or any of the requites are absent, it is the Labor Arbiter who has jurisdiction over the money claim pursuant to Article 217.

For example: If the claimant, who is an employee who is still employed and seeks reinstatement although his money claim is only P4,000, that will fall under the jurisdiction of the Labor Arbiter.

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Note: Distinguish Article 129 from Article 217. Procedure under Article 129: a.The employee files a pro-forma complaint with the Regional Director. b. The Regional Director dockets the complaint as simple money claim. c.The Regional Director issues summons served upon employer (respondent), together with the copy of the compliant, and sends a copy of the same to the respondent. d. The employer-respondent is given 5 calendar days to answer the complaint. The employer can either admit the allegations or deny it. e.After receiving the answer, the Regional Director calls for a summary hearing and decides on the matter within 30 calendar days from the date of filing of the complaint. f. If the decision is adverse, the employer may appeal the decision to the NLRC within 5 calendar days from the receipt of the copy of said decision or resolution. The appeal must conform to the requirements provided for under Article 217 and the NLRC Rules. To perfect the appeal, the employer must post a cash or surety bond.

In the appeal from the RD decision to the NLRC, the aggrieved party has 5 calendar days, while in the appeal from LA decision to the NLRC, the aggrieved party has 10 days. g. From the adverse decision of the NLRC, the employer can then file a motion for reconsideration. h. If said motion is denied, the employer may still file a Special Civil Action for Certiorari with the Court of Appeals under Rule 65 of the Rules of Court within a period of 60 days from receipt of the decision.

The Regional Tripartite Wages and Productivity Board (RTWPB) do not have the power to promulgate rules providing who is exempted from minimum wage. It is the National Wages and Productivity Board (NWPC) that has the rule-making power to promulgate rules on exemption and minimum wage fixing, and not the RTWPB.

Nasipit Lumber vs. NWPC, 289 SCRA 667 The Board has no power but it is the NWPC who has the power to promulgate rules on exemption, for example.

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PROHIBITIONS REGARDING WAGES

Article 112. Non-Interference in Disposal of Wages. No employer shall limit or otherwise interfere with the freedom of any employee to dispose of his wages. ]- interference He shall not in any manner force, compel, or oblige his employees to purchase merchandise, commodities or other property from the employer or from any other person, or otherwise make use of any store or services of such person.]- compulsory patronage

Section 12 Rule VIII Book III 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.

Why is the employer prohibited from interfering with the employees disposal of their wages? The employee is the owner of the wage, so there should be no interference even by your employer as regard disposal of that wage.

Article 112 does not allow compulsory patronage.

COMPULSORY PATRONAGE the employer shall not in any manner force, compel or oblige, or intimidate or threaten his employees to purchase merchandise, commodities or other property from the employer or from any other person, or otherwise make use of any store or services of such person.

The employer cannot require the employee to buy a pair of shoes every 15th of the month otherwise the employee will be terminated, because that cannot be done. It is prohibited under the Labor Code.

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Of course, in the absence of those acts of compulsion like force, intimidation or threat, there can be no challenge to a situation where the employer will ask the employees to patronize their products.

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; ]- by virtue of a CONTRACT authorized by law (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 regulation issued by the Secretary of Labor.

General Rule There can be no deduction from an employees wage.

Exceptions: (1) (2) (3) (4) when specifically required by law when specifically authorized by law when provided for in contracts authorized specifically by law regulation issued by DOLE

Required by Law: (a) Social Security Act which requires compulsory membership with the Social Security System for all employees on the first day of their employment. The employer is also required to be a compulsory member of the SSS on the first day of operation. Whether you like it or not, you have to be a member of this system. So, deductions from your salary/wage corresponding to the Social Security Contribution can be done by the employer even without your consent because such deduction is required by law. (b) Tax Reform Code this is as regard the withholding taxes on incomes. So you will find your salary automatically deducted for withholding tax whether you like it or not.

Authorized by Law:

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(a) Facilities Article 97 (f) defining Wage on deductible facilities. (b) Union dues the Labor Code contemplates of deduction from the employees salary of 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.

These two are not the same. The first situation when it is recognized by the employer will happen when there is a CBA because the CBA is the law that governs the employer and the union. If the right to deduct from the wages for union dues is recognized by the employer, it will not require the individual consent of the employee. On the other hand, if there is no recognition, then it must be through an authorization made by the individual employee.

Those two situations are not the same they are different!!!

The first speaks of a deduction by virtue of a contract authorized by law as when there is insurance. Here, the employer tells the employees that their lives will be insured but they will have to pay a share in the payment of the premium, will you agree to that? Then the employee says yes, that will be done through a contract authorized by law. That is what is contemplated in the first situation wherein the employee consents to the deduction involving insurance and that deduction is by virtue of a contract authorized by law.

Authorized by law or regulation issued by the SOLE (Article 113c): Omnibus rules which was promulgated by the SOLE allowing deductions?

Section 10. Wage Deduction. Rule VIII, Book III. Deductions from the wages of the employee may be made by the employer 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 payment to a third person and the employer agrees to do so, provided that the latter does not receive any pecuniary benefit, directly or indirectly, from the transaction.

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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 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.

Section 11. Deduction for Loss or Damages. Rule VIII, Book III. 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 loss or damage to tools, materials, or equipment supplied by the 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; and (d) That the deduction from the wages of the employee does not exceed 20% of the employees wages in a week. The making of deductions or requiring deposits must be a recognized practice in the trade, occupation, or business of the employer.

Assuming that all the requirements for the deductions for loss or damage are present, will that require the consent of the employee before the deduction can be effected? The law does not require the consent of the employee, as long as deduction is authorized. So, consent is not required as long as all the requirements for deduction enumerated are present.

Cases:
Five J Taxi vs. NLRC 235 SCRA 556

The employer is engaged in the operation of a taxi business and the employer required the employee taxi driver to make the deposit of P15.00 daily to be used to defray shortage in the boundary fee, the SC ruled it as a violation of the LC and that the business of the employer does not fall within that contemplated by law. Moreover, the SC said that payment for carwash, a necessary expense, must be shouldered by the employee. Why? Since the car is owned by the employer and it was clean when it was handed over to the employee, the Supreme Court said it is fair to ask the taxi driver to restore the car as clean or to its original condition before its use by the taxi driver. It is but fair to ask the taxi driver to assume the cost of the carwash. If the taxi driver does not assume the carwash, then the same will be deducted from his wage or salary. The SC said that this it recognized in the taxi industry. That once you use the car and you use it for a day, then it is your obligation to

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make sure that you return it clean to the taxi operator. If it is not clean and the employer does clean it, it should be at your expense. It can be deduced from Article 114 that it provides the rule on deposits for loss or damage to tools, materials or equipment supplied by the employer. Clearly, the same does nit apply to or permit deposits to defray any deficiency which the taxi driver may incur in the remittance of his boundary. Also, when private respondents stopped working for petitioners, the alleged purpose for which the petitioners required such unauthorized deposits no longer existed. In other case, any balance due to private respondents after proper accounting must be returned to them with legal interest.

Jardin vs. NLRC 326 SCRA 299 (2000)

It is not lawful for the employer to require the taxi driver to deposit to answer for shortage in the boundary, but it is lawful in a taxi business for an employer or a taxi operator to require the taxi driver to assume the cost of washing the car.

Article 115. Limitations. 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.

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 workers consent.

Distinctions:

Withholding of Wages

Inducement to Surrender Wages

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Wages do not reach the hands of the employee induced

The worker has the money but was

to surrender a portion thereof through any of the forms of vitiating consent mentioned

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 as a promise of employment or retention in employment.

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.

In the exercise of the visitorial and enforcement power, it may happen that the employees will be asked to testify against the employer for violation of labor standards law. Article 118 protects the employee against reprisals or retaliation on the part of the employer.

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.

For example, the employer makes a fabricated or bogus payroll, he will fall under this provision.

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CIVIL CODE PROVISIONS

Is it possible to withhold from the employees wage a debt due and demandable from him?
Article 1706: Withholding of the wages, except for debt due, shall not be made by the employer. ]set-off or compensation

For example, you are an employer and your employee borrowed P10,000 from you as a form of a loan employees salary loan can you deduct from the employees wage at the end of the month the amount corresponding to his loan? Only when the debt is due and demandable. The maturity date has to be taken into consideration.

You cannot just deduct the amount of the loan unless the debt is due and demandable. So if you have given your employee two years to pay, you cannot just say that at the end of the month, you will deduct the amount borrowed by the employee from you. You cannot do that because what will come into play is the provision of the Civil Code on set-off or compensation. And you will realize under your civil law that one of the requirements for set-off or compensation would be the due and demandability of the obligation.

If there is no definite date as to when the employee should pay the loan, when will it be due and demandable. It is a pure obligation and it becomes due and demandable at anytime but there must be a demand first. In the absence of a demand, it will not become due and demandable because there is no specific period or term.

It may happen that an employee owes an employer a sum of money but there is no definite date when it becomes due and demandable, so, to allow the interplay of the Civil Code provision of set-off or compensation, the lawyer should advise his client (employer) to make the demand first, to make it due and demandable. If that demand is ignored, or not obeyed by the employee, that is when you can now apply the provision of set-off and compensation.

It may happen that the employee is a member of a so-called employees cooperative. If you are a member, sometimes, the employees borrow money from the cooperative. Can the employer setoff the amount owed by the employee to the cooperative from his wage or salary?

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YES, under a special law. One of the deductions authorized by law salary deductions of a member of a legally established cooperative. (As answered by MWRosal. Please check the Cooperative Act. This will be answered next meeting.)

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 the promulgation of the Labor Code.

Non-diminution of employees wage under RA 6727: Section 3. Article 127. Non-diminution of Benefits. No Wage Order issued by any Regional Board shall provide for wage rates lower than the statutory minimum rates prescribed by Congress.

Does Article 100 apply to benefits, supplements granted by the employer after the promulgation of the Labor Code (November 1, 1974)? NO.

The LC took effect November 1, 1974, at the time when it was promulgated, the employers at that time were already giving benefits, supplements to their employees. When the LC took effect, the LC found it fit that any benefit or supplement given by the employer at the time of the promulgation of the Code should not be unilaterally reduced or withdrawn by the employer. And therefore, there is a provision on the non-diminution of benefits. So you will realize that in so many Supreme Court decisions, wherein benefits were attempted to be withdrawn or reduced by the employer, they faced with Article 100 of the LC, telling them that they cannot diminish or reduce these benefits unilaterally. What is prohibited is the unilateral withdrawal or diminution of these benefits.

Does that mean that the employer can unilaterally withdraw or reduce these supplements or benefits if they are granted after the effectivity of the LC?

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It may happen that the establishment started after 1974. If these employers give, for example, rice allowance, gasoline allowance, housing allowance, and they were given after the effectivity of the Labor Code, can the employer unilaterally withdraw these benefits assuming that they have been enjoyed by the workers for quite a time? NO, because it is grounded on the PRINCIPLE OF EQUITY.

If we cannot use Article 100 and there is no statutory provision other than Article 100, then EQUITY dictates or prohibits the employer from unilaterally withdrawing or reducing these benefits.

You will find some SC decisions wherein some supplements granted by the employer after the promulgation of the Code, the employer was prohibited from unilaterally withdrawing or reducing these benefits under the principle that if it has been practiced by the company for quite a time, couple by regularity, then those benefits becomes a vested right on the part of the employee, which the employer cannot unilaterally withdraw or reduce.

Cases:
Apex Mining vs. NLRC 206 SCRA 497

It is important to note that the creditability provisions in Wage Orders 5 and 6 (as well as the parallel provisions in Wage Orders 2, 3 and 4 are grounded in an important public policy. That 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. Sandigan, however, argues that to consider the P2 increase in basic salary effective February 1, 1984 provided by the CBA as compliance with the requirements of Wage Orders 5 and 6, would be to violate Article 100 of the Labor Code as well as Section 6 of the Rules Implementing Wage Order No.6. These provisions read respectively: Article 100. Prohibition against elimination or diminution of benefits. -Nothing in this book [Book III Conditions of Employment] shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of the promulgation of the Labor Code. Section 6. Non-diminution of benefits. The statutory minimum wage rates shall be exclusive of whatever supplements and other benefits the workers are enjoying without cost at the time of the effectivity of this Order. Clearly, the prohibition against elimination or diminution of benefits set out in Article 100 of the Labor Code is specifically concerned with benefits already enjoyed at the time of the promulgation of the Labor Code. Article 100 does not, in other words, purport to apply to situations arising after the promulgation date of the Labor Code, Section 6 of the Rules Implementing Wage Order No.6 relates to supplements and other benefits which employees are already enjoying without cost at the time of the effectivity of WO 6. Such benefits which employees are already enjoying

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without cost could not, under Section 6, suddenly be ascribed monetary value so as to offset or diminish increases in the minimum wage reate prescribed by statute.

Kamaya Point Hotel vs. NLRC 177 SCRA 160

There is no law that mandates the payment of the 14th month pay. This is emphasized in the grant of exemption under PD 851 (13th Month Pay Law) which states: Employers already paying their employees a 13th month pay or its equivalent are not covered by this Decree. Necessarily then, only the 13th month pay is mandated. Having enjoyed the additional income in the form of 13th month pay, private respondents insistence on the 14th month pay for 1982 is already an unwarranted expansion of the liberality of the law. Also contractually, as gleaned from the CBA between management and the union, there is no stipulation as to such extra remuneration. Evidently, this omission is an acknowledgment that such benefit is entirely contingent or dependent on the profitability of the companys operations. Verily, a 14th month pay is a misnomer because it is basically a bonus and therefore, gratuitous in nature. The granting of the 14th month pay is a management prerogative which cannot be forced upon the employer. It is something given in addition to what is ordinarily received by or strictly due the recipient. It is a gratuity to which the recipient has no right to make a demand. This court is not prepared to compel petitioner to grant the 14th month pay solely because it has already ripened into a company practice as the Labor Arbiter has put it. having lost its catering business derived from Libyan students, Kamaya Hotel should not be penalized for its previous liberality. An employer may not be obliged to assume a double burden of paying the 13th month pay in addition to bonuses or other benefits aside from the employees basic salaries or wages. Restated differently, we rule that an employer may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the employees basic salaries or wages in addition to the required 13th month pay.

]- On these 2 cases: Article 100 applies to benefits and supplements before promulgation of the Labor Code.

So that the rule against diminution of supplements or benefits may apply: 1. It must be shown that the grant of the benefit ripened into a practice over a long period of time. 2. That the practice is consistent and deliberate. 3. That the practice is not due to error in the construction and application of a doubtful or difficult question of law.

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Remember that grant of benefits and supplements can be done through (a) a company written policy or (b) a company practice

If it done through a policy, then there is no problem because this is black and white, you can see it and if it is put into writing, then certainly that benefit will form part of the terms and conditions of employment which cannot be withdrawn unilaterally by the employer or reduced without the consent of the employee.

It may happen, on the otherhand, that the supplement is granted by the employer, not through a company policy, but through company practice. So, if at the time of establishment, the company usually grants a sack of rice every Christmas, and the grant thereof is not dependent on the profit of the employer. The continued practice thereof may amount to a COMPANY PRACTICE and therefore, if it has been done for a considerable length of time, and the same has been consistent and deliberate on the part of the employer, the same may no longer be withdrawn or reduced without the consent of the employees.

Cases: wherein benefits were granted by the employer, the employer was already barred from reducing these benefits.

Davao Fruits vs. Associated Labor Union (ALU) 225 SCRA 562

In this case, the employer in computing the 13th Month Pay of his employees included in the computation the cash equivalent of sick leave and vacation leave, etc. [In the 13th Month Pay law, the 13th month pay shall be at least 1/12 of the total basic salary earned and it excludes among others sick leave and vacation leave, etc. But if what the employer is doing is that in computing the 13th month pay, you include, for example, sick leave and vacation leave, etc., and he has been doing that for a considerable length time and you have been doing that not through mistake but through deliberateness and consistency, that may ripen into a company benefit and a company practice. The employer can no longer withdraw without the consent of the employees.] The employer has been doing this practice for at least 6 years.

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Manila Bank vs. NLRC 279 SCRA 602

In this case, it involves the granting of gas allowance, uniform allowance which has been practiced there by Manila Bank since 1984. It has been quite long. When Manila Bank suffered financial problems, they tried to justify removing these allowance. The SC said, NO YOU CANNOT DO THAT. It has already ripened into a company practice and you cannot just unilaterally withdraw these benefits.

MERALCO vs. SOLE GR 127598 (January 27, 1999) [Get a copy]

MERALCO has a practice for quite a number of years of giving bonus to its employees. The problem with that bonus is that it was not dependent upon the financial viability of MERALCO. At one time, when the employees tried to recover this bonus, the SC said that SORRY MERALCO, YOU CANNOT WITHDRAW THIS BONUS UNILATERALLY, because it is not dependent on your financial profitability, but you have giving that as and by way of company practice. The SC interpreted the meaning of REGULARITY. (That is why we should get a copy.)

In labor law practice, sometimes your client will ask you whether or not they can withdraw or reduce certain benefits that they have been giving to their employees. You have to know these cases to be able to determine whether or not these benefits have already ripened into a company practice or not because if it has been given to you only twice or thrice, and there is no consistency or deliberateness on the part of the employer, then the employees cannot say that they have acquired a vested right on these benefits. So, it will depend on the criteria set forth by the SC in these cases.

Philippine Veterans Bank vs. NLRC GR 130439 (October 26, 1999)

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In 1983, petitioner Philippine Veterans Bank was placed under receivership by the Central Bank (now Bangko Sentral) by virtue of Resolution No. 334 issued by the Monetary Board. Petitioner was subsequently placed under liquidation on 15 June 1985. Consequently, its employees, including private respondent Dr. Jose Teodorico V. Molina (MOLINA), were terminated from work and given their respective separation pay and other benefits. To assist in the liquidation, some of petitioners former employees were rehired, among them MOLINA, whose re-employment commenced on 15 June 1985. On 11 May 1991, MOLINA filed a complaint against Renan V. Santos, Pacifico U. Cervantes and Alfredo L. Dizon, members of the liquidation team. Docketed as NLRC-NCR Case No. 05-02940-91, the complaint demanded the implementation of Wage Orders Nos. NCR-01 and NCR-02 (hereafter W.O. 1 and W.O. 2) as well as moral damages and attorneys fees in the amount of P300,000. In his position paper, MOLINA alleged that he started working for petitioner as a legal assistant on 17 March 1974. When petitioner was placed under liquidation in 1985, he was retained as Manager II in the Legal Department, where he continued to receive a monthly salary of P3,754.60. Meanwhile, W.O. 1 took effect on 10 November 1990, prescribing a P17-increase in the daily wage of employees whose monthly salary did not exceed P3,802.08. On the other hand, W.O. 2, which became effective on 8 January 1991, mandated a P12-increase in the daily wage of employees whose monthly salary did not exceed P4,319.16. MOLINA claimed that his salary should have been adjusted in compliance with said wage orders. In their position paper, the liquidation team countered that MOLINA was not entitled to any salary increase because he was already receiving a monthly salary of P6,654.60 broken down as follows: P3,754.60 as basic compensation, P2,000 as representation and transportation allowance (RATA), and a special allowance of P900. The Office of the Solicitor General supports the NLRCs finding that MOLINA was entitled to the wage increases because it was never disputed that his salary of P3,754.60 was clearly covered by the wage orders. The liquidators, however, used the 26.16 instead of the 365 factor in computing his daily wage. The OSG cites the ruling of the National Wages Council in its letter to the Philippine Veterans Bank Retained Employees, where the Council opined that the retained employees were entitled to the wage increase computed on the basis of 365 days. It also agrees with the NLRCs conclusion that MOLINA is entitled to moral damages and attorneys fees, although they must be separately specified. Finally, the OSG opines that upon the rehabilitation of petitioner, it assumed all the assets, liabilities, rights and obligations of the liquidation team. This would include the salaries of the employees hired for liquidation purposes, such as MOLINA. We see no reason to disturb the factual finding of the labor arbiter, and affirmed by the NLRC, that MOLINAs salary was within the coverage of the cited wage orders. Well-settled is the rule that the findings of fact of quasi-judicial bodies are generally accorded respect and finality where they are supported by substantial evidence. (Metro Transit Organization, Inc. v. NLRC, 263 SCRA 313, 319 [1996]; Sebuguero v. NLRC, 248 SCRA 532, 544 [1995]; Philippine National Construction Corporation v. NLRC, 245 SCRA 668, 675 [1995].) Indeed, MOLINAs monthly salary of P3,754.60 was never at issue. What was in dispute was the computation of his daily wage. W.O. 1 expressly states that employees having a monthly salary of not more than P3,802.08 are entitled to receive the mandated wage increase. Undeniably, MOLINA was receiving a monthly salary of P3,754.60. This fact alone leaves no doubt that he should benefit from said wage order.

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On the other hand, W.O. 2 raised the ceiling for entitlement to the wage increase. If MOLINA was covered by the earlier wage order, with more reason should the later wage order apply to him. Worth mentioning is the opinion rendered by the National Wages Council on the query of the Philippines Veterans Bank Retained Employees, on whether they were entitled to a wage increase under Republic Act No. 6640,viz.: The documents attached to your query show that the Bank has been consistently using the factor of 365 days in computing your equivalent monthly salary prior to its being placed under receivership by the Central Bank. This is evident in the wage and allowance increases granted under previous Presidential Decrees and Wage Orders, which were given by the Bank on monthly basis, i.e., where the rest days are unworked [sic] but paid. This is also indicated in the appointment and service records of bank personnel who started out as daily paid employees and were eventually promoted as permanent employees with fixed monthly salaries. However, when R.A. 6640 went into force, the Bank unilaterally reduced the factor to 262 instead of maintaining factor 365 as was the practice/policy long before the effectivity of the Act. And when R.A 6727 took effect, the Bank reverted to the old practice/policy of using factor 365 days in computing your equivalent monthly rate salary. Xxx May we add that the old practice of the bank in using factor 365 days in a year in determining your equivalent monthly salary cannot unilaterally be changed by your employer without the consent of the employees, such practice being now a part of the terms and conditions of your employment. An employment agreement, whether written or unwritten, is a bilateral contract and as such either party thereto cannot change or amend the terms thereof without the consent of the other party thereto. From the foregoing, it is clear that you are entitled to the wage increase under R.A. 6440 computed on the basis of 365 paid days and to the corresponding salary differentials as a result of the application of this factor. [Emphasis supplied] Evidently, the use of the 365 factor is binding and conclusive, forming as it did part of the employment contract. Petitioner can no longer invoke the 26.16 factor after it voluntarily adopted the 365 factor as a policy even prior to its receivership. To abandon such policy and revert to its old practice of using the 26.16 factor would be a diminution of a labor benefit, which is prohibited by the Labor Code. [Article 100 of the Labor Code provides: 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.] It cannot be doubted that the 365 factor favors petitioners employees, including MOLINA, because it results in a higher determination of their monthly salary.

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PAYMENT OF WAGES

Article 102. Form of Payment. No employer shall pay the wages of an employee by means of promissory notes, vouchers, coupons, tokens, tickets, chits or any object other than legal tender, even when expressly requested by the employee. Payment of wages by check or money order shall be allowed: (a) when such manner of payment is customary on the date of effectivity of this Code, or (b) is necessary because of special circumstances as specified in appropriate regulations to be issued by the Secretary of Labor, or (c) as stipulated in a collective bargaining agreement.

The wages will have to be paid in the form of legal tender.

LEGAL TENDER is that currency which has been made suitable by law for the purpose of a tender of payment of debts. All notes and coins issued by the Central Bank are legal tender.

The payment of wages in the form of cash considered legal tender? YES.

Can the employer pay the employee partly in cash and partly in kind? Generally, no, but there are cases decided by the Supreme Court wherein such is allowed. Such as payment for facilities.

Congson vs. NLRC 243 SCRA 260

[tuna liver + intestines + legal tender] It involves the application of Article 102 in payment of wage in the form of legal tender. In this case, the employer paid the employees legal tender combined with tuna liver and intestines. So what the employers did was pay the wages partly in cash and partly in kind. Issue was raised as to whether or not there was a valid payment of wages. The SC said this is a violation of Article 102 which requires the payment of wage in the form of legal tender.

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Undoubtedly, the petitioners practice of paying the private respondents the minimum wage by means of legal tender combined with tuna liver and intestines runs counter to Article 102 of the Labor Code. The fact that the said method of paying the minimum wage was not only agreed upon by both parties in the employment agreement but even expressly requested by private respondents, does not shield petitioner. Article 102 is clear. Wages shall be paid only by means of legal tender. The only instance when an employer is permitted to pay wages in forms other than legal tender, that is, by checks or money order, is when the circumstances prescribed in the second paragraph of Article 102 is present.

Can the employer pay the employee in the form other than cash? YES, through money order or check. This is by way of exception, the rules allow the employer to pay employees wages in these forms. Note the instances.

Payment of wages by BANK CHECKS, POSTAL CHECKS or MONEY ORDER is allowed:

Section 2 (Payment by check), Rule VIII, Book III

(a) Where such manner of wage payment is customary on the date of effectivity of the Code (November 1, 1974), or

(b) Where it is stipulated in a collective agreement, or (c) Where all the following conditions are met: (1) There is a bank or other facility for encashment within a radius of 1 kilometer from the workplace; (2) The employer, or any of his agents or representatives, does not receive any pecuniary benefit directly or indirectly from the arrangement; (3) The employees are given reasonable time during banking hours to withdraw their wages from the bank which time shall be considered compensable hours worked if done during working hours; and (4) The payment by check is with the written consent of the employees concerned if there is no collective agreement authorized the payment of wages by bank checks. If all of these conditions are met, the employer can validly, by himself, pay wages by checks. Note the differences of the instances in the rules that allow payment by check and place of payment, because that it usually the mistake of students when they interchange the instances and of course, these being different, they will end up wrong. Note that the employer should not enter into an arrangement with the bank that the employer will receive commission if the employer pays in the form of check. There should be no pecuniary benefit from this arrangement of payment through check.

Article 104. Place of Payment. Payment of wages shall be made at or near the place of undertaking, except as otherwise provided by such regulations as the Secretary of Labor may prescribe under conditions to ensure greater protection of wages.

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Is there an instance when the employer may be allowed to pay the employees wage other than at the place of undertaking?

Exception to the rule: Section 4. Place of Payment. Rule VIII, Book III. (a) 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 the deterioration of peace and order conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or other calamity rendering payment thereat impossible; (2) When the employer provides for transportation to the employees back and forth; and (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) Payment in recreational places prohibited: No employer shall pay his employees in any bar, night or day club, drinking establishment, massage clinic, dance hall, or other similar places or in places where games are played with stakes of money or things representing money except in the case of persons employed in said places.
North Davao Mining Corporation vs. NLRC 254 SCRA 721 The employer pays its employees at a bank where travel time took them 2 and hours. The SC said that the employees travel time should be compensable hours worked and the transportation fare that they spent should be reimbursed to them. [NOT yet asked in the BAR Examination] To justify the award of 2 days a month in backwages and P80 per month of transportation allowance, respondent Commission ruled: As to the appellants claim that complainants-appellees time spent in collecting their wages in Tagum, Davao is not compensable allegedly because it was on official time cannot be given credence. No iota of evidence has been presented to back up said contention. The same is true with appellants assertion that the claim for transportation expenses is without basis since they were incurred by the complainants. Appellants should have submitted the payrolls to prove that complainants appellees were not the ones who personally collected their wages and/or the bus/jeep trip tickets or vouchers to show that the complainants-appellees were provided with free transportation as claimed.

Is it possible to pay the employees wage through the facilities in a bank? YES, note the conditions. Payment of Wages through Banks (cash), all of these must concur:

Section 7, RA 6727
(1) Upon written permission of the majority of the employees or workers concerned, (2) All private establishments, companies, businesses, and other entities with at least 25 or more employees, and (3) Located within 1 kilometer radius to a commercial, savings, or rural banks shall pay wages or benefits of their employees through any of said banks, (4) Within the period of payment of wages fixed by PD 442, the Labor Code, as amended. Is the employer allowed by existing rules and regulations to pay the employees wage through the facility of the ATM?

 59 YES, note the conditions. When we say ATM, is that same as the payment of wages through the banks? That may, or may not be different. There is an ATM in a bank, but an ATM is not always located in a bank.

LABOR ADVISORY ON PAYMENT OF SALARIES THROUGH ATM: [Issued by then Secretary Leonardo Quisumbing] Article 104, as amended, requires that payment of wages shall be made at or near the place of undertaking, except as otherwise provided by such regulations as the Secretary of Labor may prescribe under conditions that would ensure prompt payment and protection of wages. Based on Article 104, as well as the provisions of Section 4, Rule VIII, Book III and considering present-day circumstances, practices and technology, employers may adopt a system of payment other than in the workplace, such as through ATMs of banks, provided that the following CONDITIONS are met: (1) The ATM system of payment is with the written consent of the employees concerned. (2) The employees are given reasonable time to withdraw their wages from the bank facilities which time, if done during working hours, shall be considered as compensable hours worked. (3) The system shall allow workers to receive their wages within the period or frequency and in the amount prescribed under the Labor Code. (4) There is a bank or ATM facility within a radius of 1 kilometer to the place of work. (5) Upon request of the concerned employee/s, the employer shall issue a record of payment of wages, benefits and deductions for a 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) The employer shall assume responsibility in case the wage protection provisions of law and regulations are not complied with under the arrangement.
The point here is that, if the employer elects to pay the employees wage through the ATM, there should be no diminution of the employees wage. The employees can also demand from the employer, proof of how much they are paid including the itemize deduction. In other words, it will not dispense with the requirement of the pay slip. Remember, that the employers decide on their own without the employees consent to pay their wages through the ATM facilities. Evidently in violation or non-conformity with the guidelines issued by the DOLE. If that happens, then the remedy of the employees would be to report it to the DOLE for an inspection and for the correction of that particular system. The DOLE, in the exercise of its visitorial and enforcement power can order the employer to correct any deficiency in that kind of practice.

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Article 105. Direct Payment of Wages. 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 Secretary of Labor in appropriate regulations, in which case the worker may be paid through another person under written authority given by the worker for the purpose; or (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 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 Secretary of Labor or his representative. The representative of the Secretary of Labor 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.

To whom should the wage be paid? Article 105 provides that wages should be paid directly to the employees. This is because it is the worker who earns that money and it should be paid directly to him and not to his girlfriend, not to his lola, or whoever. Otherwise, it is not a valid payment. As learned in Civil Law, payment or performance is a mode of extinguishing an obligation. And if there is an improper payment or performance, it will not extinguish your obligation. That is how important this rule is. Is it possible to pay the wage to other than the employee himself? YES, note the circumstances provided in Article105: (a) In cases of force majeure rendering such payment impossible; or (b) Under special circumstances to be determined by the SOLE in appropriate regulations; or (c) Where the worker has died.

Section 5. Direct Payment of Wages. Rule VIII, Book III. 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 payments for the insurance premiums 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; or (c) In case of death of the employee as provided to the succeeding section.
In cases of payment of deceased workers wages to his heirs, they do not need a court order, because there is not need for an intestate proceeding. What they need is an AFFIDAVIT OF HEIRSHIP. Also a valid payment: when the payment of the employees wage through any of the authorized deductions, such as by virtue of a check-off provision, then that is also a valid form of payment. So if there is a CBA where there is a check-off provision for union dues, the employer will pay a portion of your salary directly to the union and it will no longer pass through you, and this is a valid form of payment.

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Article 103. Time of Payment. 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 collective bargaining agreement or arbitration award: (1) (2) That payments are made at intervals not exceeding 16 days, in proportion to the amount of work completed; That final settlement is made upon completion of the work.

Section 3, Rule VIII, Book III

(a) Wages shall not be paid less often than once every two weeks or twice a month at intervals not exceeding 16 days, unless payment cannot be made with such regularity due to force majeure or circumstances beyond the employers control, in such case the employer shall pay the wages immediately after such force majeure or circumstances have ceased. (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 the work.
Frequency of Payment how often?

Wages shall be paid at least once every 2 weeks or twice a month at intervals not exceeding 16 days. It translates into twice a month! Exception:
In case of force majeure or in circumstances beyond the employers control, wherein the 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.

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HOURS OF WORK
A workweek consists of 6 days

This is pursuant to Article 91.

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 24 consecutive hours after every 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 the SOLE may provide. However, the employer shall respect the preference of employees as to their weekly rest day when such preference is cased on religious grounds.

Section 3. Weekly Rest Day. Rule III, Book III: Every employer shall give his employees a rest period of not less than 24 hours after every 6 consecutive normal work days.
What happens on the seventh day?

It becomes the rest day. It is mandatory on the part of the employer because it is provided for under Article 91. That is how we arrive on a 48-hour work week.
Will the seventh day be considered always and at all times the rest day?

YES.
Does the LC tell us what specific day of the week will the employees rest day be?

NO. Of course, under the BLUE SUNDAY LAW, the employees rest day was imposed every Sunday. But when the Labor Code took effect in 1974, it gave more flexibility on the part of the employer to determine what rest day will be best for his business. There are certain types of establishments that derives more money during Sundays and Saturdays. And on the otherhand, there may be some establishments that are not productive during Sundays. Example: Malls, Department Stores. In those establishments, it will be possible to schedule the employees rest day on days other than Sunday. The employer has the prerogative to determine the employees rest day. When it does, the employer can change the employees rest day only after giving a NOTICE, and the change will take effect 1 week after such notice. (a) The employer has to notify the employees of any change in the rest day. (b) The change will have to take effect at least 7 days after the change of schedule. This is so as not to cause inconvenience on the part of the employees who may expect to be enjoying their rest day on a particular day. If the employer decides to change it because that is his prerogative, he still has to inform his employees of the change in advance. The choice of rest day rests upon the employer, is there an instance when the employer will have to give some deference to the employees choice of their rest day? YES. Under Article 91 (b). Based on religious grounds. The employer has to respect such employees preference. (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 the SOLE may provide. However, the employer shall respect the preference of employees as to their weekly rest day when such preference is cased on religious grounds. Exception to exception: Under the implementing rules, when it will cause serious obstruction or prejudice to the operations or undertaking of the employer, the employer shall schedule the rest day of their choice for at least 2 days in a month. But of course, customarily in the Philippines, the employer gives respect to the employees choice of rest day if the same is based on religious grounds.

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Does the 6 consecutive days workweek apply to all employers or employees?

NO, it does not apply to: (a) Health personnels in cities or municipalities with a population of 1 million or (b) Hospitals with a bed capacity of at least 100. The population requirement and the bed capacity need not go together. They are to be taken separately. Remember that the bed capacity is not required to be occupied as long as the requirement of at least a hundred is met OR you belong in a municipality or city with at least 1 million in population. In this case, the normal workweek consists of 5 consecutive workdays. In effect, the rest day consists of 2 days. The law does not tell us the specific days when the rest days will fall. They have 40-hour workweek and they will enjoy 2 rest days. This is due to the nature of their job or activities involving more strenuous type of work compared to other establishments. HEALTH PERSONNEL shall include: (a) Resident physicians, (b) Nurses, (c) Nutritionists, (d) Dietitians, (e) Pharmacists, (f) Social workers, (g) Laboratory technicians, (h) Paramedical technicians, (i) Psychologists, (j) Midwives, (k) Attendants, and (l) All other hospital or clinic personnel.
Policy Instruction No. 54

[issued by Franklin Drilon] This says in effect that those health personnel will have to be considered paid 7 days a week. Is this valid? NO, this was held to be void in the case of San Juan de Dios Hospital Employees Association vs. NLRC, GR 126383 (November, 28, 1997). This is because it contravenes the LC because the LC does not say that these 2 days off shall be paid, but rather, it only says that there will be 30% which will be added to the regular wage if they work on the rest day. The LC does not give them a full 7 days with pay but rather, only additional compensation. San Juan de Dios Hospital Employees Association vs. NLRC, GR 126383 (November, 28, 1997) A cursory reading of Article 83 of the Labor Code betrays petitioners position that hospital employees are entitled to a full weekly salary with paid 2 days off if they have completed the 40-hour/5day workweek. What Article 83 merely provides are: (1) The regular office hour of 8 hours a day, 5 days a week for health personnel, and (2) Where the exigencies of service require that health personnel work for 6 days or 48 hours, then such health personnel shall be entitled to an additional compensation of at least 30% of their regular wage for work on the sixth day. There is nothing in the law that supports then SOLEs assertion that personnel in subject hospitals and clinics are entitled to a full weekly wage for 7 days is they have completed the 40hour/5-day workweek in any given workweek. Needless to say, the SOLE exceeded his authority by including a 2 days off with pay in contravention of the clear mandate of the statute. Such an act the Court shall not countenance. Administrative interpretation of the law, we reiterate, is at best merely advisory, and the Court will not hesitate to strike down an administrative interpretation that deviates from the provision of the statute. Policy Instruction 54 to our mind unduly extended the statute. It being inconsistent with and repugnant to the provision of Article 83, as well as to RA 5901, PI 54 is declared VOID.
Can the employees be compelled to work during rest day?

Article 92.
The general rule is that under normal circumstances, the employer cannot require to compel his employee to work on the latters scheduled rest day against his will. The general rule however admits of certain exceptions, and these are found in Article 92 of the Labor Code and Section 6 Rule III of the Omnibus Rules.

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An employer may require any of his employees to work on his scheduled rest day for the duration of the following emergencies and exceptional conditions:

1. In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake, epidemic, or other disaster or calamity, to prevent loss of life or property, or in case of force majeure or imminent danger to public safety; 2. In case of urgent work to be performed on machineries, equipment or installations to avoid serious loss which the employer would otherwise suffer; 3. In the event of abnormal pressure or work due to special circumstances, where the employer cannot be ordinarily be expected to resort to other measures; 4. To prevent serious loss of perishable goods; 5. Where the nature of the work is such that the employees have to work continuously for 7 days in a week or more, as in the case of the crew members of a vessel to complete a voyage and in other similar cases; 6. When the work is necessary to avail of favorable weather or environmental conditions where performance or quality of work is dependent thereon. No employee shall be required against his will to work on his scheduled rest day except under the circumstances provided. Provided, however, that where an employee volunteers to work on his rest day under other circumstances, he shall express such desire in writing. If the employee works on his rest day, he is entitled to additional compensation and this is called PREMIUM PAY. This is not the same as overtime pay. This is additional compensation for the work of the employee for not more than 8 hours during his rest day.
Meal Period

Article 85. Meal Periods.

Subject to such regulations as the Secretary of Labor and Employment may prescribe, it shall be the duty of every employer to give his employees not less than 60 minutes time off for their regular meals.

The employer is required to give his employees not less than 60 minutes or 1 hour for their regular meals everyday. The LC does not specify as to what specific hour of the day the meal period are to be given. The 60-minute meal period is not compensable because during this time, the worker does not work. Possible to reduce the meal period to less than 60 minutes? If so, under what instances? YES, under Section 7, Rule I, Book III. A meal period of not less than 20 minutes may be given by the employer provided that such shortened meal period is credited as compensable hours worked of the employee:

(a) Where the work is non-manual work in nature or does not involve strenuous physical exertion;
(b) Where the establishment regularly operates not less than 16 hours a day; (c) In cases of actual or impending emergencies or there is urgent work to be performed on machineries, equipment or installations to avoid serious loss which the employer should otherwise suffer; and (d) Where the work is necessary to prevent serious loss of perishable goods.

Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable working time.
Short coffee breaks of 5 20 minutes is compensable. So if the employer gives the employees break in the morning and in the afternoon, this time is considered compensable. Note that the employer is not obliged by law to give this coffee break.

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The employer can lessen the 60-minute meal period into 30 minutes. And this is
compensable. Note that the employer shall pay the Overtime Pay whenever proper. Note that meal periods can be reduced to less than 60 minutes but not less than 20 minutes, and it is compensable. For example, if the meal period is reduced to 59 minutes it is compensable.
Sime Darby vs. NLRC 289 SCRA 86

The meal period was shortened to less than 60 minutes. Then later, the employer decided to revert to the 60 minutes. In which case, it was no longer compensable. Prerogative of the employer to revert because they are not obliged by law. What is in fact required is 60 minutes. Thus, this action by the employer is valid. The right to fix the work schedules of the employees rests principally on their employer. In the instant case, petitioner, as the employer, cites as reason for the adjustment the efficient conduct of its business operations and its improved production. It rationalizes that while the old work schedule included a 30-minute paid lunch break, the employees could be called upon to do jobs during that period as they were on call. Even if dominated as lunch break, this period could very well be considered as working time because the factory employees were required to work if necessary and were paid accordingly for working. With the new work schedule, the employees are now given a 1-hour lunch break without any interruption from their employer. For a full 1 hour undisturbed lunch break, the employees can freely and effectively use this hour not only for eating but also for their rest and comfort which are conducive to more efficiency and better performance in their work. Since the employees are no longer required to work during this 1-hour lunch break, there is no more need for them to be compensated for this period. We agree with the Labor Arbiter that the new work schedule fully complied with the daily work period of 8 hours without violating the Labor Code. Besides, the new schedule applies to all employees in the factory similarly situated whether they are union members or not. Every business enterprise endeavors to increase its profits. In the process, it may devise means to attain that goal. Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. Thus, management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay off of workers and discipline, dismissal and recall of workers. Further, management retains the prerogative, whenever exigencies of the service so require, to change the working hours of its employees. So long as such prerogative is exercised in good faith for the advancement of the employers interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold such exercise.

The employer cannot prohibit employees from leaving the premises during the meal period of employees. The law in fact does not require that the 60 minutes to be spent in the employers premises. There is no labor code provision to this effect. Philippine Airlines vs. NLRC, 302 SCRA 532 Issue: Required to spend the 60 minutes in the company premises.

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NORMAL WORK WEEK

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 24 consecutive hours after every 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.

Section 2. Business on Sundays/Holidays. Rule III, Book III All establishments and enterprises may operate or open for business on Sundays and Holidays provided that the employees are given the weekly rest day and the benefits due them under the law. The rest day need not be a Sunday, because the Blue Sunday Law no longer finds application in the present.

Section 3. Weekly rest day. Rule III, Book III Every employer shall give his employees a rest period of not less than twenty-four (24) hours after every six consecutive normal work days.

Section 4. Preference of employee. Rule III, Book III The preference of the employee as to his weekly day of rest shall be respected by the employer if the same is based on religious grounds. The employee shall make known his preference to the employer in writing at least seven (7) days before the desired effectivity of the initial rest day so preferred. Where, however, the choice of the employees as to their rest day based on religious grounds will inevitably result in serious prejudice or obstruction to the operations of the undertaking and the employer cannot normally be expected to resort to other remedial measures the employer may so schedule the weekly rest day of their choice for at least two (2) days in a month.

COMPRESSED WORK WEEK

While as a general rule the right to overtime pay cannot be waived under existing laws, the compressed workweek arrangement may be imposed if the following conditions are met: 1. The employees voluntarily agree to work 9 hours a day from Monday to Friday; 2. That there will not be any diminution whatsoever in the monthly or weekly take home pay and fringe benefits of the employees; 3. The value of the benefits that will accrue to the employees under the proposed work schedule is more than or at least commensurate with or equal to the one-hour overtime pay that is due them during the weekdays based on the employees qualifications; 4. The one-hour overtime pay of the employees will become due and demandable if ever they are permitted or made to work on any Saturday during the effectivity of the new working time arrangement, since the agreement between the management is that there will be no Saturday work in exchange for longer workday during weekdays; 5. The work of the employees does not involve strenuous physical exertion and that they are provided with adequate rest periods or coffee breaks in the morning and afternoon; 6. The effectivity of the proposed working time arrangement shall be of temporary duration as determined by the SOLE.

 67 This was from an Explanatory Bulletin dates August 20, 1984 of the Director of the Bureau of Working Conditions, citing the opinion of the Acting Minister of Labor and Employment on the letter-query of Hydro-Resources Contractors Corporation. This came about not so long ago when our country was suffering an energy crisis and power supply was always interrupted. The payment of overtime pay is actually waived under a compressed workweek arrangement, which is valid if the conditions provided under the rules are complied with. This arrangement is the exception to the general rule that overtime pay cannot be waived. If however during any day in the compressed workweek is asked to work beyond the agreed 9 hours, or when he is made to work on a Saturday, the employer should pay the employee overtime pay. The Labor Code does not provide for a compressed workweek. This is only an agreement between the employer and the employee. In such an agreement, the employees agree to perform work 9 hours a day for 5 days instead of the normal work period of 8 hours a day for 6 days in a week. The overtime rendered for each day is normally compensable with Overtime pay. However, in this arrangement, the employees waive their right to Overtime pay, in lieu of a longer weekend. In practice, employer and employee should agree. The employee writes a letter petition containing the following: 1) Request for a compressed workweek. 2) In effect thereto, they will render work for 9 hours a day for 5 days thereby extending their rest day into 2 days. 3) Implied in this agreement are a) Should the employer require them to work on their scheduled rest day, employer shall pay them Overtime already rendered during their 5 working days as well as Premium Pay for working during their rest day; b) There will be no diminution of benefit as a result of this agreement. 4) Employees are given the leeway to revert to their normal workweek. This agreement is dependent on the discretion of the employees to revert to the normal workweek. Note that this agreement on the compressed workweek will depend on the willingness of the employees.
Lagatic vs. NLRC 285 SCRA 262 Employees can waive their overtime pay as a result of a shortened workweek. In this case, there was compressed workweek but the court is not admitting to its legality. Petitioner Romeo Lagatic was employed by Cityland, first as a probationary sales agent, and later on as a marketing specialist. He was tasked with soliciting sales for the company, with the corresponding duties of accepting call-ins, referrals, and making client calls and cold calls. COLD CALLS refer to the practice of prospecting for clients through the telephone directory. Cityland, believing that the same is effective and cost-efficient method of finding clients, requires all its marketing specialists to make cold calls. The number of cold calls depends on the sales generated by each: more sales means less cold calls. Likewise, in order to access cold calls made by the sales staff, as well as to determine the results thereof, Cityland requires the submission of daily progress reports on the same. Cityland issued a written reprimand to petitioner for his failure to submit cold call reports. Petitioner was required to explain his inaction, with a warning that further noncompliance would result in his termination from the company. Petitioner failed to show his entitlement to overtime and rest day pay due, to the lack of sufficient evidence as to the number of days and hours when he rendered overtime and rest day work. Entitlement to overtime pay must first be established by proof that said overtime work was actually performed, before an employee may avail of said benefit. To support his allegations, petitioner submitted in evidence minutes of meetings wherein he was assigned to work on weekends and holidays at Citylands housing projects. Suffice it to say that said minutes do not prove that petitioner actually worked on said dates. It is a basic rule in evidence that each party must prove his affirmative allegations. This petitioner failed to do. (Please see related discussion of this case under Prohibition against Offsetting, infra)

OVERTIME WORK
Article 83. Normal Hours of Work.

 68 The normal hours of work of any employee shall not exceed 8 hours a day. XXX

Can the employer validly require his employees to work longer than 8 hours a day? Say 10 a day?

NO. Labor Code says in Article 83 that the normal hours of work shall not exceed 8 hours a day. However, should they be engaged to perform work in excess of that required by law, employer is mandated to pay the overtime pay.

Article 87. Overtime Work. Work may be performed beyond 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 25% thereof. Work performed beyond 8 hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate of the first 8 hours on a holiday or rest day plus at least 30% thereof.

Section 8. Overtime Pay. Rule I, Book III

Any employee covered by this Rule who is permitted or required to work beyond 8 hours on ordinary working days shall be paid an additional compensation for the overtime work in an amount equivalent to his regular wage plus at least 25% thereof.

Regular wage

At least 25% of the Regular Wage

Overtime Pay

Section 9. Premium and Overtime Pay for Holiday and Rest Day Work. Rule I, Book III

(a) Except employees referred to under the exceptions, an employee who is permitted or
suffered to work on special holidays or on his designated rest days not falling on regular holidays shall be paid a premium pay of not less than 30% of his minimum wage; For work performed in excess of 8 hours on special holidays and rest days not falling on regular holidays, an employee shall be paid an additional compensation for the overtime work equivalent to his rate for the first 8 hours on a special holiday or rest day plus at least 30% thereof; (b) Employees of public utility enterprises as well as those employed in non-profit institutions and organizations shall be entitled to the premium and overtime pay provided herein, unless they are specifically excluded from the coverage of the Rule. (c) The payment of additional compensation for work performed on regular holidays shall be governed by Rule IV Book III [Holiday with Pay]. A normal work day can be shorter than 8 hours, like say, 5 hours because the Labor Code is worded X X X not to exceed eight (8) hours.
Can ER be compelled to pay OT if work is rendered by an employee beyond the 5 hour working time?

NO. Labor Code says Overtime is an additional compensation required by law for work rendered in excess of 8 hours in a day. However, if the ER decides to pay for the overtime work rendered, this is valid. There is no legal prohibition. OVERTIME COMPENSATION Overtime compensation is additional pay for service or work rendered in excess of 8 hours a day by employees or laborers in employment covered by the 8hour Labor Law and not exempt from its requirements. It is computed by multiplying the overtime hourly rate by the number of hours worked in excess of 8 hours. REGULAR WAGE for the purposes of computing overtime and other additional remuneration shall include the cash wage only, without deduction on account of facilities provided by the employer.

Reason for the Overtime Pay

There can be no other reason that a worker is made to work longer than is commensurate with his agreed compensation for the statutorily fixed or voluntarily agreed hours of labor he is supposed to. When he thus spends additional time for his work, he puts in more physical and

 69 mental effort and he is delayed in going home to his family and to enjoy the comforts of his home. The reason why employers are discouraged to require employees to work overtime is the human factor.
There are establishments operating more than 8 hrs a day. Can the ER validly compel them to work beyond the 8 hour period?

Generally, NO. For exceptions see Rule I, Section 10 on Compulsory Overtime Work.
Section 10. Compulsory Overtime Work. Rule I, Book III

In any of the following cases, an employer may require any of his employees to work beyond 8 hours a day, provided that the employee required to render overtime work is paid the additional compensation required by these regulations. (a) When the country is at war or when any other national or local emergency has been declared by the National Assembly or the Chief Executive; (b) When overtime work is necessary to prevent loss of life or property, or in case of imminent danger to public safety due to actual or impending emergency in the locality caused by serious accident, fire, floods, typhoons, earthquake, epidemic or other disaster or calamities; (c) When there is urgent work to be performed on machineries, installations, or equipment, in order to avoid serious loss or damage to the employer or some other causes of similar nature; (d) When the work is necessary to prevent loss or damage to perishable goods; (e) When the completion or continuation of work started before the 8th hour is necessary to prevent serious obstruction or prejudice to the business or operations of the employer; (f) When overtime work is necessary to avail of favorable weather or environmental conditions where performance or quality of work is dependent thereon. In cases not falling within any of these enumerated in this Section, no employee may be made to work beyond eight hours a day against his will.

Article 88. Overtime not offset by Undertime. Under time 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) [Hours of Work]. If the employee worked overtime and on the following day he worked under time, his under time work cannot be offset by his overtime work. The reason is fairness. If the employee works for less than 8 hours, he will be paid by the employer only for the corresponding number of hours he had actually worked. Overtime pay if not paid is not only illegal. It is also contrary to public policy. The employer cannot use the overtime of the employee to offset the under time because payment of overtime pay is mandatory. The employer may either deduct the under time from the wage of the employee, or charge it to the employees leave of absence depending on how many times the employee has worked under time. These approaches are not in the Labor Code but may be found in company policy.

Prohibition against Offsetting

The obligation to pay overtime compensation is MANDATORY. An employer cannot evade payment of overtime rendered on one day by offsetting it with undertime incurred on another day. Equally objectionable is the practice of offsetting overtime with undertime and at the same time charging said undertime to the accrued leave of the employee. For under such method, the employee is made to pa twice for his undertime because his leave is reduced to that extent while he was made to pay for it with work beyond the regular working hours. The proper method should be to deduct the undertime from the accrued leave but pay the overtime to which the employee is entitled. (NAWASA vs. NWSA Consolidated Unions, 11 SCRA 766).
Lagatic vs. NLRC 285 SCRA 262 With respect to petitioners claims for overtime pay, rest day pay and holiday premiums, Cityland maintains that Saturday and Sunday call-ins were voluntary activities on the part of sales personnel who wanted to realize more sales and thereby earn more commissions. It is their contention that sales personnel were clamoring for the privilege to

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attend Saturday and Sunday call-ins, as well as to entertain walk-in clients at project sites during weekends, that Cityland had to stagger the schedule of sales employees to give everyone a chance to do so. Put simultaneously, Cityland claims that the same were optional because call-ins and walk-ins were not scheduled every weekend. If there really were a clamor on the part of sales staff ro voluntarily work on weekends, so much so that Cityland needed to schedule them, how come no call-ins or walk-ins were scheduled on some weekends? In addition to the above, the Labor Arbiter and the NLRC sanctioned respondents practice of offsetting rest day or holiday work with equivalent time o regular workdays on the ground that the same is authorized by Department Order 21, Series of 1990. As correctly pointed out by petitioner, said DO was misapplied in this case. The DO involves the shortening of the workweek from 6 days to 5 days but with prolonged hours on those 5 days. Under this scheme, non-payment of overtime premiums was allowed in exchange for longer weekends for employees. In the instant case, petitioners workweek was never compressed. Instead, he claims payment for work over and above his normal 5 days of work in a week. Applying by analogy the principle that overtime cannot be offset by undertime, to allow offsetting woutld prejudice the worker. He would be deprived of the additional pay for the rest day work he has rendered and which is utilized to offset his equivalent time off on regular workdays. To allow Cityland to do so would be to circumvent the law on payment of premiums for the rest day and holiday work.

In the same way or by analogy, it is not valid for an employer to offset a regular work day from that of a regular holiday. Because the employee will be deprived of additional compensation of the premium rate on working on a holiday. Example: ER tells you November 30 is a regular working day, I will give you a day-off on December 3. He cannot do that because of the non-diminution clause.

HOURS WORKED
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 periods of short duration during working hours shall be counted as hours worked.

What is the reason why we should know this?

So that we will know when to start counting the normal hours of work. This is also a prerequisite in determining compensation.
Can an employer validly require the employee to work before and after the 8 hours of work? Is this valid?

Yes. These are what we call the preliminary and postliminary work.
Preliminary and Postliminary activities are deemed performed during working hours, where such activities are:

1) Controlled and required by the employer. 2) Pursued necessarily and primarily for the employers benefit.

The 60-minute meal period required by law is not compensable. This period is primarily
devoted for the personal interests of the employees. Hence, the Principle of NO WORK NO PAY applies. The employee can devote this period for personal needs. In fact he may go out or opt to stay within his work premises. If during such meal period, an employee is permitted or required to work, that will be considered as hours of work.

So what is the criteria to consider rest period as hours work?

See Art. 84, Labor Code.

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Section 3. Hours Worked. Rule I, Book III

The following shall be considered as compensable hours worked: (a) All time during which an employee is required to be on duty or to be at the employers premises or to be at a prescribed workplace; and (b) All time during which an employee is suffered or permitted to work. Section 4. Principles in Determining Hours Worked. Rule I, Book III 1. All hours are hours worked which the employee is required to give his employer, regardless of whether or not such hours are spent in productive labor or involve physical or mental exertion; 2. An employee need not leave the premises of the workplace in order that his rest period shall be counted, it being enough that he stops working, may rest completely and may leave his workplace to go elsewhere, whether within or outside the premises of his workplace; 3. If the work performed was necessary, or it benefited the employer, or the employee cannot abandon his work at the end of his normal working hours because he has no replacement, all time spent for such work shall be considered as hours worked, if the work was with the knowledge of his employer or immediate supervisor; 4. The time during which an employee is inactive by reason of interruptions in his work beyond his control shall be considered working time either if the imminence of the resumption of work requires the employees presence at the place of work or if the interval is too brief to be utilized effectively and gainfully in the employees own interest. So, if an employee cannot rest completely during his rest periods, that will be considered as hours worked for as long as it was for the benefit of the employer.

What about those who work aboard ship or vessels? Will you consider the whole time they are aboard the vessel hours worked?

NO, because of the nature of their work. They are always on board the ship. Their hours of worked will depend upon what they are doing. If it is for the benefit of the employer, it will be considered as hours worked. In the case of Luzon Stevedoring Co. Inc. vs. Luzon Marine Department Union, 101 Phil. 257, where it was held: For purposes of this case, we do not need to set for seamen a criterion different from that applied to laborers on land, for under the provisions of the above quoted section, the only thing to be done is to determine the meaning of the term working place used therein. As we understand this term, a laborer need not leave the premises of the factory, shop or boat in order that his rest period shall not be counted, it being enough that he cease to work, may rest completely and leave or may leave at will the spot where he actually stays while working, to go somewhere else, whether within or outside the premises of the said factory, shop or boat. If these requisites are complied with, the period of such rest shall NOT be counted.

Cagampan vs. NLRC 195 SCRA 533 Petitioners have conveniently adopted the view that the guaranteed or fixed overtime pay of 30% of the basic salary per month embodied in their employment contract should be awarded to them as part of a package benefit. They have theorized that even without sufficient evidence of actual rendition of overtime work, they would automatically be entitled to overtime pay. Their theory is erroneous for being illogical and unrealistic. Their thinking even runs counter to the intention behind the provision. The contract provision means that the fixed overtime pay of 30% would be the basis for computing the overtime pay if and when overtime work would be rendered. Simply stated, the rendition of overtime work and the submission of sufficient proof that said work was actually performed are conditions to be satisfied before a seaman could be entitled to overtime pay which should be computed on the basis of 30% of the basic monthly salary. In short, the contract provision guarantees the right to overtime pay but the entitlement to such benefit must first be established. Realistically speaking, a seaman, by the very nature of his job, stays on board a ship or vessel beyond the regular 8-hour work schedule. For the employer to give him overtime pay for the extra hours when he might be sleeping or attending to his personal chores or even just lulling away his time would be extremely unfair and unreasonable. We already resolved the question of OVERTIME PAY OF A WORKER ABOARD A VESSEL in the case of National Shipyards and Steel Corporation vs. CIR, 3 SCRA 890: We cannot agree with the Court below that the respondent should be paid overtime compensation for every hour in excess of the regular working hours that he was on board his vessel or barge each day, irrespective of whether or not he actually put in work during those hours. Seamen are required to stay on board their vessels by the very nature of their duties, and it is for this reason that, in addition to their regular compensation, they are given free

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living quarters and subsistence allowance when required to be on board. It could not have been the purpose of our law to require their employers to pay them overtime even when they are not actually working; otherwise, every sailor on board a vessel would be entitled to overtime for 16 hours each day, even if he spent all those hours resting or sleeping in his bunk, after his regular tour of duty. The criterion in determining whether or not seamen are entitled to overtime pay is not, whether they were on board and cannot leave the ship beyond the regular 8-working hours a day, but whether they actually rendered service in excess of said number of hours. Stolt-Nielsen vs. NLRC 258 SCRA 643 Private respondent Meynardo J. Hernandez was hired by petitioner Stolt-Nielsen Marine Services (Philippines), Inc. as radio officer on board M/T Stolt Condor for a period of 10 months. He boarded the vessel on January 20, 1990. On April 26, 1990, the ship captain ordered private respondent to carry the baggage of crew member Lito Loveria who was being repatriated. He refused to obey the order out of fear in view of the utterance of said crew member Makakasaksak ako and also because he did not perceive such task as one of his duties as radio officer. As a result of such refusal, private respondent was ordered to disembark and was himself repatriated. He was paid his salaries and wages only up to May 16, 1990. The Court agrees that by virtue of the CBA and POEZ Standard Contract provisions, private respondent is indeed bound to obey the lawful commands of the captain of the ship, but only as long as these pertain to his duties. The order to carry the luggage of a crew member, while being lawful, is not part of the duties of a radio officer. On the award of overtime pay, the NLRC in its assailed resolution states: Anent the overtime pay, complainant alleged that he is entitled thereto as the same is a fixed overtime pay. The respondents failed to controvert said allegations. In short, the complainants claim was for overtime pay was undisputed and for this reason, the grant of this claim must be upheld. Petitioner cites the case of Cagampan and his argument is well taken. A close scrutiny of the computation of the monetary award shows that the award for overtime was for the remaining 6 months and 3 days of private respondents contract at which time he was no longer rendering services as he has already been repatriated. In light of the decision in Cagampan, said award for overtime should be, as it is hereby, disallowed for being unjustified.

WORK INTERRUPTION
Section 4, Rule I, Book III

(d) The time during which an employee is inactive by reason of interruptions in his work beyond his control shall be considered time either if the imminence of the resumption of work requires the employees presence at the place of work or if the interval is too brief to be utilized effectively and gainfully in the employees own interest.

Power interruptions or brownouts

Brownouts of short duration but not exceeding 20 minutes are considered as hours worked, whether used productively by the employees or not. Reason: The imminence of the resumption of work requires the employees presence at the place of work and the time is too short for the employees to utilize it effectively and gainfully for his own interest. Note: this was not discussed but is relatively important. Brownouts exceeding 20 minutes will not be treated as hours worked is any of the following conditions are present: (a) The employees can leave their workplace to go elsewhere within or without the work premises; or (b) The employee can use the time effectively for their own interest. In either case, the employer can extend the working hours beyond the regular schedule to compensate the loss of productive man-hours without being liable for overtime pay. Industrial enterprises with 1 or 2 work shifts may adopt any of the work shifts prescribed for enterprises with 3 work shifts to prevent serious loss or damage to materials, machineries or equipment that may result in case of power interruptions (Policy Instructions #36).

Section 5. WAITING TIME. Rule I, Book III

(a) Waiting time spent by an employee shall be considered as working time if waiting is an integral part of his work or the employee is required or engaged by the employer to wait.

 73 (b) An employee who is required to remain on call in the employers premises or so close thereto that he cannot use the time effectively and gainfully for his own purpose shall be considered as working while on call. An employee who is not required to leave work at his home or with company officials where he may be reached is not working while on call. Examples 1. 2. 3. 4. 5. 6. 7. of employees in which waiting is an integral part of their job Driver Sales lady Barbers Workers of massage parlors Standby crew of airline companies Co-pilots Laboratory technicians

Art. 84 speaks of two definition of hours work in relation to waiting time. So even if drivers are doing nothing, or even if the sales ladies are just sitting doing nothing, for as long as they are required to be on duty or to be at a specified workplace, then the time spent during such period is considered as hours worked.

Pan-American World Airways Employees vs. Pan-American World Airways, 1 SCRA 527, GR L-16275, February 23, 1961

STATEMENT OF THE JURISDICTIONAL RULE ON CLAIM FOR OVERTIME PAY. Where the claimants, at the time of the filing of the petition, were still in the service of the employer, or, having been separated from service, should also ask for reinstatement, the claim must be brought before the Court of Industrial Relations; otherwise, such claim should be brought before the regular courts. (NASSCO, vs. CIR, et al., 107 Phil., 1006; 58 Off. Gaz., [36] 5875; PRISCO vs. CIR, et al., 102 Phil., 515; Board of Liquidation, et al., vs. CIR, 108 Phil., 330; AjaxInternational Corp. vs. Seguritan, 109 Phil., 815, Sampaguita Pictures, Inc., et al. vs. CIR, 109 Phil., 818). WHEN MEAL PERIOD CONSIDERED OVERTIME WORK. Where during the so-called meal period, the laborers are required to stand by for emergency work, or where said meals hour is not one of complete rest, such period is considered overtime. COMPENSATION BY CIR'S EXAMINING DIVISION NOT UNDUE DELEGATION OF JUDICIAL FUNCTION; LACK OF SPECIFIC AMOUNT OF OVERTIME PAY IN DECISION DOES NOT MAKE IT INCOMPLETE. Computation of overtime pay involves, at the most, a mechanical act, and its being computed by the Chief, Examining Division of the CIR, is not undue delegation of its judicial functions; the lack of a specific amount of overtime pay in the decision does not render it incomplete.

Section 6. Lectures, Meetings and Training Programs. Rule I, Book III

Attendance at lectures, meetings, training programs and other similar activities shall NOT be counted as working time if ALL the following conditions are met: (c) Attendance is outside of the employees working hours; (d) Attendance is in fact voluntary; (e) The employee does not perform any productive work during such attendance

There are certain personnel who are exempt from enjoying labor standards benefits. By express provision of the law, this is the coverage of Book III on Condition of Employment, Title I on Working Conditions and Rest Periods Hours of Work. The Chapters under this Title are as follows: Chapter 1 Chapter 2 Hours of Work Weekly Rest Periods

 74 Chapter 3 Holidays, Service Incentive Leave, Service Charges

Article 82. Coverage The provisions of this Article shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by result as determined by the Secretary of Labor in appropriate regulations. As used herein, Managerial Employees refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff. Field Personnel shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.

Labor Standards Benefits covered under Art. 82:

(a) (b) (c) (d) (e)

Night Shift Differential; Overtime pay; Holiday pay; Service Incentive Leave; and Service Charges

Employees not covered by this provision:

1.

Government Employees whether employed by the national government or any of its political subdivisions, including those employed in government-owned and controlled corporations

REASON: They are governed by different set of laws, which are the Civil Service Law, the Administrative Code, and by their respective charters. If a government-owned or

controlled corporation has been incorporated, they are governed by the Corporation Code and are consequently covered by the Labor Code.

2.

Managerial Employees and members of the Managerial Staffs Managerial employees if they meet all of the following conditions:

1. Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof; [formulate policies]

2. They customarily and regularly direct the work of two or more employees therein; [execute management policies]

3. They have the authority to hire and fire employees of lower rank, or their suggestions and recommendations to hiring and firing and as to the promotion or any other change of status of other employees, are given particular weight. [impose disciplinary actions]

REASON: Managerial employees are not usually employed and paid by the hour. Their compensation is determined by their special training, experience or knowledge, which require

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the exercise of discretion and independent judgment; or perform work related to management policies and general business operations along specialized or technical lines.

Officers or members of the managerial staff if they perform the following duties and responsibilities: 1. The primary duty consists of the performance of work directly related to management policies of the employer; 2. Customarily and regularly exercise discretion and independent judgment; 3. They: i. Regularly and directly assist a proprietor or general managerial employee whose primary duty consists of the management of the establishment in which he is employed or a subdivision thereof; ii. Execute, under general supervision, work along specialized or technical lines requiring special training, experience or knowledge; or iii. Execute, under general supervision, special assignments and tasks. 4. They do not devote more than 20% of their hours worked in a workweek to activities, which are not directly and closely related to the performance of the work prescribed in the above-mentioned 1, 2 and 3.

REASON: They may be considered managerial employees as well. Thus, it would not be feasible to provide a fixed hourly rate of pay or maximum hours of work like managerial employees as previously mentioned.

3.

Field Personnels If they:

(a) Regularly perform their duties away from the principal or branch office or place of business of the employer; and

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(b) Whose actual hours of work in the field cannot be determined with reasonable certainty.

REASON: These workers perform their jobs away from the employers place of business, and therefore not subject to the personal supervision of their employer. His employer has no way of knowing the exact number of hours he is working in a day, like medical representatives and field salesmen. Their hours of work cannot be determined with reasonable certainty.

Union of Filipro Employees vs. Vicar 205 SCRA 200 The labor dispute stems from the exclusion of sales personnel from the holiday pay award. Respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the NLRC a petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of its monthly paid employees for holiday pay in the light of the Courts decision in Chartered Bank Employees Association vs. Ople, 138 SCRA 273. Whether or not Nestles sales personnel are entitled to holiday pay. Petitioner insists that respondents sales personnel are not field personnel under Article 82 of the Labor Code. Respondent company controverts this assertion. Under Article 82, field personnel are not entitled to holiday pay, said article defines FIELD PERSONNEL as non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. It is undisputed that these sales personnel start their field-work at 8 am after having reported to the office and come back to the office at 4 pm if they are Makati-based. The petitioner maintains that the period between 8 am to 4 or 4:30 pm comprises the sales personnels working hours which can be determined with reasonable certainty. The court does not agree. The law requires that the actual hours of work in the field be reasonably ascertained. The company has not way of determining whether or not these sales personnel, even if theu report to the office before 8 am prior to field work and come back at 4:30 pm, rally spend the hours in between in actual field work.

Mercidar Fishing Corp. vs. NLRC 297 SCRA 445 Private respondent had been employed as a bodegero or ships quartermaster on February 12, 1988. he complained that he has been constructively dismissed by petitioner when the latter refuse him assignments aboard its boats after he has reported to work on May 28, 1990. Private respondent alleged that he had been sick and thus allowed to go on leave for 1 month but when he reported to work at the end of such period with a health clearance, he was told to come back another time as he could not be reinstated immediately. Thereafter, petitioner refused to give him work. Petitioner on the other hand, alleged that it was private respondent who actually abandoned his work. Petitioner contends that NLRC palpably erred in ruling and sustaining the view that fishing crew members, like Fermin Agao, Jr., cannot be classified as field personnel under Article 82 of the Labor Code. The petition has not merit. Petitioner argues essentially that since the work of private respondent is performed away from its principal place of business, it has not way of verifying his actual hours of work on the vessel. It contends that the private respondent and other fishermen in its employ should be classified as field personnel who have no statutory right to service incentive leave pay. This case cited the case of Union of Filipro Employees. In contrast, in the case at bar, during the entire course of their fishing voyage, fishermen employed by petitioner have no choice but to remain on board its vessel. Although they perform non-agricultural work away from petitioners business offices, the fact remains that throughout the duration of their work, they are under the effective control and supervision of petitioner through the vessels patron or master as the NLRC correctly held.

 77 4. Members of the family who are dependent upon him for support

REASON: The employer has already taken care of the sustenance, clothing, medical attendance or education of the particular members of his family. Note that this category refers to husband and wife, parents and children, other descendants and ascendants, brothers and sisters whether in the full or half blood. It does not include in-laws because they do not pertain to the same family. Also keep in mind that the family must be dependent upon the employer for support.

5. 6.

Household helpers Persons in the personal service of another

Domestic servants and persons in the personal service of another if they perform such services in the employers home which are usually necessary and desirable for the maintenance and enjoyment thereof, or minister to the personal comfort, convenience or safety of the employer as well as the members of the employers household.

REASON: They are already provided with living quarters, food, and extra clothing such that all in all, it would exceed the statutory minimum wage. Also because the nature of the work plus the fact that they are not employed in a business undertaking.

7.

Workers paid by results

Including those who are paid by piece-work, takay, pakiao, or task basis, and other non-time work if their output rates are in accordance with the standards under Section 8 Rule VII Book III of these Regulations, or where such rates have been fixed by the SOLE in accordance with the aforesaid section.

REASON: They are not paid on an hourly basis but in their output. Their pay is dependent upon the work done regardless of the time spent or employed in doing the work. Moreover, they are governed by specific contracts. Their output should be fixed in

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accordance with Section 8 Rule VII Book III of the Omnibus Rules, which provide that they shall receive not less than the applicable statutory wage rates prescribed by law for the normal working hours which shall not exceed 8 hours a day, or a proportion thereof for work less than the normal working hours.

Classification of workers paid by result

1. Piece Rate 2. Job or task base.
Lambo vs. NLRC GR 111042, October 26, 1999 Where SC gave the correct classification of workers paid by results. Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked from 8am to 7pm daily, including Sundays and holidays. As in the case of the other 100 employees of private respondents, petitioners were paid on a piece-work basis, according to the style of suits they made. Regardless of the number of pieces they finished in a day, they were each given a daily pay of at least P64.00. On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave pay, separation pay, 13th month pay, and attorneys fees. After hearing, Labor Arbiter found private respondents guilty of illegal dismissal. On appeal by private respondents, the NLRC reversed the decision of the Labor Arbiter. The NLRC held petitioners guilty of abandonment of work and accordingly dismissed their claims except that for 13th month pay.

The decision of the NLRC is SET ASIDE and another one is rendered ordering private respondents to pay petitioners the total amount of P181,102.40.

TWO CATEGORIES OF EMPLOYEES PAID BY RESULTS. There are 2 categories of employees paid by results: 1. Those whose time and performance are supervised by the employer. (Here, there is an element of control and supervision over the manner as to how the work is to be performed. A piece-rate worker belongs in this category especially if he performs his work in the company premises.); and 2. Those whose time and performance are unsupervised. (Here, the employers control is over the result of the work. Workers on pakyao and takay basis belong to this group.)

Both classes of workers are paid per unit accomplished. Piece-rate payment is generally practiced in garment factories where work is done in the company premises, while payment on pakyao and takay basis is commonly

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observed in the agricultural industry, such as in sugar plantations where the work is performed in bulk or in volumes difficult to quantify. Petitioners belong to the first category, i.e., supervised employees.

THE MERE FACT THAT PETITIONERS WERE PAID IN A PIECE-RATE BASIS DOES NOT NEGATE THEIR STATUS AS REGULAR EMPLOYEES OF PRIVATE RESPONDENTS. In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners worked in the companys premises from 8am to 7pam daily, including Sundays and holidays. The mere fact that petitioners were paid in a piece-rate basis does not negate their status as regular employees of private respondents. The term WAGE is broadly defined in Article 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis. Payment by the price is just a method of compensation and does not define the essence of the relations. Nor does the fact that petitioners are not covered by the SSS affect the employer-employee relationship.

FACTORS THAT SHOW THAT PETITIONERS ALTHOUGH PIECE-RATE WORKERS, WERE REGULAR EMPLOYEES OF PRIVATE RESPONDENTS. (1) Within the contemplation of Article 280 of the Labor Code, their work as tailors was necessary or desirable in the usual business of private respondents, which is engaged in the tailoring business; (2) Petitioners worked for private respondents throughout the year, their employment not being dependent on a specific project or season; and, (3) Petitioners worked for private respondents for more than 1 year.

NOT ALL QUITCLAIMS ARE PER SE INVALID OR AGAINST PUBLIC POLICY; EXCEPTIONS. To be sure, not all quitclaims are per se invalid or against public policy. But those (1) Where there is clear proof that the waiver was wrangled from an unsuspecting or gullible person or (2) Where the terms of settlement are unconscionable on their face are invalid. In these cases, the law will step in to annul the questionable transaction. However, considering that the Labor Arbiter had given the petitioner Lambo a total award of P94,719.20, the amount of P10,000 to cover any and all monetary claims is clearly unconscionable. As we have held in another case, the subordinate position of the individual employee vis--vis management renders him especially vulnerable to its blandishments, importunings, and even intimidations, and results in his improvidently waiving benefits too which he is clearly entitled. Thus, quitclaims, waivers or releases are looked upon with disfavor for being contrary to public policy and are ineffective to bar claims for the full measure of the workers legal rights. An employee who is merely constrained to accept the wages paid to him is not precluded from recovering the difference between the amount he actually received and that amount which he should have received.

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OVERTIME PAY vs. PREMIUM PAY

OVERTIME PAY Additional compensation required by law for work performed in excess of 8 hours in a day. PREMIUM PAY Additional compensation required by law for work performed during nonworking days not exceeding 8 hours such as rest days, holidays.

Premium Pay is an additional compensation given to a covered employee for working on a holiday or rest day within the first 8 hours.

Premium Pay is an additional compensation other than and added to the regular wage or basic salary. It should not be included or considered in the computation of the 13th month pay. With respect to employees paid on a monthly basis, the first 100% (of the 130%) corresponding to the regular remuneration, may or may not be included in the monthly salary. If it is, then the employee is entitled to collect only the premium of 30%. If it is, then the employee has the right to receive the entire 130%. However, Sunday is a regular workday unless it is his established rest day.

Premium pay for work within 8 hours on a

Special or rest day: plus 30% of basic daily rate Rest day falling on special day: plus 50% of basic daily rate Rest day falling on a regular holiday: plus 30% of 200% of basic daily rate. Mathematically, it is 260% of basic daily rate

Overtime Pay
Ordinary days: plus 25% of the basic hourly rate Special days, rest days and holidays: plus 30% of the regular hourly rate on said days.

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HOLIDAY PAY
Article 94. Right to Holiday Pay. (a) Every worker shall be paid his regular daily wage during regular holidays except in retail and service establishments regularly employing less than 10 workers; (b) The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate; (c) As used in this Article, Holiday includes: New Years Day Maundy Thursday Day) Good Friday 9th of April 1st of May 12th of June Last Sunday of August (National Heroes 30th of November (Bonifacio Day) 25th of December (Christmas Day) 30th of December (Rizal Day)

EXECUTIVE ORDER 203 (June 30, 1987 by President Corazon C. Aquino) Providing a List of Regular Holidays and Special Days to be observed throughout the Philippines and for other Purposes Regular Holidays (10) New Years Day Maundy Thursday Good Friday Araw ng Kagitingan (or Bataan and Corregidor Day Labor Day Independence Day National Heroes Day Bonifacio Day Christmas Day Rizal Day Nationwide Special Days (2) All Saints Day Last day of the year November 01 December 31 January 01 Movable date Movable date April 09 May 01 June 12 Last day of August November 30 December 25 December 30

Henceforth, the terms Legal or Regular Holiday and Special Holiday as used in laws, orders, rules and regulations or other issuance shall now be referred to as Regular Holiday and Special Holiday, respectively.

Is the ER required to pay the EE Holiday pay?

Yes, it is mandated by Article 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than 10 workers When we speak of Holiday, how many kinds are there? As per EO 203, there are two kinds of Holidays: Regular and Special Holidays. The employer cannot declare his own holiday. The Local Government Units may however declare its own holiday. There are 10 Regular and 2 Special Holidays. In effect, there are 52 Rest Days in a year. By the term Holiday Pay, what is being referred to? Holiday Pay refers to working on a Regular Holiday. When the employee does not work on a special holiday, he does not receive compensation. In order for him to be compensated, he has to render service on that particular special day. His compensation is equivalent to 30% of his regular wage. The principle of No Work, No Pay applies to Special Days.

 82 Holiday pay is a premium given to an employee during regular holidays. The purpose of holiday pay is to prevent diminution of the monthly income on account of work interruptions. It is primarily aimed to benefit daily-paid workers, whose income is circumscribed by the No Work, No Pay Principle.

Does the law provide what are the Regular Holidays?

Yes, Article 94 (c), Labor Code. This provision has been superceded by Executive Order No. 203 providing for a list of regular holidays and special days to be observed.

Regular Holiday
If unworked, the Labor Code sanctions payment of 100%. If worked, the premium pay is 200%. This is what is referred to as DOUBLE COMPENSATION.

Special Day
If unworked, the Labor Code does not provide for payment. This follows the principle of NO WORK NO PAY as lodged in the famous principle of a FAIR DAYS WAGE FOR A FAIR DAYSS LABOR. Cases: FAIR DAYS WAGE FOR A FAIR DAYSS LABOR.
Caltex Refinery vs. Brillantes 279 SCRA 218 The employer granted wage increase but the employees demanded a wage increase equivalent to that of the increase granted by another employer (Shell) to its employees. They alleged that Caltex is similarly situated with Shell, therefore, CALTEX should grant an increase equal to what is given by Shell to its employees. RULING: The alleged similarity in the situation of Caltex and Shell cannot be considered a valid ground for a demand of wage increase, in the absence of a showing that the 2 companies are also similar in substantial aspects. The wage should be commensurate to the work done. Employees have the right to demand salary increase; but it is also cogent that they should also be able to justify an increase in wages. FAIR DAYS WAGE FOR A FAIR DAYS WORK. The age-old general rule governing relations between labor and capital or management and employee is a fair days wage for a fair days work. If no work is performed by the employee, there can be no wage or pay unless of course the laborer was ready, willing and able to work but was locked out, dismissed or suspended or otherwise illegally prevented from working. SSS vs. SSS Supervisors Union 117 SCRA 749 This petition seeks to review on Certiorari the orders of respondent court of industrial relations on the issue of whether or not petitioner SSS may be held liable for the payment of wages of members of respondent union who admittedly did not work during the strike declared in 1968 by the rank-and-file union. The age-old rule governing the relation between labor and capital or management and employee is that of a fair days wage for a fair days labor if there is no work performed by the employee there can be no wage or pay, unless of course the laborer was able, willing and ready to work, but was illegally locked out, dismissed or suspended. Where the failure of workers to work was not due to the employers fault, burden of economic loss suffered by them should not be shifted to the employer and each party must bear his own loss. In this case, the failure of work on the part of the member of the respondents union was due to circumstances not attributable to themselves, but neither should the burden of economic loss suffered by them be shifted to their employers (SSS) which was equally faultless, considering that the situation was not a direct consequence of the employers lockout or unfair labor practice. Under the circumstances, each party must bear the loss Aklan Electric Cooperative vs. NLRC GR 121439 Jan. 25, 2000

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The sole issue for determination is whether or not public respondent NLRC committed grave abuse of discretion amounting to excess or want of jurisdiction when it reversed the findings of the Labor Arbiter that private respondents-employees refused to work under the lawful orders of the petitioner AKELCO management (which was to report to work to the new temporary office premises in another location); hence they are covered by the "no work, no pay" principle and are thus not entitled to the claim for unpaid wages from June 16, 1992 to March 18, 1993. The age-old rule governing the relation between labor and capital, or management and employee of a "fair days wage for a fair days labor" remains as the basic factor in determining employees wages. If there is no work performed by the employee there can be no wage or pay unless, of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed, or otherwise illegally prevented from working, a situation which we find is not present in the instant case. It would neither be fair nor just to allow private respondents to recover something they have not earned and could not have earned because they did not render services at the Kalibo office during the stated period.

Counterpart principle of Fair Days Wage for Fair Days Labor EQUAL PAY FOR EQUAL WORK. Cases: EQUAL PAY FOR EQUAL WORK.
Prubankers vs. Prudential Bank 302 SCRA 74 "On November 18, 1993, the Regional Tripartite Wages and Productivity Board of Region V issued Wage Order No. RB 05-03 which provided for a Cost of Living Allowance (COLA) to workers in the private sector who ha[d] rendered service for at least three (3) months before its effectivity, and for the same period [t]hereafter, in the following categories: SEVENTEEN PESOS AND FIFTY CENTAVOS (P17.50) in the cities of Naga and Legaspi; FIFTEEN PESOS AND FIFTY CENTAVOS (P15.50) in the municipalities of Tabaco, Daraga, Pili and the city of Iriga; and TEN PESOS (P10.00) for all other areas in the Bicol Region. "Subsequently on November 23, 1993, the Regional Tripartite Wages and Productivity Board 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 employees in the private sector as follows: by Ten Pesos (P10.00) in the cities of Cebu, Mandaue and Lapulapu; Five Pesos (P5.00) in the municipalities of Compostela, Liloan, Consolacion, Cordova, Talisay, Minglanilla, Naga and the cities of Davao, Toledo, Dumaguete, Bais, Canlaon, and Tagbilaran. "The petitioner 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. "On June 7, 1994, respondent Prubankers Association wrote the petitioner 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. Respondent Association then demanded in the Labor Management Committee meetings that the petitioner 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 petitioner's employees nationwide. As the grievance could not be settled in the said meetings, the parties agreed to submit the matter to voluntary arbitration. The Arbitration Committee formed for that purpose was composed of the following: public respondent Froilan M. Bacungan as Chairman, with Attys. Domingo T. Anonuevo and Emerico O. de Guzman as members. The issue presented before the Committee was whether or not the bank's separate and regional implementation of Wage Order No. 5-03 at its Naga Branch and Wage Order No. VII-03 at its Cebu, Mabolo and P. del Rosario branches, created a wage distortion in the bank nationwide. "The Arbitration Committee on June 18, 1996 rendered the questioned decision." Equal Pay for Equal Work Petitioner also avers that the implementation of the Wage Order in only one region violates the equal-pay-for-equalwork principle. This is not correct. 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. Necessarily, the wages in different regions will not be uniform. Thus, under RA 6727, the minimum wage in Region 1 may be different from that in Region 13, because the socioeconomic conditions in the two regions are different.

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International School Alliance of Educators vs. Quisumbing GR 128845 June 1, 2000 Receiving salaries less than their counterparts hired abroad, the local-hires of private respondent School, mostly Filipinos, cry discrimination. We agree. That the local-hires are paid more than their colleagues in other schools is, of course, beside the point. The point is that employees should be given equal pay for work of equal value. That is a principle long honored in this jurisdiction. That is a principle that rests on fundamental notions of justice. That is the principle we uphold today. Private respondent International School, Inc. (the School, for short), pursuant to Presidential Decree 732, is a domestic educational institution established primarily for dependents of foreign diplomatic personnel and other temporary residents. To enable the School to continue carrying out its educational program and improve its standard of instruction, Section 2(c) of the same decree authorizes the School to employ its own teaching and management personnel selected by it either locally or abroad, from Philippine or other nationalities, such personnel being exempt from otherwise applicable laws and regulations attending their employment, except laws that have been or will be enacted for the protection of employees. Accordingly, the School hires both foreign and local teachers as members of its faculty, classifying the same into two: (1) foreign-hires and (2) local-hires. The School grants foreign-hires certain benefits not accorded local-hires. These include housing, transportation, shipping costs, taxes, and home leave travel allowance. Foreignhires are also paid a salary rate twenty-five percent (25%) more than local-hires. The School justifies the difference on two "significant economic disadvantages" foreign-hires have to endure, namely: (a) the "dislocation factor" and (b) limited tenure. The School explains: A foreign-hire would necessarily have to uproot himself from his home country, leave his family and friends, and take the risk of deviating from a promising career path-all for the purpose of pursuing his profession as an educator, but this time in a foreign land. The new foreign hire is faced with economic realities: decent abode for oneself and/or for one's family, effective means of transportation, allowance for the education of one's children, adequate insurance against illness and death, and of course the primary benefit of a basic salary/retirement compensation. Because of a limited tenure, the foreign hire is confronted again with the same economic reality after his term: that he will eventually and inevitably return to his home country where he will have to confront the uncertainty of obtaining suitable employment after a long period in a foreign land. The compensation scheme is simply the School's adaptive measure to remain competitive on an international level in terms of attracting competent professionals in the field of international education. When negotiations for a new collective bargaining agreement were held on June 1995, petitioner International School Alliance of Educators, "a legitimate labor union and the collective bargaining representative of all faculty members of the School, contested the difference in salary rates between foreign and local-hires. This issue, as well as the question of whether foreign-hires should be included in the appropriate bargaining unit, eventually caused a deadlock between the parties. The Acting Secretary of Labor found that these non-Filipino local-hires received the same benefits as the Filipino local-hires: The compensation package given to local-hires has been shown to apply to all, regardless of race. Truth to tell, there are foreigners who have been hired locally and who are paid equally as Filipino local hires. The Acting Secretary upheld the point-of-hire classification for the distinction in salary rates: The principle "equal pay for equal work" does not find application in the present case. The international character of the School requires the hiring of foreign personnel to deal with different nationalities and different cultures, among the student population. We also take cognizance of the existence of a system of salaries and benefits accorded to foreign hired personnel which system is universally recognized. We agree that certain amenities have to be provided to these people in order to entice them to render their services in the Philippines and in the process remain competitive in the international market. Furthermore, we took note of the fact that foreign hires have limited contract of employment unlike the local hires who enjoy security of tenure. To apply parity therefore, in wages and other benefits would also require parity in other terms and conditions of employment which include the employment contract. We cannot agree. That public policy abhors inequality and discrimination is beyond contention. Our Constitution and laws reflect the policy against these evils. The Constitution in the Article on Social Justice and Human Rights exhorts Congress to "give highest priority to the enactment of measures that protect and enhance the right of all people to human dignity, reduce social, economic, and political inequalities." The very broad Article 19 of the Civil Code requires every person, "in the exercise of his rights and in the performance of his duties, [to] act with justice, give everyone his due, and observe honesty and good faith." International law, which springs from general principles of law, likewise proscribes discrimination. General principles of law include principles of equity, i.e., the general principles of fairness and justice, based on the test of what is reasonable.

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In the workplace, where the relations between capital and labor are often skewed in favor of capital, inequality and discrimination by the employer are all the more reprehensible. The Constitution specifically provides that labor is entitled to "humane conditions of work." These conditions are not restricted to the physical workplace - the factory, the office or the field - but include as well the manner by which employers treat their employees. The Constitution also directs the State to promote "equality of employment opportunities for all." Similarly, the Labor Code provides that the State shall "ensure equal work opportunities regardless of sex, race or creed." It would be an affront to both the spirit and letter of these provisions if the State, in spite of its primordial obligation to promote and ensure equal employment opportunities, closes its eyes to unequal and discriminatory terms and conditions of employment. Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article 135, for example, prohibits and penalizes the payment of lesser compensation to a female employee as against a male employee for work of equal value. Article 248 declares it an unfair labor practice for an employer to discriminate in regard to wages in order to encourage or discourage membership in any labor organization. The School contends that petitioner has not adduced evidence that local-hires perform work equal to that of foreign-hires. The Court finds this argument a little cavalier. If an employer accords employees the same position and rank, the presumption is that these employees perform equal work. This presumption is borne by logic and human experience. If the employer pays one employee less than the rest, it is not for that employee to explain why he receives less or why the others receive more. That would be adding insult to injury. The employer has discriminated against that employee; it is for the employer to explain why the employee is treated unfairly. The employer in this case has failed to discharge this burden. There is no evidence here that foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups have similar functions and responsibilities, which they perform under similar working conditions. The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize the distinction in salary rates without violating the principle of equal work for equal pay. "Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or recompense for services performed." Similarly, the Philippine Legal Encyclopedia states that "salary" is the "[c]onsideration paid at regular intervals for the rendering of services." In Songco v. National Labor Relations Commission, we said that: "salary" means a recompense or consideration made to a person for his pains or industry in another man's business. Whether it be derived from "salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries with it the fundamental idea of compensation for services rendered. (Emphasis supplied.) While we recognize the need of the School to attract foreign-hires, salaries should not be used as an enticement to the prejudice of local-hires. The local-hires perform the same services as foreign-hires and they ought to be paid the same salaries as the latter. For the same reason, the "dislocation factor" and the foreign-hires' limited tenure also cannot serve as valid bases for the distinction in salary rates. The dislocation factor and limited tenure affecting foreign-hires are adequately compensated by certain benefits accorded them which are not enjoyed by local-hires, such as housing, transportation, shipping costs, taxes and home leave travel allowances. The Constitution enjoins the State to "protect the rights of workers and promote their welfare," "to afford labor full protection." The State, therefore, has the right and duty to regulate the relations between labor and capital. These relations are not merely contractual but are so impressed with public interest that labor contracts, collective bargaining agreements included, must yield to the common good. Should such contracts contain stipulations that are contrary to public policy, courts will not hesitate to strike down these stipulations. In this case, we find the point-of-hire classification employed by respondent School to justify the distinction in the salary rates of foreign-hires and local hires to be an invalid classification. There is no reasonable distinction between the services rendered by foreignhires and local-hires. The practice of the School of according higher salaries to foreign-hires contravenes public policy and, certainly, does not deserve the sympathy of this Court.

If your scheduled rest day is Sunday and you are not required to work, you are not entitled to
any pay. On the principle of No work no pay. If your scheduled rest day is Sunday and you are required to work, you would be entitled to pay.

Article 93. Compensation for rest day and Sunday or Holiday work. (a) Where an employee is made or permitted to work on his scheduled rest day, he shall be paid an additional compensation of at least 30% of his regular wage. An employee shall be entitled to such additional compensation for work

 86 performed on Sunday only when it is his established rest day.

(b) When the nature of the work of the employee is such that he has no regular
workdays and no regular rest days can be scheduled, he shall be paid an additional compensation of at least 30% of his regular wage for work performed on Sundays and holidays. Work performed on any special holiday shall be paid an additional compensation of at least 30% of the regular wage of the employee. Where such holiday work falls on the employees scheduled rest day, he shall be entitled to an additional compensation of at least 50% of his regular wage. Where the collective bargaining agreement or other applicable employment contract stipulates the payment of a higher premium pay than that prescribed under this Article, the employer shall pay such higher rate.

(c)

(d)

What do you call that pay made during the first 8 hours?
Premium Pay. If on your scheduled rest day, a regular holiday falls, and you did not work on that day, you are entitled to compensation.

You are entitled to what?

Holiday pay because the law says that even if you did not work on a holiday, an employee is entitled to holiday premium pay.
Section 4. Compensation for holiday work. Rule IV, Book III

Any employee who is permitted or suffered to work on any regular holiday, not exceeding 8 hours, shall be paid at least 200% of his regular daily wage. If the holiday work falls on the scheduled rest day of the employee, he shall be entitled to an additional premium pay of at least 30% of his regular holiday rate of 200% based on his regular wage rate. If it is your scheduled restday, and it falls on a regular holiday, and you work during said restday, you are entitled to 100% equivalent to your basic wage for the first 8 hours of work. Since it is a regular holiday, you will be entitled to another 100%. Since you work during your scheduled restday, you will be entitled to a 30% premium pay. All in all it will 100% + 100% + 30%. Mathematically, it will be 260%. Formula: [ 100% basic daily wage + 100%] Holiday Pay x 30% = 260%

for work on rest day

Section 5. Overtime pay for holiday work. Rule IV, Book III For work performed in excess of 8 hours on a regular holiday, an employee shall be paid an additional compensation for the overtime work equivalent to his rate for the first 8 hours on such holiday work plus at least 30% thereof. Where the regular holiday work exceeding 8 hours falls on the scheduled rest day of the employee, he shall be paid an additional compensation for the overtime work equivalent to his regular holiday-rest day for the first 8 hours plus 30% thereof. The regular holiday-rest day rate of an employee shall consist of 200% of his regular daily wage rate plus 30% thereof.

There are 2 regular holidays falling on the same day.

This happened way back in 1993 where April 9 (Araw ng Kagitingan) also fell on Good Friday. If you do not render work, you are entitled to compensation of 200%. If you render work, you are entitled to compensation of 300% for the first 8 hours.

There are 2 regular holidays falling on a rest day.

300% for work rendered during Regular Holiday 30% for Restday 330% Total. Mathematically, this translates to 390%.

 87 Note: Do not think of any other combination, as these are the only possible combination. Section 9. Regular holiday falling on rest days or Sundays. (a) A regular holiday falling on the employees rest day shall be compensated accordingly. (b) Where a regular holiday falls on a Sunday, the following day shall be considered a special holiday for purposes of the Labor Code, unless said day is also a regular holiday. Section 10. Successive regular holidays. Where there are 2 successive regular holidays, like Holy Thursday and Good Friday, an employee may not be paid for both holidays if he absents himself from work on the day immediately preceding the first holiday, unless he works on the first holiday, in which case he is entitled to his holiday pay on the second holiday. Instance when an employee will not be entitled to holiday pay Section 6. Absences. Rule IV, Book III (a) All covered employees shall be entitled to the benefit provided herein when they are on leave of absence with pay. Employees who are on leave of absence without pay immediately preceding a regular holiday may not be paid the required holiday pay if he has not worked on such regular holiday; (b) Employees shall grant the same percentage of the holiday pay as the benefit granted by competent authority in the form of employees compensation or social security payment, whichever is higher, if they are not reporting for work on such benefits; (c) Where the day immediately preceding the holiday is a non-working day in the establishment or the scheduled rest day of the employee, he shall not be deemed to be on leave of absence on that day, in which case, he shall be entitled to the holiday pay if he worked on the day immediately preceding the non-working day or rest day. Employers in retail and service establishments not employing more than 10 employees are exempt from paying holiday pay.
Section 1. Coverage. Rule IV, Book III

(a) (b) (c) (d)

(e)

This rule shall apply to all employees except: Those of the government and any of the political subdivision, including governmentowned and controlled corporation; Those of retail and service establishments regularly employing less than 10 workers; Domestic helpers and persons in the personal service of another; Managerial employees Field personnel and other employees whose time and performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.

NIGHT SHIFT DIFFERENTIAL

Article 86. Night Shift Differential. Every employee shall be paid a night shift differential of not less than 10% of his regular wage for each hour of work performed between 10 oclock in the evening and 6 oclock in the

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morning.

NIGHT SHIFT DIFFERENTIAL - 10% OF basic Daily rate in addition to OT whenever applicable.

Section 1. Coverage. Rule II, Book III This Rule shall apply to all employees, except:
(a) Those employed in the government and any of the political subdivisions including government-owned and controlled corporations; (b) Those of retail and service establishments regularly employing not more than 5 workers; (c) Domestic helpers and persons in the personal service of another; (d) Managerial employees; (e) Field personnel and other employees whose time and performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.
Section 2. Night shift differential. Rule II, Book III
An employee shall be paid night shift differential of NOT LESS THAN 10% of his regular wage for each hour of work performed between 10 oclock in the evening and 6 oclock in the morning.

Section 3. Additional Compensation. Rule II, Book III Where an employee is permitted or suffered to work on the period covered after his work schedule, he shall be entitled to his regular wage plus at least 25% and an additional amount of no less than 10% of such overtime rate for each hour of work performed betweem 10pm to 6 am. Regular wage 10% of + at least 25% of the regular wage + At least

such overtime rate for each hour of work performed between 10pm to 6am
Section 4. Additional Compensation on Scheduled Rest Day or Special Holiday. Rule II, Book III

An employee who is required or permitted to work on the period covered during rest days and/or special holidays not falling on regular holidays, shall be paid a compensation equivalent to his regular wage plus at least 30% and an additional amount of not less than 10% of such premium pay rate for each hour of work performed.

Regular wage

at least 30% of the regular wage

at least 10% of

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such premium pay for each hour of work performed

Section 5. Additional Compensation on Regular Holidays. Rule II, Book III For work on the period covered during regular holidays, an employee shall be entitled to his regular wage during these days plus an additional compensation of no less than 10% of such premium rate for each hour of work performed.

Regular wage

at least 10% of such premium rate for each hour of work performed

Night work generally has many inconveniences on the part of the employee, and it is but just that he should be properly compensated for working under such inconveniences. Night work deprives the laborer the complete and uninterrupted sleep that he deserves and moments of leisure and relaxation for spiritual and cultural expansion. Also, there is danger involved, as when the employee can only go home in the wee hours of the morning or late at night, as the case may be.

In arriving at the night shift differential pay, one must know how to compute the hourly rate. It may happen that the worker need not complete the 8-hour graveyard shift. So if for instance his shift runs from 10pm to 2am, then only 4 hours should be entitled to a night shift differential pay.

Article 130. NIGHT WORK PROHIBITION No woman, regardless of age, shall be employed or permitted or suffered to work, with or without compensation: 1) In any industrial undertaking or branch thereof between 10 at night and 6 in the morning of the following day; or 2) In any commercial or non-industrial undertaking or branch thereof, other than agricultural, between midnight and 6 in the morning of the following day; or 3) In any agricultural undertaking at nighttime unless she is given a period of rest of not less than 9 consecutive hours.

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Article 131. EXCEPTIONS The prohibitions prescribed by the preceding article shall not apply in any of the following cases: 1. 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 case of force majeure or imminent danger to public safety; 2. In case of urgent work to be performed on machineries, equipment or installations, to avoid serious loss which the employer would otherwise suffer; 3. Where the work is necessary to prevent serious loss of perishable goods; 4. 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; 5. 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, or [where the employment of women is the established practice in the enterprises concerned on the date these rules become effective]; and 6. Where the women employees are immediate members of the family operating the establishment or undertaking; 7. Other analogous cases as determined by the Secretary of Labor.

Article 138. CLASSIFICATION OF CERTAIN WOMEN WORKERS

Any woman who is permitted or suffered to work with or without compensation in any night club, cocktail lounge, massage clinic, bar, or similar establishment under effective control and supervision of the employer for a substantial period of time as determined by the Secretary of Labor and Employment, shall be considered an employee in such establishments for purposes of labor and social legislation

SERVICE INCENTIVE LEAVE

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 of five days with pay. (b) This provision shall not apply to those who are already enjoying the benefit herein provided, those 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.
Section 1. Coverage. Rule V, Book III

This rule shall apply to all employees except: (a) Those of the government and any of its political subdivisions, including governmentowned or controlled corporations;

 91 (b) Domestic helpers and persons in the personal service of another; (c) Managerial employees; (d) Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on Task or contract basis, Purely commission basis, or Those who are paid in a fixed amount for performing work irrespective of the time consumed in the performance thereof; (e) Those who are already enjoying the benefit herein provided; (f) Those enjoying vacation leave with pay of at least 5 days; and (g) Those employed in establishments regularly employing less than 10 employees.
Section 2. Right to Service Incentive Leave. Rule V, Book III

Every employee who has rendered at least 1 year of service shall be entitled to a yearly service incentive leave of 5 days with pay.
Section 3. Definition of certain terms. Rule V, Book III

AT LEAST 1 YEAR OF SERVICE service within 12 months, whether continuous or broken reckoned from the date the employee started working, including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contract is less than 12 months, in which case said period shall be considered as 1 year.

This is similar to Vacation Leave with pay in a sense that during those days an employee
is not required to work but is still paid during such period of absence. The Labor Code does not require the employer to provide Vacation leave with pay. The Labor Code does not limit an employer from giving a Vacation leave with pay. So, it possible that an employer may grant vacation leave with pay to its Employees.

When they so provide, are they still obliged to give the Service Incentive Leave?
No more, provided that the Vacation Leave with pay given to the employees is equivalent to the Service Incentive Leave required by law. Regarding sick leave with pay, the Labor Code does not require the employer to give such to its employees. But the employer may give it voluntarily.

When can the Service Incentive Leave be availed of by the employee? What particular month of the year?

Service Incentive Leave can be availed of at anytime in a given year. Availment thereof is lodged with the employees choice subject to the approval by the employer, so as not to interrupt business operation.

Differentiate Service Incentive Leave from Vacation Leave

Service Incentive Leave Provided under the law (Article 95, LC). Matter of right. Convertible to cash if not used.

Vacation Leave Is not provided under the law. Not a matter of right. On the other hand, it is upon the employer to decide whether or not to convert unused vacation leave of his employees to cash. Once granted, the employer has absolute right to regulate it with respect

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to forfeiture or convertibility to cash. Cannot be waived. As a requirement, at least 1 year of service is needed to be entitled to service incentive leave. It can be waived. On the other hand, the requirements to be entitled to vacation leave may differ, depending upon the policy or practice of the company or the employer. Usually given to employees who have become regular or permanently employed. Purpose: For the benefit and welfare of the employee (working is always stressful, hence the provision relieves the worker from his job for a maximum of 5 days upon the condition that he has worked for at least 1 year). A way of showing, on the part of the employer, to his workers his appreciation for their loyalty to the company (continued service). To afford to a laborer a chance to get a much needed rest to replenish his worn out energies and acquire a new vitality to enable him to efficiently perform his duties and not merely to give him additional salary or bounty.

Purposes: (a)

(b)

Assuming that Service Incentive Leave is not availed of by the EE, will that be forfeited?

No because the Labor Code provides that it is commutable to its cash equivalent. When not availed of during a given year, the Labor Code says that it shall be given at the end of the year. So if not availed of, the SIL can be commuted to cash. This can be demandable by an employee assuming that the employer does not provide any vacation leave with pay of 5 days.
Section 5. Treatment of Benefit. Rule V, Book III

The service incentive leave shall be commutable to its money equivalent if not used or exhausted at the end of the year.
Cases: Service Incentive Leave Fernandez vs. NLRC 285 SCRA 175 Supreme Court reiterated that the employees may avail service incentive leave after rendering 1 year of service. Supreme Court emphasized that the Labor Code does not prohibit the commutation of service incentive leave to cash, unlike a vacation leave with pay. Since this vacation leave is not statutorily given, this cannot be commutable to cash. When not availed of by the employee at any given year, this (vacation leave) may be forfeited by the employer unless the same employer provides that the same may be commutable. If the employer does not grant service incentive leave, he violates the law. If not availed by the employee, the service incentive leave may be converted to cash. If unpaid or outstanding, it accumulates and becomes a money claim. Sobrepena vs. CA 280 SCRA 476 Upon retirement of the petitioner, he asked for the commutation of his unused vacation leave credits. Under the company policy only employees who have not used their vacation leave because they were not allowed by the company to go on vacation due to work requirement, may commute their unused vacation leave. The petitioner has not shown that he was not allowed to enjoy his vacation leave. Issue is whether Vacation Leave is commutable to cash or not. Supreme Court held that commutation of Vacation Leave with pay is a prerogative of the ER and the ER is given the leeway to impose the conditions thereof because this is not a standard required imposed by law. RULING: In the grant of vacation leave privileges to employees, the employer is given the lee-way to impose conditions on the entitlement to and commutation of the same, as the grant of vacation leave is not a standard of law, but a prerogative of management. Is the petitioner in this case upon retirement as president of the respondent Pacific Memorial Plans, Inc. entitled to cash commutations of unused vacation leave benefits? In the grant of vacation leaves privileges to employees, the employer is given the leeway to impose conditions on the entitlement to and commutation of the same, as the grant of vacation leave is not a standard of law, but a prerogative of management. The purpose of vacation leave is to afford a laborer a chance to get a much needed rest to replenish his worn out energies and acquire new vitality to enable him to efficiently perform his duties, and not merely to give him additional salary or bounty. This privilege must be demanded in its opportune time and if he allows the years go by in silence, he waives it. It becomes a mere concession or act of grace of the employer. [The company policy in this case was upheld by the Court. The policy provided for only one instance wherein an employee may be allowed to have his unused vacation leave commuted into cash and that is when that employee is not allowed by the company to enjoy his vacation leave, thus giving

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the employee the option either to encash the unused leave or to carry it over to the next year.]

SERVICE CHARGES
Article 96. Service charges. All service charges collected by hotels, restaurants and similar establishments shall be distributed at the rate of 85% for all covered employees and 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.

Imposed by what kind of establishment?

(a) Hotels, (b) Restaurants and (c) Similar establishments Service Charges are not similar to the Service Incentive Leave. While both are special labor standards benefits, service charges are special because the grant of service charges applies to purely service establishments.
Section 1. Coverage. Rule VI, Book III

This rule shall apply only to establishments collecting service charges such as
(a) (b) (c) (d) (e) (f) (g) (h) (i) Hotels, Restaurants, Lodging houses, Night clubs, Cocktail lounge, Massage clinics, Bars Casinos and gambling houses, and Similar establishments, including those entities operating primarily as private subsidiaries of the government.

Section 2. Employees Covered. Rule VI, Book III This rule shall apply to all employees of covered employers regardless of their positions, designations or employment status, and irrespective of the method by which their wages are paid, except to managerial employees. As used herein, a MANAGERIAL EMPLOYEE shall mean one who is vested with the powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign, discipline employees or to effectively recommend such managerial actions. All employees not falling within this definition shall be considered as rank-andfile employees.

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Section 3. Distribution of Service Charges. Rule VI, Book III All service charges collected by covered employees shall be distributed at the rate of 85% for the employees and 15% for the management. The 85% shall be distributed equally among the covered employees. The 15% shall be for disposition by management to answer for losses and breakages and distribution to managerial employees at the discretion of the management in the latter case.

Section 4. Frequency of Distribution. Rule VI, Book III The shares referred to herein shall be distributed and paid to the employees not less than once every 2 weeks or twice a month at intervals not exceeding 16 days.

Section 5. Permanency of Service Charges. Rule VI, Book III In case the service charge is abolished. The share of covered employees shall be considered integrated in their wages. The basis of the amount to be integrated shall be the average monthly share of each employee for the past 12 months immediately preceding the abolition or withdrawals of such charges.

Section 6. Relation to Agreements. Rule VI, Book III Nothing in this Rule shall prevent the employer and his employees from entering into any agreement with terms more favorable to the employees than those provided herein, or be used to diminish any benefit granted to the employees under existing laws, agreement, and voluntary employer practice.

Section 7. Rule VI, Book III This rule shall be without prejudice to existing and future collective bargaining agreements. Nothing in this rule shall be construed to justify the reduction or diminution of any benefit being enjoyed by the employee at the time of effectivity of this Rule.

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The implementing rules provide that in case the service charge is abolished, the share of the
covered employees shall be considered integrated in their wages. The basis of the amount to be integrated shall be the average monthly share of each employee for the past twelve (12 months) immediately preceding the abolition or withdrawal of such charges.
Salazar vs. NLRC 256 SCRA 273 Labor standards benefits are not required to those as mentioned in Article 82. If given to those who are not entitled thereto, it may be taken from them especially if it was not consistent, deliberate, in disregard what the employer thought what the employee was entitled to. Petitioner was a construction project engineer. His services were preterminated. Is he entitled to overtime pay for work which he has rendered beyond 8 hours for the period he worked for the employer? No, he is not entitled to overtime pay. Petitioner was a managerial employee and therefore exempt from the payment of overtime pay, premium pay for holidays and rest days and service incentive leave pay under the law. In his original complaint, petitioner stated that the nature of his work is supervisory engineering. Although petitioner cannot strictly be classified as a managerial employee under Article 82 of the Labor Code, nonetheless he is still not entitled to payment of the aforestated benefits because he falls squarely under another exempt category officers or members of the managerial staff. Even if petitioner had already been receiving overtime pay, that does not automatically denote that he is entitled thereto. It is well and good that he is given overtime pay for overtime services, but that does not translate into a right on his part to demand payment. National Sugar Refineries Corporation vs. NLRC 220 SCRA 452 Petitioner owns a corporation fully owned by the government which operates 3 sugar refineries in the country. One day, petitioner implemented a JEP or Job Evaluation Program affecting all employees from rank-and-file to department heads. All positions were re-evaluated and all employees including the members of the respondent union were granted salary adjustments and increases in benefits commensurate to their actual duties and functions. Before the JEP, the members of the respondent union were treated in the same manner as rank-andfile employees and entitled to overtime pay, rest day, and holiday pay. But with the implementation of the JEP, the members of the respondent union were considered managerial staff for purposes of compensation and benefits, they enjoyed a 50% increase in their basic pay, an increased COLA and an allowance for holiday or rest day work. Two years after JEP implementation, the members of the union filed a case against petitioner for payment of overtime, rest say and holiday pay invoking Article 100 on Non-diminution of Benefits. Are they correct? NO. The Supreme Court found creditable merit for the petitioner. The members of the respondent union are supervisory employees as defined in Article 212(m) of the Labor Code. But for purposes of determining whether they are entitled to overtime pay, rest day pay and holiday pay, said employees should be considered as officers and members of the managerial staff as defined under Article 82, Book III of the Labor Code and amplified in Section 2 Rule I Book III of the Rules Implementing the Labor Code. Perforce, they are not entitled to the mentioned benefits. The distinction made by the NLRC on the basis of whether or not the union members are managerial employees, to determine the latters entitlement to the questioned benefits, is misplaced and inappropriate. It is admitted that that these union members are supervisory employees and this is one instance where nomenclatures or titles of their jobs conform with the nature of their functions. Hence, to distinguish them from a managerial employee as defined in Article 82 or 212(m) of the Labor Code, is puerile and inefficacious. The controversy actually involved here seeks a determination of whether or not these supervisory employees ought to be considered as officers and members of the managerial staff. The distinction therefore should have been made along that line and its corresponding conceptual criteria. The payment of the benefits to the employees did not ripen into a contractual obligation. Prior to the JEP, they could not be categorically classified as officers and members of the managerial staff considering that they were treated merely on the same level as rank-and-file. Consequently, the payment thereof could not be constitutive of voluntary employer practice, which cannot now be unilaterally withdrawn by the petitioner. To be considered as such, it should have been practiced over a long period of time, and must be shown to have been consistent and deliberate. The test requires a showing that the employer agreed to continue giving the benefits knowing fully well that said employees are not covered by the law requiring payment thereof. In the case at bar, respondent union failed to establish that petitioner has been motivated or is wont to give these benefits out of pure generosity. Quebec, Sr. vs. NLRC 301 SCRA 627

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Petitioner owns a transportation company. Private respondent [Antonio Quebec], brother of the petitioner was hired by the company as inspector and liaison officer. He was thereafter dismissed. Another private respondent [Pamfilo Pombo] was likewise hired by the company as driver-mechanic and co-manager of Antonio Quebec. He was likewise dismissed. Are they entitled to 13th month pay, overtime pay and service incentive leave? No they are not entitled to any of the above-mentioned benefits. Inasmuch as they have admitted in their affidavits that they exercised managerial or supervisory powers in their jobs, they cannot avail of those benefits. This case is a reiteration of SALAZAR VS NLRC that although the employees in this case were not strictly be classified as managerial employees under Article 82 of the Labor Code and Section 2(b) Rule I Book III of the Omnibus Rules, they are still not entitled because they fall squarely under another exempt category officers and members of the managerial staff as defined under Section 2(c) Rule I Book III of the Rules.

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DIFFERENT METHODS OF FIXING COMPENSATION

Significance

These methods of fixing employees compensation are significant because many labor standard provisions provide for exceptions or reduces the rate of benefits for employees who are being paid according to a particular method such as those paid on straight commission, or by the job or by the results. The foregoing discussion is premised on the fact that an employer-employee relationship exists and that the only difference lies in the method by which the employees compensation is fixed.

1. Compensation based on Time Spent a. monthly paid b. daily paid 2. Payment on a task or job basis 3. Payment based on piece-rate basis 4. Commission basis 5. Boundary System 1. Compensation based on Time Spent a. monthly paid - are those employees who are paid all the days of the year

Under the Workers Statutory Handbook, monthly-paid employees refer to those who are paid every day of the month, including unworked rest days, special days and regular holidays. Their salary is for 30 days.

Applicable daily rate x 365 ---------------------------------------12

Equivalent monthly rate

There are 365 days in the year, and you are paid every day of the year, you are a monthly paid employee. Short of that, you are a daily paid employee b. daily paid - are those that are paid only for days actually worked

According to the Workers Statutory Handbook, daily paid employees refer to those who are paid on the days they actually worked, except unworked regular holidays when they are paid their basic wage, is they are present or on leave with pay on the working day before the regular holiday. Daily-paid employees (DPES) are paid according to the number of hours worked each day. They may be paid a monthly sum, yet they are daily-paid, not monthly-paid employees. Examples of Daily Paid Employees are: salesladies, bank tellers, service crew of fastfood chains. The advantages of paying employees daily are: 1. If the employee does not work on a particular day, like on his rest day or on special days, the employer does not have to pay him. The Principle of No Work No Pay so dictates. 2. If there is a decrease in the demand, the employer may require his employees not to report for work on certain days, or where there has been

 98 a work slowdown. Thus, one does not have to pay them, on the same working principle of No Work, No Pay. 2. Payment on a task or job basis

An employee is considered paid according to job or task basis when a flat or fixed sum is paid for each particular job or task completed, without regard to the number of hours actually spent in the performance or completion of the work.

Example: The paving or asphalting of roads per kilometer In mass housing projects, per house or per unit constructed or completed Digging of ditches per cubic meter Note that the payment of compensation according to job or task basis should not be confused with independent contractorship. The former is merely a method of fixing compensation and does not assure the existence of an employment relationship. The fact that an employee is paid in such manner merely describes the method by which his compensation is paid, and does not describe the existence of an employer-employee relationship.
At what instances can you pay an employee on a job or task basis?

One cannot just pay his employees according to this method because the workers would then be considered workers by result, exempting them from certain labor standards benefits. Whereas, if he would be paid daily (time spent), he would be entitled to such benefits.

Requisites:

1. The work must be susceptible of being segregated into standardized and distinct units, each known as a task or job; o Example, in the paving of roads by kilometer, you spend quite an effort in making a kilometer of paved roads. The succeeding units by kilometer, can be said as tasks or jobs.
2. The nature of the job or task is such that the expenditure of time, materials and efforts for each is substantially the same as for any other; o Here, there are the same number of workers and materials per unit of work and the employee is paid depending upon the nature of the work done.
Cases: Payment By Result Pulp and Paper vs. NLRC 279 SCRA 408 In the absence of wage rates based on time and motion studies determined by the labor secretary or submitted by the employer to the labor secretary for his approval, wage rates of piece-rate workers must be based on the applicable daily minimum wage determined by the RTWPB. To ensure the payment of fair and reasonable wage rates, Article 101 of the Labor Code provides that the Secretary of Labor shall regulate the payment of wages by results, including pakyao, piecework and other non-time work. The same statutory provision also states that the wage rates should be based, preferably o On time and motion studies, or o Those arrived at in consultation with representatives of workers and employees organizations. In the absence of such prescribed wage rates for piece-rate workers, the ordinary minimum wages rates prescribed by the RTWPB should apply. This is in compliance with Section 8 of the Rules Implementing Wage Order NCR-02 and NCR-02-A the prevailing wage order at the time of dismissal of private respondent.

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Labor Congress of The Philippines vs. NLRC 290 SCRA 509 As to holiday pay, premium pay, 13th month pay and service incentive leave which the Labor Arbiter failed to rule on but which the petitioners prayed for in their complaint, we hold that petitioners are so entitled to these benefits. 3 Factors lead us to conclude that petitioners, although piece-rate workers, were regular employees of private respondents: 1. As to the nature of petitioners tasks, their job of repacking snack food was necessary or desirable in the usual business of private respondents, who were engaged in the manufacture and selling of such food products; 2. Petitioners worked for private respondents throughout the year, their employment not having been dependent on a specific project or season; and 3. The length of time that petitioners worked for private respondents. Thus, while the petitioners mode of compensation was on a per piece basis, the status and nature of their employment was that of regular employees. As to overtime pay, the rules, however, are different. According to Section 2(e), Rule I, Book III, workers who are paid by results including those who are paid on piecework, takay, pakiao, or task basis, if their output rates are in accordance with the standards prescribed under Section 8, Rule VII, Book III, or where such rates have been fixed by the Secretary of Labor in accordance with the aforementioned section, are not entitled to receive overtime pay. Here, private respondents did not allege adherence to the standards set forth in Section 8 nor with the rates prescribed by the SOLE. As such, petitioners are beyond the ambit of exempted persons and are therefore entitled to overtime pay. San Miguel Jeepney Services vs. NLRC 265 SCRA 35 Public respondent had found that the private respondents drivers, dispatchers and mechanic to be regular employees, and, petitioners yielded to said ruling, terming it tinged with reason and authority. But even if they had not conceded thus, it is obvious that public respondent is correct. The rationale for this ruling is simply that the complainants/private respondents were unarguably performing work necessary and desirable in the business of SMJS. Without the services rendered by private respondents, petitioners could not have conducted their business of providing transportation services within the naval base. This plus the fact that private respondents had each rendered from 2 to 8 years of service cause them to come squarely within the ambit of Article 280 of the Labor Code; beyond dispute, they were not only employees, but regular employees, as correctly held by public respondent. The mere fact that they were paid on commission basis does not affect or change their status as regular employees. The TEST for determining whether an employee is regular or casual has nothing to do with the manner of computing or paying an employees wages or compensation. Rather, the primary standard, x x x, of determining a regular (as against casual) employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The TEST is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least 1 year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists. On the other hand, we should hasten to add that while in this particular case, these commission-basis employees involved were regular employees (by operation of law, plus of course, the fact that their status as employees had never been challenged at any stage of the present case), it does NOT follow that every employee paid (whether wholly or partly) on commission can be considered as regular employee, or an employee at all, for that matter. While this caveat may seem rather elementary, it is still needful to stress that there are many lines of business legally and legitimately engaging the services of workers, who are paid on commission basis to perform activities desirable and necessary for such businesses, without creating any kind of employer-employee relationship at any time. Villuga vs. NLRC 225 SCRA 537 The respondent Commissioner is in error. The mere fact that petitioners were paid on a piece-rate basis is no argument that herein petitioners were not employees. The term wage has been broadly defined in Article 97 as remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis x x x. The facts of this case indicate that payment by the piece is just a method of compensation and does not define the essence of the relations. That petitioners were

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allowed to perform their work at home does not likewise imply absence of control and supervision. The control test calls merely for the existence of a right to control the manner of doing the work, not the actual exercise of the right. Tailors and similar workers hired in the tailoring department although paid weekly wages or piece-work basis are employees not independent contractors.

3. Payment based on piece-rate basis A worker is said to be paid his compensation according to piece-rate basis when he is paid a standard amount for every piece or unit of work produced that is more or less regularly replicated without regard to the time spent in producing the same.

An employer can pay his employees according to piece-rate basis only in the following circumstances:

1. The finished products are things, articles or commodities that are physically distinct or fungible such that one unit is much like any other in value and physical qualities;

2. The labor contributed by each employee or worker to a particular process or phase of production is determinable and separable from that contributed by the others;

3. The value of the labor input in any particular stage is standard. The worth is the same regardless of which particular employee or worker does it.

Distinguished from job or task basis, in piecework, each unit or piece is completed or performed by one worker alone. In job or task basis, two or more workers cooperate and work together to perform the job or task.

Distinguished from time spent, the earnings in both are fairly certain, because they are paid upon completion of the period in time spent, and upon completion of the task or unit in case of payment by result. In time spent, the effort, regardless of the outcome or result, must be paid or compensated. In piecework or payment by result, acceptable and completed outputs are required as a basis of payment. Hence, the payment of wages is geared towards not merely to the effort, but likewise to the results of such effort. The workers in payment by result are paid according to the units produced or the resultant output, regardless of the time spent.

In the case of Pulp and Paper, Inc. vs. NLRC, the Supreme Court said that in the absence of wage rates based on time-and-motion studies determined by the SOLE or submitted by the employer to the SOLE for his approval, the wage rates for piece-rate workers must be based on the applicable daily minimum wage rate determined by the Regional Tripartite Wages and Productivity Board. Furthermore, the Labor Code provides:

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Article 101. Payment by Results The Secretary of Labor shall regulate the payment of wages by results, including pakiao, piecework and other non-time work, in order to ensure the payment of fair and reasonable wage rates, preferable through time-and-motion studies, a consultation with representatives from workers and employers organizations.

Also, the Rules clearly state: [Section 8, Rule VII, Book III]

Section 8. Payment by Results (a) On petition of any interested party, or upon its initiative, the Department of Labor and Employment shall use all available devices, including the use of time-and-motion studies and consultations with representatives of employers and workers organizations, to determine whether the employees in any industry or enterprise are being compensated in accordance with the minimum wage requirements of this Rule. (b) The basis for the establishment of rates for piece, output or contract work shall be performance of an ordinary worker of minimum skill or ability. (c) An ordinary worker of minimum skill or ability is the average worker of the lowest producing group representing 50% of the total number of employees engaged in similar employment in a particular establishment, excluding learners, apprentices and handicapped workers employed therein. (d) Where the output rates established by the employer does not conform with the standards prescribed herein, or with the rates prescribed by the DOLE in an appropriate order, the employees shall be entitled to receive under such prescribed standards or rates and that actually paid them by employer.
4. Commission basis

Workers who are paid on commission basis are those who are paid a percentage of the money received in a sale or other transaction paid to the agent responsible for the business.

If you are a worker paid on a commission basis, there may or may not be an employer-employee relationship. The Four-Fold Test must be used to determine if there really is such relationship. Remember that the methods of fixing compensation do not automatically imply or guarantee that there exists an employer-employee relationship between the laborer and the person who he works for. The Test is the determinant.

Common examples would be insurance agents or sales agents who are paid a certain percentage of their gross sales. There are also those who are paid purely on a commission basis. These workers are not entitled to 13th month pay as they are expressly exempt therefrom, like barbers and taxicab drivers.

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There are no hard and fast rules in determining whether or not an employee is paid on a commission basis. Moreover, the regularity or irregularity of an employment does not affect the method of fixing his compensation. There are different criteria in determining whether or not they are regular workers.

Commissions are intended to spur effort and efficiency, since compensation is payable only on the resultant proceeds.

COMMISSION is the recompense compensation or reward of an agent, salesman, executor, trustee, receiver, factor, broker or bailee when the same is calculated as a percentage on the amount of his transactions or on the profit to the principal.

The mere fact that the employees were paid on commission basis does not mean affect or change their status are regular employees. The test for determining whether an employee is regular or casual has nothing to do with the manner of computing or paying an employees wages or compensation but the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. This was what the Supreme Court said in the case of San Miguel Jeepney Service vs. NLRC. Employees in this case, 23 of them, worked for SMJS who had a contract with the US Naval Base Facility. They were to provide transportation services to the personnel of the facility. The contract expired and the employer refused to renew it. Employees said that they are entitled to security of tenure. The LA said they werent because of the fact that they are paid on purely commission basis. The Supreme Court ruled in favor of the employees and said that they are entitled to security of tenure and their services may be terminated only for causes provided by law. Moreover, being regular employees, they are likewise entitled to the protection of minimum wage statutes.

5. Boundary System The personnel of public utility vehicles pay a fixed charge per day or a fraction thereof to the employer and then take, as their earnings, the excess of the gross proceeds for the day over the boundary fee and the expenditures for running the vehicle.

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(PD 851: Requiring All Employers To Pay Their Employees 13th Month Pay)

THIRTEENTH MONTH PAY LAW

Whereas: 1. It is necessary to further protect the level of real wages from the ravage of world-wide inflation; 2. There has been no increase in the legal minimum wage rates since 1970; 3. The Christmas season is an opportune time for society to show its concern for the plight of the working masses so they may properly celebrate Christmas and New Year.
Before Memorandum Order 28 by President Corazon Aquino:

Section 1. All employers are hereby required to pay all their employees receiving a basic salary of not more than P1,000 a month, regardless of the nature of the employment, a 13th month pay not later than December 24 of every year.

After Memorandum Order 28:

Section 1. All employers are hereby required to pay all their rank-and-file employees a 13th month pay not later than December 24 of every year.

The salary ceiling of P1,000 has already been removed by Memorandum Order 28.

All rank-and-file employees are now entitled to a 13th month pay regardless of the amount of the basic salary they receive in a month, if their employers are not otherwise exempted from the application of PD 851. Such employees are entitled to the benefits regardless of their designation or employment status, and irrespective of the method by which they are paid, provided that they have worked for at least one month during a calendar year.
13TH MONTH PAY shall mean one-twelfth (1/12) of the basic salary of an employee within a calendar year. BASIC SALARY shall include ALL remunerations and earnings paid by an employer to an employee for services rendered, but may NOT INCLUDE: Cost of living allowances granted pursuant to PD 525 or LOI 174 Profit sharing payments and All allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary of the employee at the time of the promulgation of the decree [on December 16, 1975].

13th month pay are paid to rank and file employees. Rank-and-file employees The Labor Code distinguishes a rank and file employee from a managerial employee. It provides that a managerial employee is one who is vested with the powers and prerogatives to lay

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down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or to effectively recommend such managerial actions. All employees not falling within this definition are considered rank-and-file employees.

Amount and Payment of the 13th month pay The minimum 13th month pay required by law shall not be less than 1/12 of the total basic salary earned by an employee within a calendar year. The required 13th month pay shall be paid not later than December 24 of each year. An employer however may give to his employees of the 13 th month pay before the opening of the regular school year and the other not later than December 24 of every year. The frequency of payment of this monetary benefit may be the subject of agreement between the employer and the recognized collective bargaining agent of the employees.

Employers covered PD 851 shall apply to all employers, except to: 1. The government and any of its political subdivisions, including government-owned and controlled corporations, except those corporations operating essentially as private subsidiaries of the Government; 2. Employers already paying their employees a 13th month pay or more in a calendar year or its equivalent [at the time of issuance]; Its equivalent shall include Christmas bonus, mid-year bonus, cash bonuses, and other payments 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 other allowances regularly enjoyed by the employee, as well as nonmonetary benefits. Where an employer pays less than the required 1/12 of the employees basic salary, the employer shall pay the difference. 3. Employers of household helpers and persons in the personal service of another in relation to such workers; 4. Employers of those who are paid on purely commission basis, boundary or task basis, and those who are paid in a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on a piece rate basis in which case, the employer shall grant 13th month pay to such workers. Workers on a piece-rate basis are those who are paid a standard amount of money for every piece or unit of work that is more or less regularly replicated, without regard to the time spent in producing the same. Therefore, workers paid by result are not entitled to 13th month pay. Note that when we speak of piece rate basis, it is simply a method with which an employees wages are paid. What is determinative is the existence of an

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employer-employee relationship through the four-fold test, especially the control test. There may be instances when these employees paid on a piece rate basis may not be employees of the employer. But if their work is supervised not only with respect to the method but also as to the result, they shall be classified as employees of the employer.

In the case of Villuga vs. NLRC the Supreme Court explained, payment by the piece is just a method of compensation and does not define the essence of an employment relationship. That petitioners were allowed to work at home does not likewise imply absence or control and/or supervision. The control test calls merely for the existence of the employers right to control the manner of doing the work, not the actual exercise of the right. They are entitled to 13th month pay.

Note that before the amendment, Distressed Employers were excluded from paying their employees 13th month pay.

Quebec, Sr. vs. NLRC, 301SCRA 627 Reiterates that 13th month shall be paid to all rank and file employees For purposes of 13th month pay, there are only 2 kinds of employees: 1. Managerial 2. Rank and file

If an employee has rendered at least one month of service during the calendar year, you are
entitled to 13th month pay Note: Those who are paid on a piece rate basis are an exception to an exception Therefore, not all employers of those who are PAID BY RESULTS are exempted from 13thmonth pay. Covered under the law are those that are paid on a piece-rate basis
Kinds of Workers who are paid by results:

(a) (b)

Those whose time and performance is supervised by the employer and Those whose time and performance is unsupervised by the employer.
Villuga vs. NLRC 225 SCRA 537

Are piece-work employers entitled to thirteenth month pay? The employees are sewers, repairmen and ironers HELD: employers just like tailors who are paid on a piece-rate basis are entitled to 13th-month pay The respondent Commissioner is in error. The mere fact that petitioners were paid on a piece-rate basis is no argument that herein petitioners were not employees. The term wage has been broadly defined in Article 97 as remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis x x x. The facts of this case indicate that payment by the piece is just a method of compensation and does not define the essence of the relations. That petitioners were allowed to perform their work at home does not likewise imply absence of control and supervision. The control test calls merely for the existence of a right to control the manner of doing the work, not the actual exercise of the right. Tailors and similar workers hired in the tailoring department although paid weekly wages or piece-work basis are employees not independent contractors.

Are barbers and manicurists entitled to Yes. They are not excluded from independent contractors or managerial those who are paid on a piece rate basis vs. NLRC 341 SCRA 669)

13th-month pay? the coverage. They are employees. They are not employees especially since the law provides that are entitled to 13 th-month pay (Case: Corporal Sr.

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How much is the MIMIMUM 13th month pay? 1/12 of the total basic salary EARNED during the calendar year (it is possible that the employee had absences) BASIC SALARY rate of pay for a standard work period exclusive of other payment such as overtime and other bonuses (therefore, supplements are not included for purposes of computing the 13th-month pay)
Boie-Takeda Chemicals vs. Dela Serna 228 SCRA 329 Whether or not the commission should be included in the computation of the 13 th month pay. It turned out that the commission was more that the fixed salary paid to the employee. HELD: The commission paid to the medical representatives where more in the nature of productivity or incentive bonus There was a finding in one of the inspections of petitioners premises that it has not been including the commissions earned by its medical representatives in the computation of their 13th month pay. Employer-petitioner says commissions should not be included in the computation because the law speaks of regular or basic salary and thus excludes all other remunerations not part of the regular salary. Is he correct? Yes, commissions do not form part of the basic salary. In remunerative schemes consisting of a fixed or guaranteed wage is patently the basic salary for this is what the employee receives for a standard work period. Commissions are given for extra efforts exerted in consummating sales or other related transactions. They are, as such, additional pay, which the Supreme Court has made clear do not form part of the basic salary. Philippine Duplicators vs. NLRC Whether or not the commission should be included in the computation of the 13 th month pay. It turned out that the commission was less than the fixed salary paid to the employee. HELD: The commission is part of basic salary The order of the Labor Arbiter directed the petitioner to pay 13th month pay to private respondents computed on the basis of heir fixed wage plus their sales commissions. The Supreme Court upheld said decision. Could this decision reversed or abandoned the BOIE-TAKEDA ruling? NO. The salesmens commissions, comprising a pre-determined percent of the selling price of the goods sold by each salesman, were properly included in the term basic salary for purposes of computing their 13th month pay. The 3rd division of the Supreme Court correctly held that the sales commissions were part of the basic salary structure of Philippine Duplicators employees-salesmen. These commissions were not overtime payments nor profit-sharing payments, nor any other fringe benefit. In BOIE-TAKEDA (BT), the so-called commissions paid to or received by medical representatives of BT were excluded from the term basic salary because these were paid to the employees as productivity bonuses. These payments were characterized as additional monetary benefits not properly included in the term basic salary in computing their 13th month pay. Productivity bonuses are generally tied to the productivity or capacity for revenue production of a corporation. Such bonuses have no clear, direct or necessary relation to the amount of work actually done by each employee. A bonus is an amount granted and paid ex gratia to the employees. Its payment constitutes an act of enlightened generosity and self-interest on the part of the employer rather than as a demandable or enforceable obligation. Phil. Agricultural Commercial And Industrial Workers Union vs. NLRC 247 SCRA 256 This case involved drivers and bus conductors of a bus company who are paid on a commission basis on top of their guaranteed basic minimum pay Should the commission be included in the computation of 13th month pay? HELD: Yes. They are not paid purely on commission and the fixed salary of eight hours of work is more than the commission Petitioner instituted a claim against the employer VALLACAR TRANSIT for the payment of the 13th month pay in behalf of the drivers and conductors of the employer. The employer said that the drivers and conductors are compensated on a purely commission basis so they are not entitled to 13th month pay pursuant to the exempting provisions of the implementing rules of the 13th Month Pay Law. The CBA also prohibited the drivers and conductors paid purely on commission from receiving 13th month pay. Who is correct? The petitioner in this case is correct. Every employee receiving a commission in addition to a fixed or guaranteed wage or salary is entitled to 13th month pay. For purposes of entitling rank-and-file employees a 13th month pay, it is immaterial whether the employees concerned are paid a guaranteed wage plus commission or commission with a guaranteed wage inasmuch as the bottom line is that they receive a guaranteed wage. This is correctly construed by

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Explanatory Bulletin 86-12 by the then MOLE. What is controlling is not the label attached to the remuneration but the nature of the remuneration and the purpose for which the 13th month pay was given: to alleviate the plight of the working masses who are receiving low wages. In sum, the 13th month pay of the drivers and conductors who are paid a fixed or guaranteed wage in case their commissions be less than the statutory minimum, and commissions only in case where the same is over and above the statutory minimum, must be equivalent to 1/12 of their earnings during the calendar year.

If the employer fails to pay, what is the remedy of the employee?

The employee can sue the employer for non-payment of the 13 th month pay. This is in the nature of a money claim.

If employee retired or was terminated for cause?

The retired or terminated (for cause) employee is still entitled to 13th month pay. The employer cannot forfeit it. There is no forfeiture clause in the law. The law provides: An employee who has resigned or whose services are terminated at any time before the time of payment of the 13th month pay is entitled to this monetary benefit in proportion to the length of time he worked during the year, reckoned form the time he started working during the calendar year up to the time of his resignation or termination from service. Thus, if he worked from January up to September, his proportionate 13th month pay should be equivalent of 1/12 of his total basic salary he earned during that period. The payment of the 13th month pay may be demanded by the employee upon the cessation of employer-employee relationship. This is consistent with the principle of equity as the employer can require the employee to clear himself of all benefits due him from the termination of the relationship.

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PATERNITY LEAVE ACT of 1996

(RA 8187, June 11, 1996) - Refers to the benefits granted to a married male employee allowing him not to report for work for 7 days but continues to earn the compensation therefor, on the condition that his spouse has delivered a child or suffered a miscarriage for purposes of enabling him to effectively lend support to his wife in her period of recovery and/or nursing of the newly born child.

Entitlement: Notwithstanding any law, rules and regulations to the contrary, any married male employee in the public and private sectors shall be entitled to a paternity leave of 7 days with full pay for the first 4 deliveries of the legitimate spouse with whom he is cohabiting.

What are the male employees benefits under RA 8187? 1. 7 calendar days paternity leave. 2. The pay shall consist of his basic salary, all allowances and other monetary benefits. Unlike Service incentive leave, Paternity Leave is NOT commutable to cash. In the event that the paternity leave benefit is not availed of, said leave shall not be convertible to cash. Note that the purpose is to lend support to his wife during her period of recovery and/or nursing of the newly-born child. The conversion of the leave into money would defeat the very purpose of the law.

Penal Sanction
Section 5. Any person, corporation, trust, firm, partnership, association or entity found violating this Act or the rules and regulations promulgated thereunder shall be punished by a fine not exceeding P25,000 or imprisonment of not less than 30 days nor more than 6 months.

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

Conditions for Entitlement

3. He is employed at the time of delivery of the child; 4. He is cohabiting with his spouse at the time she gives birth or suffers a miscarriage; 5. He has notified the employer of the pregnancy of his wife and her expected date of delivery subject; 6. His wife has given birth, suffered an abortion [unintentional] Note that as of date (November 26, 2001), there is NO JURISPRUDENCE YET regarding paternity leave.

How is notification by the qualified male employee made?

Section 4. Notification.

As soon as the married male employee learns that his spouse is pregnant:

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1. 2.

3.

He shall inform his employer of such pregnancy and the expected date of delivery within a reasonable period of time; He shall accomplish a Paternity Notification Form to be provided by the employer and submit the same to the latter, together with the copy of his marriage contract, or where not applicable, any proof of marriage. [This notification requirement shall not apply in cases of miscarriage or abortion.] Any employee who has availed of the paternity leave benefits shall, within a reasonable period of time, submit a copy of the birth certificate of the newly-born child, death or medical certificate in case of miscarriage or abortion, duly signed by the attending physician or midwife, showing the actual date of childbirth, miscarriage or abortion as the case may be.

Availment of Paternity Leave by a Male (papa) Employee:

Revised Implementing Rules and Regulations (March 13, 1997)

Section 5. Availment
Paternity leave benefits shall be granted to the qualified employee after delivery by his wife, without prejudice to an employer allowing an employee to avail of the benefit before or during the delivery, provided that the total number of days shall not exceed seven (7) days for each delivery.

Would it include miscarriage? Intentional abortion?

It includes miscarriage which covers spontaneous abortion but not intentional abortion. The 7 days refer to calendar days and not to working days.

Are existing benefits credited to the benefits under RA 8187? Where a male employee is already enjoying the paternity leave benefits by reason of contract, company policy or collective bargaining agreement, the following rules shall apply:

1. If the existing paternity leave benefit is greater than the benefit herein provided, the greater benefit shall prevail; 2. If the existing paternity leave is less than that provided herein, such existing benefit shall be adjusted to the extent of the difference.

However, when a contract, company policy or collective bargaining agreement provides for an emergency or contingency leave without specific provisions on paternity leave, the paternity leave provided by law shall apply.

Employee under RA 8187 Employee refers to any person who performs services for an employer and receives compensation therefore, provided an employer-employee relationship exists between them.

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Delivery refers to childbirth, miscarriage, or abortion.

Spouse refers to the lawful wife. For this purpose, lawful wife refers to a woman who is legally married to the male employee concerned.

Cohabiting refers to the obligation of the husband and wife to live together.

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RETIREMENT PAY LAW

(RA 7641)
An amendment of article 287 EFFECTIVITY DATE: JANUARY 7, 1993 It is a social legislation, it has a retroactive effect, if you are qualified under the law.

This was amended by RA 7641 on January 7, 1993 by Senator Ernesto Herrera. Article 287 of the Labor Code does not purport to impose any obligation on the part of the employer to set up a retirement scheme over and above those under existing law. Prior to RA 7641, there were no retirement benefits afforded to a retiring employee if there is none under the Collective Bargaining Agreement.

The law on retirement pay was again amended by RA 8558. It was an act amending Article 287 of the Labor Code by reducing the retirement age of underground mine workers from 60 years old to 50 years old.

Article 287. Retirement.

Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements. Provided, however that an employees retirement benefits under the collective bargaining and other agreements shall not be less than those provided therein. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of 60 years or more, but not beyond 65 years which is hereby declared the compulsory retirement age, who has served at least 5 years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half monthly salary for every year of service; a fraction of at least 6 months being considered as one whole year. Unless the parties provide for broader inclusions, the term one-half monthly salary shall mean 15 days plus one-half of the 13th month pay and the cash equivalent of not more than 5 days of service incentive leaves. An underground mining employee upon reaching the age of 50 years or more, but not beyond 60 years which is hereby declared the compulsory retirement age for underground mine workers who has served at least 5 years as underground mine worker, may retire and shall be entitled to all the retirement benefits provided under this Article. Retail, service and agricultural establishments or operations employing not more than 10 employees or workers are exempt from the coverage of this provision. Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under Article 288 of the Code. Nothing in this Article shall deprive any employee of benefits to which he may be entitled under existing laws or company policies and practices.

Requisites:

1. He must be an employee at the time of the effectivity of the law. 2. Compliance with the requirement for eligibility under the law: optional retirement 60 years with 5 years of service compulsory retirement 65 years with no requirement of years of service

Retirement pay under the law

month salary for every year of service 15 days +

 112 5 days SIL + 2.5 days (1/12 of 13th month pay) ---------22.5 days Thus, this includes the following: 15 days 1/12 of the 13th month pay cash equivalent of not more than 5 days service incentive leave The retirement pay has a broader inclusion than the usual separation pay. Note that the Labor Code does not provide for a forfeiture provision in case an employee at the time of just dismissal is also qualified to receive retirement law. It is obligatory and mandatory as long as the employee is qualified. This is a labor standard benefit and it must be construed in favor of the employee, in the absence of a forfeiture clause. This is on a case to case basis.

Is there a group of employees whose retirement age is below that of 60?

Undeground mining employees. Under Republic Act 8558, approved in 1998. Optional retirement age: 50 years, 5 years of service Compulsory retirement 60 years of age

Exempted under the law

(1) (2) Employees of the National Government and its political subdivisions, including government-owned and controlled corporations, if they are covered by the Covil Service Law and its regulations; Employees of retail, service and agricultural establishments or operations regularly employing not more than 10 employees.

Note that domestic helpers and persons in the personal service of another were deleted by Department Order 20 from the enumeration of those exempted under the law.
Labor Advisory on Retirement Pay Law (October 24, 1996)

A. Coverage

RA 7641 or the retirement pay law shall apply to all employees in the private sector, regardless of their position, designation, or status and irrespective of the method by which their wages are paid. They shall include the part-time employees, employees of service and other job contractors and domestic helpers or persons in the personal service of another.

Penal sanction for violation of Article 287, as amended

Article 288. Penalties

Except as otherwise provided in this Code, or unless the acts complained of hinges on a question of interpretation or implementation of ambiguous provisions of an existing collective bargaining agreement, any violation of the provisions of this Code declared to be unlawful or penal in nature shall be punished with a fine not less P1,000 nor more than P10,000 or imprisonment of not less than 3 months nor more than 3 years, or both such fine and imprisonment at the discretion of the Court. In addition to such penalty, any alien found guilty shall be summarily deported upon completion of service of sentence. Any provision of law to the contrary notwithstanding, any criminal offense punished in this Code shall be under the concurrent jurisdiction of the Municipal or City Courts and the Regional Trial Courts.
Upon acceptance of employment, a contractual employment is established. If a retirement package is lower than the retirement pay law, which shall govern?

The Collective Bargaining Agreement (CBA) will govern, but the employer must pay for the difference.

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May the employer stipulate a lower retirement age?

Yes. Article 287 applies only in the absence of a retirement plan or a CBA stipulating a retirement benefit, such retirement plan should not be less than what is provided for by law
Pantranco North Express vs. NLRC 259 SCRA 161 The CBA provided that the employee could be retired after 25 years of service Is it valid? HELD: It is valid because it allows an employee to retire at an early retirement age Cabcaban vs. NLRC GR 120256, August 18, 1997

On March 16, 1993, Hermito Cabcaban, then 63 years old, filed a complaint for retirement benefits under Republic Act 7641 against Hda. Corazon de Jesus and/or Teodora Cabillo de Guia. Complainant alleged that he worked at the 50-hectare hacienda, owned by Teodora Cabillo de Guia at Bais, Negros Oriental, from 1962 to July 1991, 1 performing such jobs as clearing the plantation, planting, weeding, fertilizing, cutting cane points, canal digging, harvesting/loading, "depol," "gahit," and gathering coconuts. Respondents moved to dismiss the complaint on the following grounds: first, that complainant's cause of action had already prescribed; and second, that complainant is also one of the complainants in RAB-VII-06-0110-92-D, 2 a case for illegal dismissal and reinstatement against the same respondents pending before another Labor Arbiter. Respondents, likewise, argued that assuming complainant's action had not prescribed, he still would not be entitled to any retirement benefits since he was only 48 years old when he was separated from employment in 1978, well below the 60-year old retirement age prescribed by the Labor Code. It does not appear that complainant filed any opposition to respondents' appeal. On June 30, 1994, the NLRC rendered a Decision dismissing the complaint for lack of merit. On August 29, 1994, complainant filed a Motion for Reconsideration before the NLRC. He pointed out that in the same Application for Retirement Benefit adduced by respondents, complainant's employer, Teodora C. de Guia, certified complainant's exact date of separation to be February 28, 1991.

Prior to its amendment, Article 287 of the Labor Code provided as follows: ART. 287. Retirement. Any employee may be retired upon reaching the retirement age established in the Collective Bargaining Agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining or other agreements. In Llora Motors, Inc. vs. Drilon, we interpreted the provisions of the above article to mean that: . . . Article 287 not itself purport to impose any obligation upon employers to set up a retirement scheme for their employees over and above that already established under existing laws. In other words, Article 287 recognizes that existing laws already provide for a scheme by which retirement benefits may be earned or accrue [sic] in favor of employees, as part of a broader social security system that provides not only for retirement benefits but also death and funeral benefits, permanent disability benefits, sickness and maternity leave benefits. As a consequence of our ruling in the above case, Congress enacted Republic Act 7641, amending Article 287 of the Labor Code to read as follows: ART. 287. Retirement. Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective agreement and other agreements: Provided, however, That an employee's retirement benefits under any collective bargaining and other agreements shall not be less that those provided herein. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.

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Unless the parties provide for broader inclusions, the term 'one-half (1/2) month salary' shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves. Retail, service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision. Violation of this provision is hereby declared unlawful and subject to the penal provisions under Article 288 of this Code.

R.A. 7641 took effect on January 7, 1993. Nevertheless, we did not hesitate to give retroactive effect to said law in Oro Enterprises, supra, as follows: RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as a curative statute that absent a retirement plan devised by, an agreement with, or a voluntary grant from, an employer can respond, in part at least, to the financial well-being of workers during their twilight years soon following their life of labor. There should be little doubt about the fact that the law can apply to labor contracts still existing at the time the statute has taken effect, and that its benefits can be reckoned not only from the date of the law's enactment but retroactively to the time said employment contracts have started. . . . Republic Act 7641 took effect on 07 January 1993, while the appeal of private respondent was till pending consideration by the NLRC. Still for determination at the time was, among other things, the issue of whether or not private respondent has, in fact, been effectively retired.

The case of Oro Enterprises, however, does not find application in the instant petition. In CJC Trading, Inc. vs. National Labor Relations Commission, we enumerated the requirements for the proper application of Oro Enterprises, as follows: . . . We read Oro Enterprises as holding that R.A. No. 7641 may be given effect where (1) the claimant for retirement benefits was still the employee of the employer at the time the statute took effect; and (2) the claimant was in compliance with the requirements for eligibility under the statute for such retirement benefits. The above requisites have not been met in the case at bar. First, although petitioner's complaint was filed after R.A. 7641 took effect, his application for retirement benefits with SSS indubitably shows that petitioner was separated from private respondent's employ on December 31, 1978. Petitioner's bare and as noted earlier inconsistent allegations that he was employed by private respondent through the early 1990s cannot prevail over private respondent's evidence showing that he was separated from employment in 1978 way before R.A. 7641 took effect in 1993. Second, petitioner has not shown any employment contract or collective bargaining agreement which entitles him to retirement benefits. Moreover, his application for retirement benefits states that he was born in 1930, and thus, only forty-eight (48) years of age when he was separated from private respondent's employ in 1978. The same document shows that petitioner was employed by private respondent for a mere four and a half (4) years, from July 1973 to December 31, 1978. Clearly then, petitioner is not qualified to an award of retirement pay under Article 287, as amended. Article 287, as amended, therefore cannot be applied retroactively to favor petitioner. Neither can petitioner avail of retirement benefits under the old Article 287. As stated earlier, petitioner has not shown the existence of any collective bargaining agreement or employment contract which entitles him to such benefits. Producers Bank vs. NLRC GR 118069, November 16, 1998 Prefatorily, at the time the instant controversy started, petitioner was placed by the then Central Bank of the Philippines (now Bangko Sentral ng Pilipinas) under a conservator for the purpose of protecting its assets. It appears that when the private respondents sought the implementation of Section I Article XI of the CBA regarding the retirement plan and Section 4, Article X thereof, pertaining to uniform allowance, the acting conservator of the petitioner expressed her objection to such plan, resulting in an impasse between the petitioner bank and the private respondent union. The deadlock continued for at least six months when the private respondent, to resolve the issue, decided to file a case against the petitioner for unfair labor practice and for flagrant violation of the CBA provisions. As stated earlier, the Labor Arbiter dismissed private respondent's complaint, on this premise: "Considering that the Bank is under conservatorship program under which the bank is under the rule of a conservator, the latter is under no compulsion to implement the resolutions issued by the LMRC. If he finds that the enforcement of the resolutions would not redound for

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the best interest of the Bank in accordance with the conservatorship program, he may not be faulted by such inaction or action." Petitioner asserts since the employees have retired, as a consequence of which no employee-employer relationship exists anymore between it and the employees, private respondent no longer had the personality to file the complaint for them. Petitioner's contention is untenable. Retirement results from a voluntary agreement between the employer and the employee whereby the latter after reaching a certain age agrees to sever his employment with the former. The very essence of retirement is the termination of the employer-employee relationship. Hence, the retirement of an employee does not, in itself, affect his employment status especially when it involves all rights and benefits due to him, since these must be protected as though there had been no interruption of service. It must be borne in mind that the retirement scheme was part of the employment package and the benefits to be derived therefrom constituted, as it were, a continuing consideration for services rendered, as well as an effective inducement for remaining with the corporation. It is intended to help the employee enjoy the remaining years of his life, releasing him from the burden of worrying for his financial support, and are a form of reward for his loyalty. When the retired employees were requesting that their retirement benefits be granted, they were not pleading for generosity but were merely demanding that their rights, as embodied in the CBA, be recognized. Thus, when an employee has retired but his benefits under the law or the CBA have not yet been given, he still retains, for the purpose of prosecuting his claims, the status of an employee entitled to the protection of the Labor Code, one of which is the protection of the labor union. In Esso Philippines, Inc. v. Malayang Manggagawa sa Esso (MME), we recognized that while the individual complainants are the real party in interest in issues involving monetary claims and benefits, the union, however, is not denied its right to sue on behalf of its members, thus: "We see no legal impediments to considering this particular matter of retirement benefits to be within the ambit of Our consistent holding that when it comes to individual benefits accruing to members of a union from a favorable final judgment of any court, the members themselves become the real parties in interest and it is for them, rather than for the union, to accept or reject individually the fruits of the litigation. In the case at bar, the representations of the MME which may result in prejudice to the interests of any of its individual members in the final judgment being sought to be executed should yield to the individual decisions of the said members themselves, who are free to choose whichever position suits their conscience."

Martinez vs. NLRC GR 118743, October 12, 1998 The employer and employee agreed to change the date of retirement. consideration, the employer gave the employee something in return. The SC said this is valid. In

It appears that on June 10, 1977, respondent GMCR, Inc. employed petitioner as assistant credit and collection manager. At the inception of petitioner's employment, respondent company made it clear that employees who were not eligible for membership in the bargaining unit and, therefore, not entitled to the benefits under the collective bargaining agreement, would be paid benefits which were at least equivalent to, if not higher than, those provided in the collective bargaining agreement. On September 22, 1981, respondent company promoted petitioner to credit and collection manager, a position he held until the day of his retirement. In the course of his employment, petitioner received annual salary increases based on merit and/or performance. Although the annual salary increases were not given on the exact due dates, they were retroactively applied to the start of the evaluation period. However, much to his surprise, petitioner received no salary increase for the period immediately prior to his retirement. While two (2) of his subordinates were given salary increases of twenty-two percent (22%) and twenty-one percent (21%) for the period from September 16, 1990 to September 16, 1991, he was not given a performance evaluation and consequently not granted any salary increase. Petitioner was examined by Dr. Florencio A. Chavez, the company physician and a pulmonary and cardiology specialist, and found to be suffering from a "severe restrictive and obstructive pulmonary defect with no reversible component." He was advised to rest for 120 days. Petitioner took the physician's advice and went on sick leave from March 1 until July 15, 1992. In a letter, dated April 10, 1992, to respondent Mark Anthony Javier, president of respondent company, petitioner applied for optional retirement benefits under the collective bargaining agreement. He stated that since he

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would have been in the service of the company for fifteen years on June 10, 1992, he wished to retire effective July 16, 1992, on which date "the long term sick leave availment as per advice by the company's physician shall have expired." Petitioner contends that under the collective bargaining agreement, the option to retire is granted to retiring employees and not to the company and, therefore, private respondents cannot vary the effective date of his retirement. On the other hand, private respondents deny that petitioner can claim the benefits of the collective bargaining agreement considering that he is a managerial employee. Thus, the question is whether petitioner, who is a managerial employee, can claim retirement benefits under the collective bargaining agreement, Art. XXIX of which provides: Section 1.An employee shall be entitled to a retirement benefit plan under the following conditions: (a) an employee may retire at his option any time after such employee shall have attained the age of

Fifty Years (50) and whose term of service is ten (10) years or more; and an employee may retire at his option upon completing twenty-five (25) years of service. (b) (65). The employee must retire under this plan at the time such employee attains the age of Sixty-Five

The Labor Code provides: Article 245. Ineligibility of managerial employees to join any labor organization; right of supervisory

employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. As we recently held in United Pepsi-Cola Supervisory Union (UPSU) v. Laguesma: . . . [T]here is a rational basis for prohibiting managerial employees from forming or joining labor organizations. As Justice Davide, Jr., himself a constitutional commissioner, said in his ponencia in Philips Industrial Development, Inc. v. NLRC: In the first place, all these employees, with the exception of the service engineers and the sales force personnel, are confidential employees. Their classification as such is not seriously disputed by PEO-FFW; the five (5) previous CBAs between PIDI and PEO-FFW explicitly considered them as confidential employees. By the very nature of their functions, they assist and act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial functions in the field of labor relations. As such, the rationale behind the ineligibility of managerial employees to form, assist or join a labor union equally applies to them. In Bulletin Publishing Co. Inc. v. Hon. Augusto Sanchez, this Court elaborated on this rationale, thus: ". . . The rationale for this inhibition has been stated to be, because if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interests. The Union can also become company-dominated with the presence of managerial employees in Union membership."

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To be sure, the Court in Philips Industrial was dealing with the right of confidential employees to organize. But the same reason for denying them the right to organize justifies even more the ban on managerial employees from forming unions. After all, those who qualify as top or middle managers are executives who receive from their employers information that not only is confidential but also is not generally available to the public, or to their competitors, or to other employees. It is hardly necessary to point out that to say that the first sentence of Art. 245 is unconstitutional would be to contradict the decision in that case.

Accordingly, managerial employees cannot, in the absence of an agreement to the contrary, be allowed to share in the concessions obtained by the labor union through collective negotiation. Otherwise, they would be exposed to the temptation of colluding with the union during the negotiations to the detriment of the employer. However, there is nothing to prevent the employer from granting benefits to managerial employees equal to or higher than those afforded to union members There can be no conflict of interest where the employer himself voluntarily agrees to grant such benefits to managerial employees. In the case at bar, at the beginning of petitioner's employment, he was told that those who are not covered by me CBA would nevertheless be entitled to benefits which would be, if not higher, at least equivalent to those provided in the CBA.. That private respondents made such a promise to petitioner is not denied by them.

Petitioner assented to change the date of his retirement from July 16, 1992 to April 30, 1992 in consideration of obtaining an advance payment of P100,000.00 on his retirement pay. Such agreement is valid. As has been held: Not all waiver and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking. The fact that respondent company still paid petitioner salaries after July 16, 1992 does not detract from the fact that petitioner voluntarily agreed to advance the date of his retirement. Neither is petitioner's entitlement to a long term sick leave which he claims was yet to expire on July 16, 1992 a reason for holding the new date of his retirement invalid. By changing the date of his retirement from July 16, 1992 to April 30, 1992 in exchange for an advance of P100,000.00 on his retirement pay, petitioner waived his right to insist on July 16, 1992 as the effective date of his retirement. The option in optional retirements rests upon the employee Capili vs. NLRC G.R. No. 120802. June 17, 1997 THE OPTION TO RETIRE UPON REACHING THE AGE OF, 60 BECOMES THE EXCLUSIVE PREROGATIVE OF THE EMPLOYEE; EXCEPTION. It is clear from Policy Instruction No. 25 promulgated on 1 June 1977 by the Secretary of Labor that in the absence of a collective

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bargaining agreement or company policy providing for a retirement plan, the option to retire at age 60 could be exercised by either the employee or the employer. This power of the employer no longer exists under R.A. No. 7641, which unequivocally provides that the option to retire upon reaching the age of 60 years or more but not beyond 65 is the exclusive prerogative of the employee if there is no provision on retirement in a collective bargaining agreement or any other agreement or if the employer has no retirement plan. WHEN AN EMPLOYEE MAYBE DEEMED TO HAVE OPTED TO RETIRE; CASE AT BAR. By his acceptance of retirement benefits the petitioner is deemed to have opted to retire under the third paragraph of Article 287 of the Labor Code, as amended by R.A. No. 7641. Thereunder he could choose to retire upon reaching the age of 60 years, provided it is before reaching 65 years, which is the compulsory age of retirement. Also worth noting is his statement that he "had long and unjustly been denied of his retirement benefits since August 18, 1993." Elsewise stated, he was entitled to retirement benefits as early as 18 August 1993 but was denied thereof without justifiable reason. This could only mean that he has already acceded to his retirement, effective on such date when he reached the age of 60 years. Requisites of retirement. CJC Trading vs. NLRC 246 SCRA 724 Private respondents Ricardo Ausan, Jr. and Ernesto Alanan were employed by petitioner since 1983 and 1978, respectively, as truck drivers and were paid on a "per trip or task basis." They filed separate complaints on 23 August 1992 and 15 September 1992, respectively, against petitioner CJC Trading, Incorporated and/or Ms. Celia J. Carlos for illegal dismissal and non-payment of premium pay for holiday and rest day, service incentive leave pay and thirteenth month pay. These cases were consolidated. The award of separation pay is authorized in the situations dealt with in articles 283 and 284 of the Labor Code, and as well as in cases where there is illegal dismissal and reinstatement is no longer feasible under Section 4(b), Rule I, Book VI of the Implementing Rules and Regulations of the Labor Code. By way of exception, this Court has allowed grants of separation pay to stand as "a measure of social justice" where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. The instant case, however, does not fall under any of the above mentioned instances. The facts, as found by the NLRC, show that private respondents had informed petitioner that they intended to quit their jobs and this decision was arrived at by private respondents on their own volition. We find no reason and petitioner has shown none, for departing from the rule that this Court is bound by the findings of fact of the NLRC, there being no showing that the latter had gravely abused their discretion or otherwise acted without or in excess of its jurisdiction. There was no dismissal of private respondents by petitioner here. Neither, upon the other hand, can this be considered a case of abandonment as petitioner claims because the elements of abandonment are not present. Rather, we have before us a case of voluntary resignation. An employee who voluntarily resigns is not entitled to separation pay unless otherwise stipulated in an employment contract or collective bargaining agreement, or sanctioned by established employer practice or policy. The Labor Code is devoid of any provision which grants separation pay to employees who voluntarily resign. Neither was there anything in the record that shows that, in the instant case, there is a collective bargaining agreement or any other agreement or established company policy concerning the payment of separation pay to employees who resign. The Court notes that private respondents, in their motion for reconsideration from the NLRC's 29 November 1993 decision prayed for an award of termination pay. Considering that private respondents were close to the age of sixty (60) at the time they stopped working for petitioner and that they had been in the employ of petitioner for several years, the Court, taking the view most favorable to private respondents, considers that this could be deemed to be in effect a prayer for the grant of retirement benefits. The above amended law took effect on 7 January 1993 and was applied by the Court in the case of Oro Enterprises, Inc. vs. National Labor Relations Commission where a sixty-five (65) year old employee filed a claim for retirement pay with her employer in September 1990. A few days later, a complaint was filed with the Office of the Labor Arbiter, which complaint was eventually resolved by the Labor Arbiter with an award of retirement benefits in favor of the employee. During the pendency of the appeal (which involved determination of the issue whether or not the employer-employee relationship between petitioner and private respondent had persisted or whether it had terminated by resignation of the employee) in the NLRC, R.A. No. 7641 took effect. The new statute was used a basis by the NLRC for the grant of retirement benefits to the employee i.e., service rendered before the effectivity of the statute was taken into account and the decision of the NLRC was upheld by this Court. We read Oro Enterprises as holding that R.A. No. 7641 may be given effect where (1) the claimant for retirement benefits was still the employee of the employer at the time the statute took effect; and

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(2) the claimant was in compliance with the requirements for eligibility under the statute for such retirement benefits. In the instant case, the complaints of private respondents were still being resolved on the labor arbiter level when R.A. No. 7641 took effect. However, it was quite clear, and both the Labor Arbiter and the NLRC so held, that private respondents had ceased to be employees of petitioner, by reason of voluntary resignation, before the statute went into effect. Moreover, it appears that private respondents did not qualify for the benefits of R.A. No. 7641 under the terms of this law itself. The Court notes that when private respondents filed their complaints more than one (1) year after they had been allegedly illegally dismissed, respondent Ausan, Jr. was fifty-seven (57) years old while respondent Alanan was sixty (60) years old. That would make Ausan, Jr. fifty-five (55) years old and Alanan fifty-eight (58) years old at the time their services with petitioner were ended by their resignation. Since the record does not show any retirement plan or collective bargaining agreement providing for retirement benefits to petitioner's employees, the applicable retirement benefits to petitioner's employees, the applicable retirement age is the optional retirement age of sixty (60) years according to Article 287, which would qualify the retiree to retirement benefits equivalent to one-half (1/2) month's salary for every year of service. Unfortunately, at the time private respondent stopped working for petitioner, they had not yet reached the age of sixty (60) years. We stress, however, that there is nothing to prevent petitioners from voluntarily giving private respondents some financial assistance on an ex gratia basis.

JV Angeles Construction vs. NLRC GR 126888, April 14, 1999 Private respondent Pedro Santos was employed in 1969, as a carpenter, by the petitioner, J. V. Angeles Construction Corporation (Corporation). In 1973, he was promoted to the position of foreman which he held until his retirement in February 1992 when he was sixtytwo (62) years old. On October 25, 1993, he brought a complaint for retirement benefits and service incentive leave pay before the NLRC, National Capital Region Arbitration Branch, against the corporation. After the parties failed to reach an amicable settlement during the conciliatory proceedings of the case, they were required to submit their respective position papers. Petitioner's appeal filed with the NLRC on August 14, 1995, assailed the said ruling of the Labor Arbiter granting retirement benefits to the herein private respondent, by giving Rep. Act. No. 7641 (Retirement Pay Law) a retroactive application although respondent Pedro Santos had retired almost a year prior to the effectivity of said law on January 7, 1993. It is petitioner's submission that what is applicable is the ruling laid down in Llora Motors, Inc. v. Drilon wherein the Court held that in the absence of a collective bargaining agreement or other employment contract, there is no obligation on the part of the employer to set up a retirement scheme over and above that already established under existing laws. Since Santos has been receiving his retirement benefits from the Social Security System (SSS), he cannot anymore ask for additional benefits from his employer in the absence of company practice, policy or contract granting such benefits. On May 31, 1996, the Third Division of the NLRC came out with the questioned decision, upholding the Labor Arbiter's grant of retirement benefits to Pedro Santos. The petition is impressed with merit. The pertinent law is Article 287 of the Labor Code, as amended by R. A. 7641.

In Oro Enterprises, Inc. v. NLRC, the court held that R.A. 7641 can be applied retroactively. "R.A. 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as a curative statute that absent a retirement plan devised by, an agreement with, or a voluntary grant from, an employer can respond, in part at least, to the financial well-being of workers during their twilight years soon following their life of labor. There should be little doubt about the fact that the law can apply to labor contracts still existing at the time the statute has taken effect, and that its benefits can be reckoned not only from the date of the law's enactment but retroactively to the time said employment contracts have started. . . " (emphasis supplied)

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In CJC Trading, Inc. v. NLRC, the aforecited doctrine was elaborated upon by enumerating the circumstances which must concur before the law could be given retroactive effect, to wit: (1) the claimant for retirement benefits was still the employee of the employer at the time the statute took effect; and (2) the claimant has complied with the requirements for eligibility under the statute for such retirement benefits.

In the recent case of Philippine Scout Veterans Security and Investigation Agency, et al. v. NLRC, et al., the Court had occasion to apply the Oro and CJC rulings. In the said case, private respondent Mariano Federico resigned as a security guard of the security agency on September 16, 1991. Thereafter, he sought alternative reliefs from his employer, such as termination pay corresponding to his years of service or retirement benefits. PSVSIA rejected his claim for termination pay on the ground that he had voluntarily resigned. The alternative claim for retirement benefits was likewise denied because there was no collective or individual agreement providing for retirement benefits. When subject claims were formally brought to the Labor Arbiter, the latter sustained the stand of petitioners but directed them to pay the respondent the previously offered financial assistance in the amount of P10,000.00. The NLRC reversed the said judgment by giving a retroactive application to the provisions of R.A. 7641. When it was elevated to this Court on certiorari, the court found that although respondent Federico had reached the minimum retirement age under the statute, he was no longer an employee of petitioner PSVSIA when the law took effect. R.A. 7641 could not be applied retroactively in his favor in the absence of the first circumstance. Consequently, he could not seek the beneficial provisions of the law and must settle for the petitioners' offer of financial assistance.

In the case under scrutiny, private respondent Santos retired and ceased to be an employee of petitioner on February 1992, eleven (11) months before the effectivity of R.A. 7641, and he brought his complaint on October 23, 1993, nine (9) months after the law's effectivity. It is thus decisively clear that the provisions of R.A. 7641 could not be given retroactive effect in his favor. Consequently, the NLRC erred in upholding the Labor Arbiter's award of retirement benefits to private respondent.

Oro Enterprise vs. NLRC 238 SCRA 105 In this petition for certiorari, Oro Enterprises, Inc., seeks a reversal of the 22nd March 1993 decision and 29th May 1993 order of respondent National Labor Relations Commission (NLRC) directing petitioner to pay private respondent Loreto Cecilio retirement pay in the amount of P61,500.00. Private respondent was first employed by petitioner in August of 1949. After working continuously with the company for forty one (41) years, private respondent manifested, on 03 September 1990, her intention to retire from work by filing with petitioner a "Claim for Retirement Pay." In her claim, private respondent pleaded that "the retirement pay she (was) receiving from the Social Security System in the total sum of five hundred pesos (P500.00) a month could hardly (suffice to) meet her daily subsistence. . ." On 15 September 1990, petitioner wrote private respondent, informing her that it was in no financial position to give her any retirement benefit apart from the retirement pay she was already receiving from the Social Security System ("SSS"). Nonetheless, she was offered a house and lot located in San Jose, del Monte, Bulacan, in accordance with a "plan" which was then still being conceived by the company president for retiring employees. The offer did not materialize, nor did the proposed company plan come into being, for one reason or another.

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During the pendency of the appeal, or on 07 January 1993, Republic Act ("R.A.") No. 7641 took effect. At the time private respondent supposedly ceased to work with petitioner, Article 287 of the Labor Code, then in force, provided: "Art. 287.Retirement Any employee maybe retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. "In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining or other agreement." Rule 1, Book VI, of the Implementing Rules of the Labor Code, in turn, expressed: "Sec. 13. Retirement. In the absence of any collective bargaining agreement or other applicable agreement concerning terms and conditions of employment which provides for retirement at an older age, an employee maybe retired upon reaching the age of sixty (60) years. "Sec. 14. Retirement benefits. (a) An employee who is retired pursuant to a bonafide retirement plan or in accordance with the applicable individual or collective agreement or established employer policy shall be entitled to all the retirement benefits provided therein or to termination pay equivalent at least to one-half month salary for every year of service, whichever is higher, a fraction of at least six (6) months being considered as one whole year." Private respondent, sustained by the Labor Arbiter, posits that there being no collective bargaining agreement ("CBA") that granted retirement benefits, conformably with Section 14 of the Implementing Rules aforequoted, she should be entitled to a "termination pay equivalent at least to one-half month salary for every year of service . . . ." This particular issue has long been put to rest. In Llora Motors, Inc., vs. Drilon, 179 SCRA 175, Mr. Justice Florentino P. Feliciano, speaking for the Court in an eruditely written ponencia, explained: Section 14 (a) refers to 'termination pay equivalent to at least one-half (1/2) month for every year of service' while Section 14 (b) mentions 'termination pay to which the employee would have been entitled had there been no such retirement fund' as well as 'termination pay the employee is entitled to receive.' It should be recalled that Sections 13 and 14 are found in Implementing Rule I which deals with both 'termination of employment' and 'retirement.' It is important to keep the two (2) concepts of 'termination pay' and 'retirement benefits' separate and distinct from each other. Termination pay or separation pay is required to be paid by an employer in particular situations identified by the Labor Code itself or by Implementing Rule I. Termination pay where properly due and payable under some applicable provision of the Labor Code or under Section 4 (b) of Implementing Rule I, must be paid whether or not an additional retirement plan has been set up under an agreement with the employer or under an 'established employer policy.' "What needs to be stressed, however, is that Section 14 of Implementing Rule I, like Article 287 of the Labor Code, does not purport to require 'termination pay' to be paid to an employee who may want to retire but for whom no additional retirement plan had been set up prior agreement with the employer. Thus, Section 14 itself speaks of an employee 'who is retired pursuant to a bona-fide retirement plan or in accordance with the applicable individual or collective agreement or established employer policy.' What Section 14 of Implementing Rule I may be seen to be saying is that where termination pay is otherwise payable to an employee under an applicable provision of the Labor Code, and an additional or consensual retirement plan exists, then payments under such retirement plan may be credited

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against the termination pay that is due, subject, however, to certain conditions. These conditions are: (a) that payments under the additional retirement plan cannot have the effect of reducing the amount of termination pay due and payable to less than one-half (1/2) month's salary for every year of service and (b) the employee cannot be made to contribute to the termination pay that he is entitled to receive under some provision of the Labor Code; in other words, the employee is entitled to the full amount of his termination pay plus at least the return of his own contributions to the additional retirement plan. It then goes without saying, applying Llora Motors, that the beneficial provisions of Section 14 of Implementative Rules cannot properly be invoked by private respondent. Instead, the pivotal issue, in our view, is whether or not R.A. 7641 can favorably apply to private respondent's case. RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as a curative statute that absent a retirement plan devised by, an agreement with, or a voluntary grant from, an employer can respond, in part at least, to the financial well-being of workers during their twilight years soon following their life of labor. There should be little doubt about the fact that the law can apply to labor contracts still existing at the time the statute has taken effect, and that its benefits can be reckoned not only from the date of the law's enactment but retroactively to the time said employment contracts have started. Republic Act 7641 took effect on 07 January 1993, while the appeal of private respondent was still pending consideration by the NLRC. Still for determination at the time was, among other things, the issue of whether or not private respondent has, in fact, been effectively retired. Petitioner asserts that private respondent has never reported for work after the rejection of her application for retirement benefits. This claim is denied by private respondent, who avers that she did report for work again but that petitioner has refused to accept her on the ground of abandonment of duty.

Philippines Scout Veterans Security and Investigation Agency vs. NLRC 271 SCRA 209 MARIANO FEDERICO, private respondent, had been working with petitioners Philippine Scout Veterans Security and Investigation Agency and/or Severo Santiago as a security guard for twenty-three (23) years. On 16 September 1991 Federico, then already sixty (60) years old, tendered his so-called "letter of resignation" citing as his reasons physical disability to perform his duties and desire to spend the rest of his life in the province. It seems that the letter did not strictly refer to "resignation" but "withdrawal from occupation" because thereafter he sought alternative reliefs from petitioners, namely, termination pay corresponding to his years of service, or retirement benefits. Petitioners rejected the claim for termination pay contending that respondent Federico voluntarily resigned. The claim for retirement benefits met the same fate there being no collective or individual agreement providing therefor. On 4 December 1991 respondent Federico brought his grievance to the Labor Arbiter. However, the latter sustained the stand of petitioners. Hence on 25 August 1992 he ruled against Federico. Nevertheless, the termination of the proceedings did not leave respondent empty-handed. The Labor Arbiter directed petitioners to pay respondent P10,000.00, the amount they previously offered him, as financial assistance. The question to be resolved is whether Art. 287 of the Labor Code as amended by R.A. 7641 may be applied retroactively to the complaint filed on 4 December 1991 by respondent Mariano Federico. Petitioners argue that the amendment introduced by R.A. 7641 applies to employees of the private sector who retired beginning 7 January 1993, the date of its effectivity, and onwards. In the present case therefore respondent Federico, who filed his complaint two (2) years prior to the effectivity of the law, cannot seek refuge in the provision. Besides, this Court in Llora Motors, Inc. v. Drilon was faced with the same controversy. Its ruling thereon is now judicial precedent.

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The Office of the Solicitor General contends that the matter of giving retroactive effect to social legislation has long been settled in the leading case of Allied Investigation Bureau, Inc. v. Ople. In Allied, private respondent had been an employee of petitioner since 1953. In 1976, having reached the age of sixty (60) years, he submitted to petitioner an application for retirement benefits which was subsequently approved although there was then no collective bargaining agreement or employer policy establishing an additional retirement plan for its employees. Controversy arose with respect to the method of computing the amount of retirement benefits. Instead of basing the amount upon private respondent's actual period of employment (from 1953 up to 1976), petitioner computed such amount starting with the date of the effectivity of the Labor Code (1 November 1974) up to 1976. The Labor Arbiter, the NLRC and the then Minister of Labor were one in the view that the computation should be on the basis of the length of service. This Court sustained the computation of public respondents since it found the comment of the Solicitor General in support thereof persuasive . . . in the computation thereof, public respondents acted judiciously in reckoning the retirement pay from the time private respondent started working with petitioner since respondent employee's application for retirement benefits and the company's approval of the same make express mention of Sections 13 and 14, Rule 1, Book VI of the Implementing Rules and Regulations of the Labor Code as the basis for retirement pay. Section 14 (a) of said rule provides that an employee who is retired pursuant to a bona fide retirement plan or in accordance with the applicable individual or collective agreement or established employer policy shall be entitled to all the retirement benefits provided therein or to termination pay equivalent to at least one-half month salary for every year of service, whichever is higher, a fraction of at least six (6) months being considered as one whole year . . . This position taken by public respondents squares with the principle that social legislation should be interpreted in favor of workers in the light of the Constitutional mandate that the State shall afford protection to labor. Quite differently, in Llora Motors, we set aside the grant of retirement benefits because of the absence of a collective bargaining agreement or other contractual basis or any established employer policy that contemplated said grant. Private respondent invoked Allied but we found the reliance thereon misplaced because . . . while Allied had no collective bargaining agreement or similar employment contract establishing a plan under which employees could retire, its approval of (private respondent's) application, although unilateral and possibly ad hoc, supplied the necessary consensual basis. In the instant case, (petitioner) consistently resisted the demand for separation pay or retirement benefits by private respondent . . . As between Llora which is invoked by petitioners and Allied which is invoked by the Solicitor General, we could have applied the former because of similarity in factual milieu except that we have to take into account the amendment of Art. 287 by R.A. 7641 on 7 January 1993 or during the pendency of the proceedings before the NLRC. As amended, Art. 287 now pertinently provides Art. 287. Retirement. Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: Provided, however, that an employee's retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half () month salary for every year of service, a fraction of at least six (6) months being considered as one whole year . . . (emphasis on amendment supplied).

Under the amendment, respondent Federico appears to be entitled to retirement pay. But can he avail himself of this provision considering that it took effect subsequent to his filing of the complaint? This brings to mind the principle reiterated in Allied that police power legislation intended to promote public welfare applies to existing contracts and can therefore be given retroactive effect. Actually, the case at bench no longer presents a novel issue. We have ruled in Oro Enterprises, Inc. v. NLRC that R.A. 7641 can indeed be applied retroactively. Private respondent in that case, after working continuously with the company for forty-one (41) years, manifested her intention to retire from work by filing with petitioner a claim for retirement pay which was however denied. The Labor Arbiter granted her claim. During the pendency of the appeal, R.A. 7641 took effect and on that basis the NLRC affirmed the subject decision with modification.

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Returning to the present case, although the second circumstance exists, respondent Federico severed his employment relationship with petitioners when he tendered his "letter of resignation" on 16 September 1991 or prior to the effectivity of R.A. 7641. In fact, the issue before public respondents was not the existence of employee-employer relationship between the parties; rather, considering the cessation of his service, whether he was entitled to monetary awards. On the authority of CJC, private respondent therefore cannot seek the beneficial provision of R.A. 7641 and must settle for the financial assistance of P10,000.00 offered by petitioners and directed to be released to him by the Labor Arbiter. Brion vs. South Philippine Union Mission of 7th Day Adventist, 307 SCRA 497

SOLO PARENTS WELFARE ACT of 2000

(RA 8972: An Act Providing for Benefits and Privileges to Solo Parents and their Children, Appropriating Funds therefore and for other purposes) No rules yet, so we have to be contented with the salient features of the law.

Parental leave of not more than 7 working days every year to any solo parent who has rendered at least one year of service. It is in addition to the other benefits under the law.

Solo parent
Examples: 1.A woman who gives birth as a result of rape is considered as a solo parent. 2. Parent left solo because of death of spouse 3. Parent left solo because of conviction or detention for at least one year 4. Parent left solo with the responsibility left of parenthood because of legal separation, abandoned spouses, left with custody of child 5. Parent left solo because of declaration of nullity or annulment of marriage Flexible Working Schedule is the right granted to a solo parent employee to vary his/her arrival and departure time without affecting the core work hours as defined by the employer. Additional (those regarded as salient - kaye) Section 2. Declaration of Policy.

It is the policy of the State to promote the family as the foundation of the nation, strengthen its solidarity and
o ensure its total development. Towards this end, it shall develop a comprehensive program of services for solo parents and their children to be carried out by the (a) Department of Social Welfare and Development (DSWD) (b) Department of Heath (DOH) (c) Department of Education, Culture and Sports (DECS) (d) Department of Interior and Local Government (DILG) (e) Commission on Higher Education (CHED) (f) Technical Education and Skills Development Authority (TESDA) (g) National Housing Authority (NHA) (h) Department of Labor and Employment (DOLE) (i) Other related government and non-government agencies Section 3. Definition of Terms. SOLO PARENT any individual who falls under any of the following categories: (1) A woman who gives birth as a result of rape and other crimes against chastity even without a final conviction of the offender: Provided, That the mother keeps and raises the child; (2) Parent left solo or alone with the responsibility of parenthood due to death of spouse; (3) Parent left solo or alone with the responsibility of parenthood while the spouse is detained or is serving sentence for a criminal conviction for at least 1 year; (4) Parent left solo or alone with the responsibility of parenthood due to physical and/or mental incapacity of spouse as certified by a public medical practitioner; (5) Parent left solo or alone with the responsibility of parenthood due to legal separation or de facto separation from spouse for at least 1 year, as long as he/she is entrusted with the custody of the children;

 125 Parent left solo or alone with the responsibility of parenthood due to declaration of nullity or annulment of marriage as decreed by a court or by a church as long as he/she is entrusted with the custody of the children; (7) Parent left solo or alone with the responsibility of parenthood due to abandonment of spouse for at least 1 year; (8) Unmarried mother/father who has preferred to keep and rear her/his child/children instead of having others care for them or give them up to a written welfare institution; (9) Any other person who solely provides parental care and support to a child or children; (10) Any family member who assumes the responsibility of head of family as a result of death, abandonment, disappearance or prolonged absence of the parents or solo parent. A change in the status or circumstance of the parent claiming benefits under this Act, such that he/she is no longer left alone with the responsibility of parenthood, shall terminate his/her eligibility for these benefits. CHILDREN refer to those living with and dependent upon the solo parent for support who are: (a) Unmarried, (b) Unemployed, and (c) Not more than 18 years of age, or (d) Even over 18 years but are incapable of self-support because of mental and/or physical defect/disability. PARENTAL RESPONSIBILITY with respect to their minor children shall refer to the rights and duties of the parents as defined in Article 220 of Executive Order 209, as amended, otherwise known as the Family Code of the Philippines. PARENTAL LEAVE leave benefits granted to a solo parent to enable him/her to perform parental duties and responsibilities where physical presence is required. FLEXIBLE WORKING SCHEDULE supra Section 4. Criteria for Support. Any solo parent whose income in the place of domicile falls below the poverty threshold as set by the National Economic and Development (NEDA) and subject to the assessment of the DSWD worker in the area shall be eligible for assistance: Provided, however, That any solo parent whose income is above the poverty threshold shall enjoy the benefits mentioned in Sections 6, 7 and 8 of this Act. Section 5. Comprehensive Package of Social Development and Welfare Services. -- will be developed by the DSWD, DOH, DECS, CHED, TESDA, DOLE, NHA, and DILG, in coordination with local government units and a nongovernmental organization with proven track record in providing services for solo parents. The DSWD shall coordinate with concerned agencies in the implementation of the comprehensive package of social development and welfare services for solo parents and their families. (Please see law for enumeration not at all important) Section 6. Flexible Work Schedule. The employer shall provide for a flexible working schedule for solo parents: Provided, That the same shall not affect individual and company productivity: Provided, further, That any employer may request exemption from the above requirements from the DOLE on certain meritorious grounds. Section 7. Work Discrimination. NO EMPLOYER shall discriminate against any solo parent employee with respect to terms and conditions of employment on account of his/her status. Section 8. Parental Leave. In addition to leave privileges under existing laws, parental leave of not more than 7 working days every year shall be granted to any solo parent employee who has rendered service of at least 1 year. Section 9. Educational Benefits. (6)

 126 The DECS, CHED, and TESDA shall provide the following benefits and privileges: (1) Scholarship programs for qualifies solo parents and their children in institutions of basic, tertiary and technical/skills education; and (2) Nonformal education programs appropriate for solo parents and their children. The DECS, CHED, and TESDA shall promulgate rules and regulations for the proper implementation of this program. Section 10. Housing Benefits. Solo parents shall be given allocation in housing project and shall be provided with liberal terms of payment on said government low-cost housing projects in accordance with housing law provisions prioritizing applicants below the poverty line as declared by the NEDA. Section 11. Medical Assistance. The DOH shall develop a comprehensive health care program for solo parents and their children. The program shall be implemented by the DOH through their retained hospitals and medical centers and the local government units (LGUs) through their provincial/district/city/ municipal hospitals and rural health units (RHUs).
NLRC RULES OF PROCEDURE

NLRC rules of procedure is relevant in determining which has jurisdiction because under the NLRC rule it will tell you that lack of jurisdiction is a ground to dismiss. Another important consideration is the provision in the prescription of money claim. Because if money claim is barred by law then certainly it will not prosper. Unless you waive your right to question based on the ground of prescription. Does the labor code provide for the prescriptive period of money claim? When it is reckoned from? Art. 291 all money claims arising from ER-EE relations accruing during the effectivity of this code shall be filed within 3 years from the time the cause of action accrued; otherwise they shall be forever barred. It is reckoned from the time the cause of action accrues. When does the cause of action accrue? When there is a violation of a right. Essential elements of a cause of action: 1. Legal right of the plaintiff, 2. Correlative obligation of the defendant, and 3. Act or omission of the defendant in violation of the plaintiffs legal right. Example: Service incentive leave and overtime pay is a right provided by law if there is a violation, there is an injury arising from such violation. (If you have rendered overtime you have to demand, only when ER denies that the cause of action accrues). It is important to know when your cause of action accrues in determining the reckoning of the prescriptive period of 3 years. If I will file a money claim today Dec. 3, 2001, I can only recover money claim way back as what period? 3 years from now that will be Dec. 3, 1998. How long is an ER required to keep a payroll? Under the rules implementing the LC, Rule X, Sec. 12. 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. Money claim does not only refer to labor standard provision. It also includes retirement fee and separation pay for authorized causes.
Guzman vs. CA G.R. No. 132257. October 12, 1998

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Separation pay and retirement pay partakes of money claim and it prescribes in 3 years. The company because of serious business reverses undertook a partial suspension of operation resulting in the forced leave for 6 months of complainant. A case was instituted by complainant before the NLRC for illegal forced leave in violation of CBA with respect to optional retirement and separation pay grant. Complainant was dismissed from employment on November 16, 1992 without payment of retirement and separation benefits under the CBA. Complainant filed a case in July 16, 1996. RULING: Under Article 291 of the Labor Code, money claims specifically recoverable under this Code should be filed within 3 years from the time their cause of action accrues. The filing of complaint in the NLRC in December 7 does not interrupt the running of the prescriptive period because NLRC has no jurisdiction of the case since the Voluntary Arbitrator has jurisdiction over the case regarding interpretation and implementation of the CBA. Since the case was filed in July 16, 1996, hence the cause of action has already prescribed.

Motion to dismiss the complaint is a prohibited pleading except: 1. On the ground of lack of jurisdiction over the subject matter. 2. Improper venue, 3. Res judicata or 4. Prescription. Contents of the complaint Name and address of the complainant. Name and address of the ER. No. Of the workers of the particular company. Causes of action of the complainant.

1. 2. 3. 4.

PROCEDURE 1. Complaint filed with the RAB of the NLRC which has jurisdiction over the workplace of said EE. Venue vs. Jurisdiction Venue is only procedural and is provided under the NLRC rules. While jurisdiction is defined by law under art 217. 2. After docketing, it will be forwarded to the executive labor arbiter (ELA) for raffle purposes. 3. Once assigned to the labor arbiter, the la will issue summons where a copy of the complaint will have to be attached as well as the date, place, and time of initial hearing. All these document must served to the respondent. Purpose of summons: For the proper acquisition of jurisdiction over the person of the respondent. Should the service be improper, the respondent can file a motion to dismiss and the la can dismiss the case based on that ground. It must be delivered to the respondent or his lawyer. The service of summon will depend upon the kind of respondent applying the rules of civil procedure. 4. Once the summons has been properly served, the respondent well have to comply by attending the conference as stated in the notice of hearing. MANDATORY CONFERENCE The initial hearing How many initial conferences are now authorized under the rule? Before, in the old rules, it was 3 settings. Now, it is only 2. Purpose: To amicably settle the case upon a fair compromise, or determining the real parties in interest, or defining and simplifying the issues in the case, entering into admissions and stipulation of facts and threshing out preliminary matters. Is the LA authorized to compromise under the labor code? No. His power to compromise is provided under NLRC rules of procedure. Can the parties enter into a compromise not in the presence of the LA? Yes. Under the NLRC rules of procedure, Rule 5, Section 2. A compromise agreement entered into by the parties not in the presence of the Labor Arbiter before whom the case is pending shall be approved by him if, after confronting the parties, particularly the complainants, he is satisfied that they understand the terms and condition of the settlement and that it was entered into freely and voluntarily by them and the agreement is not contrary to law, morals and public policy.

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St. Gothard Disco Pub and Restaurant vs. NLRC 218 SCRA 336 This was a quitclaim involving a compromise agreement not before the labor arbiter whom the case was assigned but with another Labor Arbiter. The SC held that said compromise agreement was void because it was in violation of the rules of procedure of the NLRC. Compromise before the LA is final and executory. It shall be enforced through writ of execution. FACTS: St. Gothard Disco was hit by Typhoon Ruping. As a result of the stoppage of business, 28 employees filed claims for separation pay and 13th month pay in the NLRC. NLRC awarded in favor of the employees. The owners appealed to the NLRC. NLRC dismissed the petitioners appeal on the ground that no cash or security bond was posted. Owners filed a petition for certiorari. RULING: The posting of a cash or surety bond equivalent to the monetary award in the judgment appealed from is a mandatory requirement for perfection of the appeal under Article 223 of the Labor Code.

NOTE: QUITCLAIM partakes the nature of a compromise, and such a settlement shall be approved by the Labor Arbiter under the Implementing Rules.

Loyola Security and Detective Agency vs. NLRC GR 113287, May 9, 1995 In this case, the SC noted that there is no provision regarding compromise agreements before the Labor Arbiter, the rules of procedure before the NLRC should be applied strictly. Should the parties arrive at any agreement as to the whole or any part of the dispute, the same shall be reduced to writing and signed by the parties and their respective counsels if any before the Labor Arbiter. The settlement shall be approved by the Labor Arbiter after being satisfied that it was voluntarily entered into by the parties and after explained to them the terms and consequences thereof. Private respondents Victor Prado, Sr. and Matilde Tuscano filed a complaint against petitioners, the Loyola Security and Detective Agency and the latter's general manager. Ruperto Acle, Jr., for illegal dismissal illegal deduction, underpayment of wages, non-payment of overtime pay, legal holiday pay, premium pay for holiday and rest day, and violation of P.D. No. 851. COMPROMISE AGREEMENT; FOR VALIDITY THEREOF, REQUIRES THE ASSISTANCE OF COUNSEL AND APPROVED BY THE LABOR ARBITER. The Labor Code of the Philippines does not contain any provision on compromise agreements or quitclaims in cases pending before the Labor Arbiter and the NLRC. However, the New Rules of Procedure of NLRC in Section 2, Rule V (Proceedings Before Labor Arbiter) provides that: . . . "Should the parties arrive at any agreement as to the whole or any part of the dispute, the same shall be reduced to writing and signed by the parties and their respective counsels, if any, before the Labor Arbiter. The settlement shall be approved by the Labor Arbiter after being satisfied that it was voluntarily entered into by the parties and after having explained to them the terms and consequences thereof. "A compromise agreement entered into by the parties not in the presence of the Labor Arbiter before whom the case is pending shall be approved by him if, after confronting the parties, particularly the complainants, he is satisfied that they understand the terms and conditions of the settlement and that it was entered into freely, and voluntarily by them and the agreement is not contrary to law, morals and public policies." In the case at bench, the NLRC found that: ". . .. In the case at bar, the satisfaction of judgment dated October 19, 1990 was executed by the complainants without the assistance of their counsel and without the approval of the Labor Arbiter. There is also a great disparity with regards to the monetary award . . .." We find no grave abuse of discretion committed by NLRC inasmuch as its decision is supported by the records of the case. Thus, we adopt the findings of NLRC to the effect that the settlement entered into by the parties was without the assistance of counsel or approval of the Labor Arbiter. CIVIL LAW; SPECIAL CONTRACTS; AGENCY; SPECIAL POWER OF ATTORNEY; WHEN REQUIRED. We also note that respondent Prado executed that compromise agreement not only on his own behalf but on behalf of respondent Tuscano. There is, however, no showing that respondent Prado was duly authorized by respondent Tuscano to waive a part of the award given her. Under Article 1878 of the Civil Code of the Philippines, a special power of attorney is necessary: ". . . (2) To effect novations which put an end to obligations already in existence at the time the agency was constituted; (3) To compromise, . . . (4) To waive any obligation gratuitously; . . . (15) Any other act of strict dominion." Hence, being violative of existing law and jurisprudence, such settlement cannot be given force and effect.

 129 Mandatory conference is analogous with pre-trial in criminal and civil cases. Stipulation of facts to be proposed to respondent ER for money claims. (still employed) 1. Existence of ER-EE relationship. 2. That the EE was employed for a particular period of time. 3. EE is receiving this particular salary. 4. That respondent is doing business in this particular name. 5. If no compromise agreement is entered into the parties will then be required to submit their respective verified position paper within an inextendible period of 10 days.

SECTION 4 RULE 7, Civil Procedure, as amended by Administrative Matter 00-2-10,

May 1, 2000 provides that the affiant has read the pleading and that the allegations therein are true and correct according to his personal knowledge and based on authentic records. Verification is important because the case may be decided based on position papers alone without need of conducting formal hearings. Violation of this requirement would either mean that such pleading would be expunged from the records and the party concerned subjected to sanctions. Position papers should also be accompanied by affidavit of the witnesses which shall take place of the latters testimony. (RULE V SECTION 3) Purpose of affidavit To take the place of the witnesses direct testimony. Support allegations in the position paper. If the LA decides to conduct hearing, there would be no need of direct examination or Q&A because the position paper would take the place of the direct testimony of the witness. The only requirement would be for the affiant to identify the affidavit and to offer the testimony of the witness. And thereupon, proceed to the cross-examination of such witness. Does the position paper require certification against forum shopping? Yes. NLRC Rules provide that rules on civil procedure would apply suppletorily. (RULE 1 SECTION 3)

Contents of position paper:

Furthermore, the Rules of Court specifically mentions not only of courts but also tribunals and agencies such as LA and NLRC.
Maricalum vs. NLRC, 298 SCRA 384 Certification against forum-shopping applicable to NLRC. The Certificate of Non-Forum Shopping as provided by Supreme Court Circular 04-94 is a mandatory and should accompany pleadings filed before the NLRC. Since the NLRC is a quasi0judicial agency hence initiatory pleading filed before it should be accompanied by a certificate of non-forum shopping.

Such certification should be signed not by the lawyer but by the party. Except if you are the
in-house lawyer of such company.

Escorpizo vs. University of Baguio 306 SCRA 503, GR 121962, April 30, 1999 Petitioner Esperanza Escorpizo was initially hired by respondent University of Baguio on June 13, 1989 as a high school classroom teacher. Under the rules of the respondent University, appointment to teach during the first 2 years at the University is probationary in nature. Attainment of a permanent status by s faculty member is conditioned upon compliance with certain requirements, such as passing the professional board examination for teachers (PBET). On March 18, 1991, respondent University informed petitioner that it was terminating her employment for her failure to pass the PBET. Petitioner pleaded that she be given another chance since she had just taken the PBET and hope to pass the same. Unfortunately, she failed again. Undaunted, she took the examination a third time in November 1991. This time, she passed. Nevertheless, on June 15, 1992, the University did not renew Escorpizos contract of employment on the ground that she failed to qualify as a regular teacher.

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Petitioner filed a complaint for illegal dismissal, payment of backwages and reinstatement. Labor Arbiter ordered reinstatement but without backwages. Petitioner appealed to the NLRC, which dismissed said appeal and affirmed Labor Arbiters decision. Instead of filing a motion for reconsideration, petitioner files instant petition for certiorari under Rule 65. PETITION DISMISSED. The assailed resolution of the NLRC is AFFIRMED. CERTIORARI WILL LIE IF THERE IS NO APPEAL OR ANY OTHER PLAIN, SPPEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW. In the case at bar, the plain and adequate remedy expressly provided by law was a motion for reconsideration of the impugned resolution, based on palpable or patent errors, to be made under oath and filed within 10 days form receipt of the questioned resolution of the NLRC, a procedure which is jurisdictional. Hence, original action of certiorari, as in this case, will not prosper. Further, it should be stressed that without a motion for reconsideration seasonably filed within the 10-day reglementary period, the questioned order, resolution or decision of the NLRC becomes final and executory after 10 calendar days from receipt thereof. Consequently, the merits of the case can no longer be reviewed to determine if the public respondent has committed any grave abuse of discretion. CERTIFICATION OF NON-FORUM SHOPPING MUST BE BY PETITIONER OR ANY OF THE PRINCIPAL PARTY. As pointed out by the private respondents, the certification in the present petition was executed by the counsel of petitioners, which is not correct. The certification of non-forum shopping must be by the plaintiff or any of the principal party and not the attorney. This procedural lapse on the part of petitioners is also a cause for the dismissal of this action.

Certification of non-forum shopping to be signed by the complainant, not the lawyer. Damasco vs. NLRC Dec. 4, 2000 It is now axiomatic that the essence of due process in administrative proceedings is simply an opportunity to explain ones side or an opportunity to seek reconsideration of the action or ruling complained of. A formal or trial-type hearing is not at all times and in all instances essential to due process, the requirements of which is satisfied where parties are afforded fair and reasonable opportunity to explain their side of the controversy at hand. As noted by the Solicitor General and petitioner Damasco, the labor arbiter set the case several times for preliminary conference but the parties failed to reached an amicable settlement. The labor arbiter then ordered the parties to submit their position papers. In compliance therewith, the parties submitted position papers where they set out and argued the factual as well as the legal bases of their position. Damasco filed her position paper, computation of money claims and affidavit. For his part, Sia filed his position paper and affidavit. Damasco, in turn, filed her affidavit in reply to the affidavit of Sia. After both parties had filed their replies, the case was deemed submitted for resolution as the labor arbiter did not find it necessary to conduct a trial-type hearing. Note that the filing of position papers and supporting documents fulfills the requirements of due process. Further, it is within the discretion of the labor arbiter to determine if there is a need for a hearing. Thus, we cannot subscribe to Sias posturing that the labor arbiter gravely abused its discretion when he dispensed with the hearing to receive further evidence. Moreover, Sia was given additional opportunity to argue his case on appeal before the NLRC in a memorandum and motion for reconsideration which pleadings were likewise considered by that labor agency in the course of resolving the case. Sia cannot thereafter interpose lack of due process since he was given sufficient time and ample chances to be heard in the present case. Consequently, the alleged defect in the proceedings in the labor arbiter, if there be any, should be deemed cured.

If other causes of action were not included in the original complaint, remedy is to file an
amended complaint. Holding of trial is discretionary on the LA, why? Because if based on the position paper, the facts are not controverted, then the Labor Arbiter can decide based on the position papers. However, if controverted, then the Labor Arbiter would see the need to ask clarificatory questions to further elicit facts. Do the technical rules on evidence apply? Is there a provision in LC? Article 221, LC - In any proceeding before the commission or any of the Labor Arbiters, the rules on evidence prevailing in courts of law or equity shall not be controlling.

RULE 5, SECTION 9, NLRC RULES The proceedings before a Labor Arbiter shall be nonlitigious in nature. Subject to the requirements of due process, the technicalities of law and procedure and the rules obtaining in the courts of law shall not strictly apply thereto.

 131 NOTE: It does not mean however that the rules on evidence will not be used. Such will not only be controlling. Admissibility of evidence involving money claims. What is the quantum of proof in labor cases? SUBSTANTIAL EVIDENCE relevant evidence, which a reasonable mind might accept as adequate to support a conclusion. Burden of proof [EX. Complainant alleges that ER did not pay minimum wage, overtime pay.] Burden rests upon ER to prove correct payment. Based on SC rulings, it is a negative allegation and does not require proof on the claimant. Also because The ER keeps payroll records. {Opinion of Marquez} However, it does not dispense on the part of the claimant to prove or specify his allegations such as the particular date or # of hours of unpaid overtime. EE should share the burden. How can Employer prove payment? The employer can prove payment though the payroll. One of the parts of the payroll is the dotted line where the EE will sign upon receipt of the payment. Since the law requires the ER to keep certain records, such as the payroll, then it is easier for the ER to prove payment than for the EE to prove non-payment. Admissibility of evidence? Rules on hearsay evidence would apply. A piece of paper which is not authenticated such as a payroll, the same being undated and unsigned, would be considered a private document. How is a private document authenticated?

(Rules on Evidence) Its due execution and authenticity must be proved by either anyone who saw the document execute or written or by the evidence of the genuineness of the signature and handwriting of the maker.

Cases: Admissibility of Evidence: Even if it is a Labor Case, the SC applied Rules on Evidence Daily Time Record which is a mere photocopy.
Jarcia Machine Shop vs. NLRC 266 SCRA 97 We fail to see any grave abuse of discretion amounting to lack of jurisdiction on the part of public respondent in upholding the labor arbiter's decision which declared Tolentino's transfer as a constructive dismissal. With respect to its first argument, petitioner contends that public respondent committed grave abuse of discretion in not taking into consideration private respondent' s propensity to absence, tardiness and work undertime which is allegedly well-established in private respondent's daily time records (DTR). It is claimed that a perusal of these DTRs would show that private respondent had been absent or had worked undertime quite a number of times for the year 1992. This had been the case since private respondent got married. Petitioner claims that private respondent's record of absences, tardiness and undertime work gives petitioner more than sufficient reason to impose some disciplinary action against private respondent. However, despite his work attitude, private respondent was not dismissed but merely transferred by petitioner to another position. Indeed, the DTRs annexed to the present petition would tend to establish private respondent's neglectful attitude towards his work duties as shown by repeated and habitual absences and tardiness and propensity for working undertime for the year 1992. But the problem with these DTRs is that they are neither originals nor certified true copies. They are plain photocopies of the originals, if the latter do exist. More importantly, they are not even signed by private respondent nor by any of the employer' s representatives. In all of the DTRs attached to the present petition, the space provided for the employee's signature is

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conspicuously blank. Hence, as pointed out by private respondent in his Comment, these DTRs have not been established as pertaining to private respondent, thus raising the probability that these records may have been simulated to justify private respondent's demotion and transfer. At this juncture, it should be noted that private respondent himself impugns the authenticity of these DTRs.

Notebook which is undated and unsigned. According to the SC there is uncertainty as to the origin and authenticity of the same.

Jimenez vs. NLRC 256 SCRA 84 As a general rule, one who pleads payment has the burden of proving it. Even where the plaintiff must allege non-payment, the general rule is that the burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-payment. The debtor has the burden of showing with legal certainty that the obligation h as been discharged by payment. When the existence of a debt is fully established by the evidence contained in the record, the burden of proving that it has been extinguished by payment devolves upon the debtor who offers such a defense to the claim of the creditor. Where the debtor introduces some evidence of payment, the burden of going forward with the evidence as distinct from the general burden of proof shifts to the creditor, who is then under a duty of producing some evidence to show non-payment. In the instant case, the right of respondent Pedro Juanatas to be paid a commission equivalent to 17%, later increased to 20%, of the gross income is not disputed by petitioners. Although private respondents admit receipt of partial payment, petitioners still have to present proof of full payment. Where the defendant sued for a debt admits that the debt was originally owed, and pleads payment in whole or in part, it is incumbent upon him to prove such payment. That a plaintiff admits that some payments have been made does not change the burden of proof. The defendant still has the burden of establishing payments beyond those admitted by plaintiff. The testimony of petitioners which merely denied the claim of private respondents, unsupported by documentary evidence, is not sufficient to establish payment. Although petitioners submitted a notebook showing the alleged vales of private respondents for the year 1990, the same is inadmissible and cannot be given probative value considering that it is not property accomplished, is undated and unsigned, and is thus uncertain as to its origin and authenticity. Involves a written summation of accounts which is undated and unsigned.

Callanta vs. NLRC 225 SCRA 526 Anent the claims for refund, petitioner once again failed to convincingly prove the authenticity of his claim against private respondent company. Petitioner claims that the amounts of P76,893.42 and P10,000.00 allegedly owed to him by private respondent company were matters proved during the hearings before the Labor Arbiter. However, the records show that no hearing for the reception of evidence was ever conducted by the Labor Arbiter. At most, what transpired were preliminary hearings which had to be reset for five (5) times due to the absence of counsel for private respondent. In fact, because of the absence of counsel for respondent company, the Labor Arbiter just ordered the parties to submit their respective position papers in lieu of actual hearings. This having been the case, the Court is not convinced that the money claims of petitioner have really been proven during the alleged hearings before the Labor Arbiter, if any, especially in the present case where the money claims are even refuted by private respondent. In support of its claims for refund, petitioner presented a written summation of accounts reflecting the amounts allegedly owed by private respondent company to him. However, the aforestated summation is undated and unsigned, thus inadmissible and uncertain as to its origin and authenticity. Further kindling the flame of suspicion as to the origin of the summation in question is the context of the November 17, 1987 letter of petitioner to private respondent Limpe. Quite unusual is the fact that in refuting the findings of the alleged "post audit" conducted by private respondent company, petitioner did not even bother to mention the source of his conclusion that private respondent company still owes him P76,893.42, while at the same time complaining that somehow he is being refused access to and disclosure of some of the company records, particularly the records/audit of E.V. Rodriguez and J. Pong, Jr. These facts are inconsistent with petitioner's contention that it was the auditor of private respondent company itself who made the written summation.

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Xerox copy is a scrap of paper. It must be a certified true copy if offered as evidence.

Capili vs. NLRC 273 SCRA 589 The validity then of UM's "retirement" of the petitioner upon the latter's 60th birth anniversary on 18 August 1993 could only be based on proof that the petitioner became a member of its Retirement Plan at any time after his employment in 1982 but before 18 August 1993. The burden to prove such a fact was on UM, but the record fails to show that UM has discharged that burden. UM's belated attempt to prove that it is a school policy to retire employees who reach the age of 60, pursuant to UM's Retirement Policies dated 16 December 1990 24 and Updated Retirement Policy dated 3 August 1993, cannot sway this Court in UM's favor. These documents are mere scraps of paper, they being only xerox copies. They have not been certified to be true copies or offered in evidence before the Labor Arbiter and the NLRC. Neither have they even been referred to in UM's comment in this case.

Can the LA validly decide based on position papers? If the issues are not controverted, then such method is practicable and valid. If the facts are controverted, then hearing must be conducted. Such is usually applied in illegal dismissal cases. In money claims, you just show your payroll.

No motion for reconsideration is allowed from a judgment or order of the LA. (RULE V,
SECTION 19, NLRC RULES). The remedy is to appeal such decision to the NLRC within 10 calendar days from the receipt of the decision of the LA. It is 5 calendar days if the decision came from the RD.
Motion for reconsideration in NLRC is a prohibited pleading.

Bombase vs. NLRC 245 SCRA 496 The claim of petitioner that her backwages should be recomputed was correctly denied by public respondent. The matter was only raised by petitioner when she moved for reconsideration of the Order of March 19, 1992 of Arbiter del Rosario. Her motion was denied on July 8, 1992 on the ground that under the rules of public respondent said motion for reconsideration is a prohibited pleading. The denial was appealed to the NLRC and it was rightly affirmed by public respondent NLRC for section 17, Rule 5 of the Revised Rules of the NLRC categorically provides that "no motion for reconsideration of any order or decision of the Labor Arbiter shall be given due course." In connection therewith, Article 223 of the Labor Code, as amended, provides that "decision, awards or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders." It is thus plain that petitioner can no longer assail the correctness of her award of backwages as she failed to challenge it by means of appeal to the NLRC and within the ten (10) day period required by the Labor Code, as amended. In Ramones v. NLRC, we held that this appeal period is jurisdictional. We also sustain the award of separation pay given by the public respondent to petitioner.

If the judgment involves a monetary award, how is the appeal perfected? By posting a cash or surety bond exclusive of damages and attorneys fees. (Rule VI, Sec. 6) 1. 2. 3. 4. What are the other requirements to perfect appeal? Proof of payment of appeal fee. Under oath Filed on time File a memorandum of appeal containing: - Grounds relied upon and arguments in support thereof. - Relief prayed for. - Statement of date when decision was received. - Proof of service to other party.

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Appeal fee is jurisdictional. Luna vs. NLRC GR 11604, Mar. 20, 1997 Private respondent Grandeur Security Services Corporation also defends the order of the NLRC and contends that petitioners' appeal was not perfected because the required appeal fees were paid beyond the reglementary period. The issue in this case is whether the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction in dismissing the petitioners' appeal. We hold that it did not. Under the rules of the NLRC, an appeal from the Labor Arbiter's decision to the NLRC may be taken (1) by filing a verified memorandum of appeal and (2) by paying the appeal fees filed within ten (10) calendar days from receipt of a decision, award or order of the Labor Arbiter. Both requisites must be satisfied, otherwise the running of the prescriptive period for perfecting an appeal will not be tolled. Payment of appeal docketing fee not required for perfection of appeal. Aba vs. NLRC 311 SCRA 248 Not jurisdictional but merely a technical rule citing Article 277(d) of the LC which states that no docket fee shall be assessed in labor standards dispute. Is delay in paying the appeal docketing fee fatal to petitioners appeal? The Office of the Solicitor General opines that the dismissal of petitioners appeal for failure to pay the appeal docketing fee on time was not in consonance with the constitutional mandate to protect labor and settled jurisprudence. Accordingly, it moves for the setting aside of the decision of the NLRC which dismissed Abas appeal and motion for reconsideration for non-payment of the appeal docketing fee. The petition is impressed with merit. "Appeal" means the elevation by an aggrieved party of any decision or award of a lower body to a higher body by means of a pleading which includes the assignment of errors, arguments in support thereof, and the reliefs prayed for. On the other hand, "perfection of an appeal" includes the filing, within the prescribed period, of the memorandum of appeal containing, among others, the assignment of error/s, arguments in support thereof, the relief sought and, in appropriate cases, posting of the appeal bond. An appeal bond is necessary only in case of a judgment involving a monetary award, in which case, the appeal may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. In the instant case, it is undisputed that the appeal was filed within the reglementary period. The memorandum of appeal contained an assignment of errors, the arguments in support thereof, and the reliefs sought. No appeal bond was necessary as the decision being appealed did not contain any monetary award. Nowhere is it written that payment of appeal docketing fee is necessary for the perfection of the appeal. Therefore, there is no question that the appeal in the instant case has been perfected and the failure to pay the appeal docketing fee is not fatal. Besides, it is settled jurisprudence that technical rules of evidence are not binding in any proceedings before the Commission or any of the labor arbiters. It has been the policy of this Court to resolve labor disputes with the view of compassionate justice towards the working class.

Marquez comments that docket fee and appeal fee are not the same!
Distinction between perfection of appeal and filing of appeal
Teofilo Gensoli and Co. vs. NLRC 289 SCRA 407 In perfecting their appeal, petitioners filed with NLRC a supersedeas bond to cover only the amount of One Hundred Eighty One Thousand Nine Hundred Sixty Nine and 10/100 (P181,969.10) Pesos, the excess amount disputed on appeal. To the appeal of petitioners, private respondents interposed their opposition on the ground that the supersedeas bond posted by petitioners did not equal the monetary award of Four Hundred Thirty Four Thousand Seven Hundred Fifty Two and 50/100 (P434,752.50) Pesos and attorney's fees. As the appeal from subject Decision was not perfected within the 10-day reglementary period; on August 11, 1993, the NLRC dismissed the appeal, holding, thus

". . . The Commission (Fourth Division) after due deliberation, RESOLVED to DISMISS the instant appeal for failure of respondent-appellants to comply with the requirement for the perfection of an appeal specifically the posting of the required cash or surety bond equivalent to the

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monetary award. The monetary award in the judgment appealed from is P434,752.50, whereas the supersedeas bond posted is only P181,969.10, and therefore, deficient by P252,783.40. The law and the present Rules of Procedure of the NLRC are very explicit in the matter of posting a cash or surety bond equivalent to the monetary award in The petition is impressed with merit.

Salutory and prevailing is the rule that technical rules be not strictly followed and the spirit and intent of the Labor Code be taken into account. True it is, Article 223 of the Labor Code, as amended by Republic Act No. 6715, requires a cash or surety bond in an amount equal to the monetary award in the judgment appealed from. But for the perfection of the appeal on the merits, to be threshed out by the NLRC, the requirements of the law should be given a liberal interpretation. This policy of liberal interpretation was unequivocably ratiocinated and amply settled in the case of Oriental Mindoro Cooperative, Inc. v. NLRC (246 SCRA 801 [1995]), to wit:

"The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that an appeal by the employer may be perfected 'only upon the posting of a cash or surety bond.' The word 'only' makes it perfectly clear, that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employer's appeal may be perfected. That requirement is intended to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their employees' just and lawful claims. Considering, however, that the current policy is not to strictly follow technical rules but rather to take into account the spirit and intention of the Labor Code, it would be prudent for us to look into the merits of the case, especially since petitioner disputes the allegation that private respondent was illegally dismissed. . . " Indeed, well entrenched is the principle of liberal interpretation of the Labor Code, as amended. order to perfect an appeal by an employer (Article 223 of the Labor Code of the Philippines, as amended, and Sections 3 (a) and 6, Rule VI of the New Rules of Procedure of the NLRC, as amended). As held by the Supreme Court, ". . . perfection of an appeal in the manner . . . prescribed by law is not only mandatory but jurisdictional and failure to perfect an appeal as required by the Rules has the effect of rendering the judgment final and executory."

Is property bond allowed? Although RULE VI SECTION 6 doesnt provide for it, the case of UERM-Memorial Medical Center vs. NLRC, March 3, 1997, GR 110419, allows the same. Judgment was more than P17M. The property bond offered was P102M.
UERM-Memorial Medical Center vs. NLRC March 3, 1997, GR 110419 The question presented in this petition for certiorari under Rule 65 is whether or not in perfecting an appeal to the National Labor Relations Commission (NLRC) a property bond is excluded by the two forms of appeal bond cash or surety as enumerated in Article 223 of the Labor Code. Within the reglementary period for appeal, the petitioners filed their Notice and Memorandum of Appeal with a Real Estate Bond consisting of land and various improvements therein worth P102,345,650. The private respondents moved to dismiss the appeal on the ground that Article 223 of the Labor Code, as amended, requires the posting of a cash or surety bond. The NLRC directed petitioners to post a cash or surety bond of P17,082,448.56 with a warning that failure to do so would cause the dismissal of the appeal. The petitioners filed a Motion for Reconsideration alleging it is not in a viable financial condition to post a cash bond nor to pay the annual premium of P700,000.00 for a surety bond. On 6 October 1992, the

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NLRC dismissed petitioners' appeal. Petitioners' Motion for Reconsideration was also denied by the NLRC in a resolution dated 7 June 1993. Hence, this petition assailing the two resolutions as having been issued with grave abuse of discretion. On 28 June 1993, we temporarily enjoined the NLRC from implementing the questioned resolutions and from executing the decision of the Labor Arbiter. The applicable law is Article 223 of the Labor Code, as amended by Republic Act No. 6715, which provides: "In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from."

We have given a liberal interpretation to this provision. In YBL (Your Bus Line) v. NLRC 4 we ruled:

". . . that while Article 223 of the Labor Code, as amended by Republic Act No. 6715, requiring a cash or surety bond in the amount equivalent to the monetary award in the judgment appealed from for the appeal to be perfected, may be considered a jurisdictional requirement, nevertheless, adhering to the principle that substantial justice is better served by allowing the appeal on the merits threshed out by the NLRC.

Then too, in Oriental Mindoro Electric Cooperative, Inc. v. National Labor Relations Commission we held: "The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that an appeal by the employer may be perfected "only upon the posting of a cash or surety bond." The word "only" makes it perfectly clear, that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employer's appeal may be perfected. The requirement is intended to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their employees' just and lawful claims. Considering, however, that the current policy is not to strictly follow technical rules but rather to take into account the spirit and intention of the Labor Code, it would be prudent for us to look into the merits of the case, especially since petitioner disputes the allegation that private respondent was illegally dismissed." We reiterate this policy which stresses the importance of deciding cases on the basis of their substantive merit and not on strict technical rules. In the case at bar, the judgment involved is more than P17 million and its precipitate execution can adversely affect the existence of petitioner medical center. Likewise, the issues involved are not insignificant and they deserve a full discourse by our quasi-judicial and judicial authorities. We are also confident that the real property bond posted by the petitioners sufficiently protects the interests of private respondents should they finally prevail. It is not disputed that the real property offered by petitioners is worth P102,345,650. The judgment in favor of private respondent is only a little more than P17 million. So holds that the foregoing requirement of the law should be given a liberal interpretation.

Your Bus Line vs. NLRC 190 SCRA 160 Reiterates the UERM case. Hence, this petition for review, which this Court will treat as a special civil action for certiorari, whereby petitioners raised the sole issue that the NLRC erred in not giving due course to the appeal for failure to satisfy a purely technical requirement when issues involving substantial rights were raised in the appeal. The petition is impressed with merit.

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Article 223 of the Labor Code as amended by Republic Act No. 6715 provides as follows: "ART. 223. Appeal. . . . In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from." (Emphasis supplied.) The NLRC Interim Rules on Appeals under Republic Act No. 6715, which took effect on September 5, 1989, provide in Section 5 thereof as follows: "Section 5. Requisites of Appeal; When Perfected. . . . shall be under oath with proof of payment of the required appeal fee and the posting of a cash or surety bond as provided in Section 7 of these rules. . . ." (Emphasis supplied.) The appeal interposed by petitioners to the NLRC was made on September 11, 1989, or just after six (6) days from the effectivity of the aforestated Interim Rules. In undertaking the appeal, the counsel of petitioners relied on the notice of the decision in the case which stated the requirements of an appeal without any mention that a bond must be filed. Apparently said counsel did not know as yet of said new law and Interim Rules requiring the posting of a bond on appeal. It also appears that private respondents did not know about it as no opposition to the appeal was made on this account. Moreover, in the appealed decision of the labor arbiter the exact total amount due to the private respondents as separation pay is not stated which would be the basis of the bond that is required to be filed by petitioners under the said law. Thus even if petitioners may be expected to know the law, then they allege that they would have to go to the socio-analyst of the NLRC to compute the approximate amount due the private respondents as the basis of the amount of the bond to be filed so that it is not probable that they may be able to secure such computation within the non-extendible period of ten (10) days to appeal provided for by law. Petitioners also assert that at that time the petitioner corporation was in financial distress. At any rate they offered to post the bond in compliance with the requirement of the law so that they may be afforded the relief of an appeal. The Court finds that while Article 223 of the Labor Code, as amended by Republic Act No. 6715, requiring a cash or surety bond in the amount equivalent to the monetary award in the judgment appealed from for the appeal to be perfected, may be considered a jurisdictional requirement, nevertheless, adhering to the principle that substantial justice is better served by allowing the appeal on the merits threshed out by the NLRC, the Court finds and so holds that the foregoing requirement of the law should be given a liberal interpretation. In Sun Insurance Office, Ltd. vs. Maximiano C. Asuncion, this Court relaxed the rule in Manchester Development Corporation vs. Court of Appeals, by allowing a liberal interpretation of the rule that the payment of the docket fees is jurisdictional. More so when the party involved demonstrated his willingness to abide by the rules to pay the docket fees required. This Court held that the payment of said fees may be authorized by the Court within a reasonable time but in no case beyond the applicable prescriptive or reglementary period. The greater interest of justice will be served by giving due course to the appeal despite the much delayed filing of the appeal bond. In this case, the circumstances of the non-filing of the bond are understandable and could be attributed to excusable oversight. The Court holds that petitioners should be given the opportunity to file the required bond and avail of the remedy of appeal.

Does the exclusion of damages and attorneys fees in the bond per Sec. 6, Rule VI, NLRC rules have statutory basis? Note that Article 223 of the LC provides that the bond should be equivalent to the monetary award in the judgment appealed from.
Are moral damages included in the computation of "monetary award" for purposes of determining the amount of the appeal bond?

Fernandez vs. NLRC Jan. 28, 1998, GR 105892 The SC said there is no conflict because Article 223 provides for the requisites to perfect the appeal while the NLRC rules, the manner of computing the bond. Petitioners contend that Respondent NLRC did not acquire jurisdiction over the appeal of private respondents because the appeal bond was insufficient. Although the total monetary award in their favor was P1,078,200.55, private respondents posted a cash bond in the amount of P752,183.00 only. In computing the monetary award for the purpose of posting an appeal bond, private respondents relied on Rule VI, Section 6 of the 1990 New Rules of Procedure of the NLRC and excluded the award for damages, litigation expenses and attorney's fees.

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Petitioners argue however that the said rule cannot prevail over Article 223 of the Labor Code, which does not provide for such exclusion. We agree with private respondents. Article 223 of the Labor Code provides: xxx xxx xxx In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided therein. . . ." (Emphasis supplied.) On the other hand, Rule VI, Section 6 of the 1990 NLRC New Rules of Procedure, invoked by private respondent, provides: "Section 6. Bond. In case of the decision of a Labor Arbiter involves a monetary award, an appeal by the employer shall be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission or the Supreme Court in an amount equivalent to the monetary award. The Commission may, in meritorious cases and upon Motion of the Appellant, reduce the amount of the bond. However, an appeal is deemed perfected upon the posting of the bond equivalent to the monetary award exclusive of moral and exemplary damages as well as attorney's fees. Nothing herein however, shall be construed as extending the period of appeal." (Emphasis supplied.) There is no conflict between the two provisions. Article 223 lays down the requirement that an appeal bond should be filed. The implementing rule, on the other hand, explains how the appeal bond shall he computed. The rule explicitly excludes moral and exemplary damages and attorney's fees from the computation of the appeal bond. This exclusion has been recognized by the Court in a number of cases. Hence, in Erectors vs. NLRC, the Court nullified an NLRC order requiring the posting of an appeal bond which, among others, "even included in the computation the award of P400,000.00 for moral and exemplary damages." Indeed, the said implementing rule is a contemporaneous construction of Article 223 by the NLRC pursuant to the mandate of the Labor Code; hence, it is accorded great respect by this Court.

If the last day to file an appeal falls on a Saturday, Sunday or Holiday You can still file it on the next working day. In computing the 10-day period, do not exclude these days because the law speaks of calendar days. Under what mode of service can a pleading before the NLRC be filed? The NLRC Rules do not provide for a more of serving pleadings in general. The Rules of Court provides however that it can be done through: - Personal delivery - Registered Mail For purposes of computing the reglementary period, if the filing is done by registered mail, the date of mailing is the date of filing. If by ordinary mail, the date of actual receipt is the date of filing. See INDUSTRIAL PAPER VS NLRC [233 SCRA 597].
Industrial Paper vs. NLRC 233 SCRA 597 SERVICE OF PLEADINGS; RULE IF MADE BY ORDINARY MAIL OR BY PRIVATE MESSENGERIAL SERVICE. On the issue of the timeless of the petitioners' motion for reconsideration, we find that the NLRC correctly applied the rule that where a pleading is filed by ordinary mail or by private messengerial service, it is deemed filed on the day it is actually received by the court, not on the day it was mailed or delivered to the messengerial service. As this Court held in Benguet Electric Cooperative, Inc. v. NLRC, (209 SCRA 55 [1992]): The established rule is that the date of delivery of pleadings to a private letter-forwarding agency is not to be considered as the date of filing thereof in court, and that in such cases, the date of actual receipt by the court, and not the date of delivery to the private carrier, is deemed the date of filing of that pleading.

Is it possible to file a Motion to Reduce Bond? Yes, see Rule 6, Section 6. However, you must file it within the reglementary period to appeal and the act of filing does not stop the running of the period to appeal. Note that the appeal is perfected once a bond is filed. See the following cases and do not mistake one from the other because these cases were decided prior to the amendment:

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Star Angel Handicraft vs. NLRC 236 SCRA 580 The appeal bond is required under Paragraph 2 of Article 223 of the Labor Code, which provides:
"In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from."

Section 3(a), Article 223, Rule VI of the New Rules of Procedure of the NLRC provides:
"Requisites for Perfection of Appeals. (a) The appeal shall be filed within the reglementary period as provided in Section 1 of the this Rule; shall be under oath with proof of payment of the required appeal fee and the posting of a cash or surety bond as provided in Section 5 of this Rule; . . ."

Under Section 5 of Rule VI, the appellant is required to pay an appeal fee of P100.00 to the Regional Arbitration Branch, Regional Office, and to attach to the records of the case the official receipt of such payment. In Section 6 of Rule VI, it is provided that:
"Bond. In case the decision of a Labor Arbiter involves a monetary award, an appeal by the employer shall be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission or the Supreme court in an amount equivalent to the monetary award. The Commission may, in meritorious cases and upon Motion of the Appellant, reduce the amount of the bond. (However, an appeal is deemed perfected upon the posting of the bond equivalent to the monetary award exclusive of moral and exemplary damages as well as attorney's fees [Deleted, effective on January 14, 1992]). Nothing herein however, shall be construed as extending the period of appeal."

Neither the Labor Code nor its implementing rules specifically provide for a situation where the appellant moves for a reduction of the appeal bond. Inasmuch as in practice the NLRC allows the reduction of the appeal bond upon motion of appellant and on meritorious grounds, it follows that a motion to that effect may be filed within the reglementary period for appealing. Such motion may be filed in lieu of a bond which amount is being contested. In the meantime, the appeal is not deemed perfected and the Labor Arbiter retains jurisdiction over the case until the NLRC has acted on the motion and appellant has filed the bond as fixed by the NLRC. An analogous procedure is the extension of time to file a record on appeal, provided the motion for such extension is filed before the expiration of the reglementary period for filing said record on appeal. If the order of the trial court granting the motion is issued only after the expiration of the original period, the appeal may still be perfected within the period extended. Likewise, the appeal is deemed perfected only after the approval of the record on appeal and not upon the filing of said record on appeal.

Coral Point Development Corporation vs. NLRC GR 129761, February 28, 2000 Article 223, second paragraph, of the Labor Code states that when a judgment involving monetary award is appealed by the employer, the appeal may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment. This is to assure the workers that if they finally prevail in the case the monetary award will be given to them upon dismissal of the employers appeal. It is further meant to discourage employers from using the appeal to delay or evade payment of their obligations to the employees. In Viron Garments Manufacturing Co., Inc. v. NLRC, this Court said: The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is clearly limned in the provision that the appeal by the employer may be perfected "only upon the posting of a cash or surety bond." The word "only" makes it perfectly clear that the lawmakers intended that the posting of a cash or surety bond by the employer may be the exclusive means by which an employers appeal may be perfected. In meritorious cases and upon motion of the appellant, the NLRC may reduce the amount of the bond. Also in some cases the requirement of posting a supersedeas bond for the perfection of an appeal was relaxed, but the decisions were justified due to substantial compliance with the rule. We recognized in Star Angel Handicrafts v. NLRC that neither the

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Labor Code nor its implementing rules specifically provide for a situation where the appellant moves for a reduction of the appeal bond, and Inasmuch as in practice the NLRC allows the reduction of the appeal bond upon motion of appellant and on meritorious grounds, it follows that a motion to that effect may be filed within the reglementary period for appealing. Such motion may be filed in lieu of a bond which amount is being contested. In the meantime, the appeal is not deemed perfected and the Labor Arbiter retains jurisdiction over the case until the NLRC has acted on the motion and appellant has filed the bond as fixed by the NLRC.

The prevailing rule now is that the filing of a motion to reduce bond will not stop the reglementary period to file an appeal.
If the NLRC has the authority to entertain a motion to reduce bind, then it can also grant extension to file bond.

Alcosero vs. NLRC 288 SCRA 140 APEX appealed to the NLRC on 15 August 1993 assailing the decision of the Labor Arbiter. Instead of posting an appeal bond, however, APEX filed in lieu thereof a motion for the reduction of the appeal bond seven (7) days from its receipt of the Labor Arbiter's decision. After due consideration, the NLRC on 4 May 1994 promulgated a resolution providing in part that APEX had already paid all the claims due to complainants in connection with this case as evidenced by the individual receipts and quitclaims executed by the latter. There being no allegation that complainants were forced or pressured into signing the receipts and quitclaims, the NLRC sustained as valid the aforementioned documents. Accordingly, the Labor Arbiter's decision was ordered vacated and set aside, and the above entitled case dismissed for lack of merit. Hence, the instant petition for certiorari questioning the resolution of the NLRC. Petitioners contend that the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction in entertaining the appeal of APEX notwithstanding that the assailed decision of the Labor Arbiter had long become final and executory for failure of APEX to file the required appeal bond within the reglementary period of ten (10) days, which bond was an indispensable requirement for the perfection of the appeal. Ordinarily, where the losing party desires to appeal from the decision of the Labor Arbiter it must be done within ten (10) days from receipt of the decision. When the judgment involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the NLRC or the Supreme Court in an amount equivalent to the monetary award in the judgment appealed from. Compliance with these requirements is both mandatory and imperative as the perfection of an appeal within the reglementary period is jurisdictional. But in a growing number of cases, we have relaxed the stringent application of the rule concerning the posting of appeal bond within the 10-day reglementary period as a requirement for the perfection of an appeal. Thus, in the leading case of Star Angel Handicraft v. National Labor Relations Commission, we held Neither the Labor Code nor its implementing rules specifically provide for a situation where the appellant moves for a reduction of the appeal bond. Inasmuch as in practice the NLRC allows the reduction of the appeal bond upon motion of appellant and on meritorious grounds, it follows that a motion to that effect may be filed within the reglementary period for appealing. Such motion may be filed in lieu of a bond which amount is being contested. In the meantime, the appeal is deemed perfected and the Labor Arbiter retains jurisdiction over the case until the NLRC has acted on the motion and appellant has filed the bond as fixed by the NLRC. In this case, APEX filed in lieu of an appeal bond a motion for the reduction of the bond together with the Memorandum of Appeal seven (7) days from receipt of the Labor Arbiter's decision. The NLRC held that the appeal of APEX was founded on meritorious grounds, hence, it gave due course to the same despite the fact that no appeal bond was posted at that time. The NLRC could not be faulted for doing so since it had authority to entertain motions for the reduction of the appeal bond. And when APEX posted the required bond within the extended period granted by the NLRC, it was deemed to have seasonably perfected its appeal.

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Once the bond has been reduced, the employer cannot file a Motion for Reconsideration as this would amount to an extension of the period to perfect an appeal.

Mers Shoes vs. NLRC 286 SCRA 647 It has been held in numerous decisions that failure to file an appeal within the reglementary period deprives the appellate court of jurisdiction to alter the final judgment, much less to entertain the appeal. This timeworn issue is again before us. Having received the above decision on February 4, 1994, petitioner perfected its appeal before respondent NLRC on February 14, 1994. Simultaneous with the filing thereof, petitioner filed a motion to reduce the amount of the bond which the NLRC partially granted in an order dated May 31, 1995, the dispositive portion of which reads: "WHEREFORE, premises considered, respondent-movants should be, as it is hereby ordered to post a cash or surety bond issued by a reputable bonding company duly accredited by the Commission or the Supreme Court in the amount of P403,126.20 within ten (10) calendar days from receipt hereof. Should respondents-movants opt to post a surety bond, they shall, in addition, submit with their counsel a joint declaration under oath attesting that the surety bond to be posted is genuine and that it shall be in effect until final disposition of the case. SO ORDERED." On July 28, 1995, petitioner filed a motion for reconsideration from the above order which the NLRC treated as a motion for extension of time to perfect an appeal which is a prohibited pleading under the New Rules of Procedure. Consequently, ruling that the ten-day reglementary period within which to post the appeal bond having lapsed, NLRC dismissed the instant appeal. Hence, this petition. We find for the respondents. Article 223 of the Labor Code requires, inter alia that in case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon posting of a cash or surety bond issued by a reputable bonding company duly accredited by the commission in the amount equivalent to the monetary award in the judgment appealed from. Perfection of an appeal within the period and in the manner prescribed by law is jurisdictional and noncompliance with such legal requirements is fatal and has the effect of rendering the judgment final and executory. This requirement is intended to discourage employers from using the appeal to delay, or even evade, their obligation to satisfy their employee's just and lawful claims. Such a requirement is jurisdictional and cannot be trifled with. The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The word "only" makes it perfectly clear, that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employer's appeal may be perfected. It must be noted, however, "that the law does not require its outright payment, but only the posting of a bond to ensure that the award will be eventually paid should the appeal fail." While Section 6(c), Rule VI of the New Rules of Procedure of the NLRC allows the reduction of the appeal bond upon motion of appellant and on meritorious grounds, the same must be filed within the reglementary period for appealing. The records reveal that when petitioner sought the reduction of the bond to P200,000.00, the NLRC partially granted the same by allowing a 50% reduction of the required bond or in the amount of P403,126.20. In support of petitioner's contention, it begs the Court to re-examine the following cases, to wit: YBL v. NLRC; Erectors, Incorporated v. NLRC; and Rada v. NLRC, in relation to the case at bar. After a careful scrutiny of the above cases and finding that the factual circumstances differ from each other, we are unconvinced of its application to the instant petition. A distinction, therefore, of said cases is in order. In the Erectors case, the labor arbiter rendered a decision which reinstated the respondent therein to his former position with full backwages, without loss of seniority rights or benefits accruing after his dismissal, and to pay him P300,000.00 as moral damages, P100,000.00 as exemplary damages and 10% of all said sums, as attorney's fees. While YBL did not question the reinstatement aspect of the decision, it, however, sought to dismiss the award of moral and exemplary damages. For allegedly failing to post the bond within the reglementary period, NLRC dismissed the appeal. On petition before this Court, we ruled that: "The equivalence thus expressly prescribed between the amount of the appeal bond and the monetary award, less moral and exemplary damages, made in the decision sought to be appealed not only underscores the fact that the obvious and logical purpose of an appeal bond is to insure, during the period of appeal, against any occurrence that would defeat or diminish recovery under the judgment if subsequently affirmed; it also validates and justifies, at least prima facie, an

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interpretation that would limit the amount of the bond to the aggregate of the sums awarded other than in the concept of moral and exemplary damages."

In fine, the labor arbiter gravely erred in including moral and exemplary damages in the computation of the appeal bond when the law clearly provides that moral and exemplary damages shall not be included in fixing the amount of the bond.

In the YBL case, the NLRC similarly dismissed the appealed decision of the labor arbiter for the non-posting of the appeal bond within the reglementary period. We ruled, thus: "Moreover, in the appealed decision of the labor arbiter the exact total amount due to the private respondents as separation pay is not stated which would be the basis of the bond that is required to be filed by petitioners under the said law. Thus even if petitioners may be expected to know the law, then they allege that they would have to go to the socio-analyst of the NLRC to compute the approximate amount due the private respondents as the basis of the amount of the bond to be filed so that it is not probable that they may be able to secure such computation within the nonextendible period of ten (10) days to appeal provided for by law." (Emphasis supplied)

In view of the foregoing circumstance, petitioner therein could not have posted a bond, the same having been omitted by the labor arbiter.

In Rada, the labor arbiter likewise committed the same infraction as in the YBL case. Thus: "Said decision did not state the amount awarded as backwages and overtime pay, hence the amount of the supersedeas bond could not be determined. It was only in the order of the NLRC of February 16, 1990 that the amount of the supersedeas bond was specified and which bond, after an extension granted by the NLRC, was timely filed by private respondent."

The instant petition, however, presents a different factual milieu. As pertinently observed by the Solicitor General in his Comment: "To have the bond reduced is not a matter of right on the part of the movant but lies within the sound discretion of the NLRC upon showing of meritorious grounds. After the NLRC had exercised its discretion in fixing the bond, the petitioner should have complied with it. To file a subsequent motion this time seeking another reconsideration of the already reduced value of the bond, is indeed to request for an extension of time to perfect the appeal which is prohibited under the NLRC Rules of Procedure. To rule otherwise will encourage endless motions for reconsideration seeking reduction of the required bond thereby rendering futile the requirement of the law to make bond an indispensable requisite for the perfection of appeal by the employer." We, therefore, rule that for petitioner's failure to post the required bond within the reglementary period after it has been ordered reduced, the NLRC committed no grave abuse of discretion in dismissing petitioner's appeal.

The NLRC may grant or dismiss the appeal. Can the aggrieved party file a motion for reconsideration? YES. It must be filed within 10 calendar days from receipt of the dismissal of the appeal. What if the Motion for Reconsideration is denied? The decision will become final and executory.
If there is no Motion for Reconsideration filed before the NLRC, the decision becomes final and executory and therefore there is no way by which another government body can review the case; the only remedy is a motion for reconsideration.

Zapanta vs. NLRC 292 SCRA 586 NLRC; MOTION FOR RECON, A PREREQUISITE BEFORE ANY FURTHER REMEDY MAY BE PURSUED. Fatal to this action is petitioner's failure to move for the reconsideration of the assailed decision on the dubious pretext that it will be a mere rehash of the arguments and issues previously raised in his position paper, but which stratagem conveniently skirts as a consequence the reglementary period therefor, especially if the same has already expired. The implementing rules of respondent NLRC are unequivocal in requiring that a motion for reconsideration of the order, resolution, or decision of respondent commission should be

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seasonably filed as a precondition for pursuing any further or subsequent remedy, otherwise the said order, resolution, or decision shall become final and executory after ten calendar days from receipt thereof. RATIONALE. The rationale therefor is that the law intends to afford the NLRC an opportunity to rectify such errors or mistakes it may have lapsed into before resort to the courts of justice can be had. This merely adopts the rule that the function of a motion for reconsideration is to point out to the court the error that it may have committed and to give it a chance to correct itself. Petitioner cannot, on its bare and self-serving representation that reconsideration is unnecessary, unilaterally disregard what the law requires and deny respondent NLRC its right to review its pronouncements before being haled to court to account therefor. On policy considerations, such prerequisite would provide an expeditious termination to labor disputes and assist in the decongestion of court dockets by obviating improvident and unnecessary recourse to judicial proceedings. The present case exemplifies the very contingency sought to be, and which could have been, avoided by the observance of said rules.

If the decision of the NLRC becomes final and executory due to the denial of the MFR, is there an appeal of the decision of the NLRC? NO. There is no appeal from the decision of the NLRC but there is still a remedy under RULE 65 of the Rules of Court on the ground of grave abuse of discretion. The ground of prima facie evidence of abuse of discretion is a ground for appealing the decision of the LA to the NLRC. Will the filing of a Petition for Certiorari stay the decision of the NLRC? NO. However, to enjoin enforcement of the decision of the NLRC which is final and executory, under Rule 65, you have to apply for the issuance of a TRO and eventually a writ of injunction. There is no way of preventing the decision of the NLRC from becoming final and executory except by the filing of MOTION FOR RECONSIDERATION within the prescribed period of 10 days. Since the motion for reconsideration has been denied, the decision will have to become final and executory and subject to execution. There is no more appeal from that decision but there is a Special Civil Action [Certiorari] on the ground of grave abuse of discretion. To prevent execution of the decision, the aggrieved party can apply for the issuance of a Temporary Restraining Order. If you apply for a TRO, for how many days will it be valid? 60 days. If issued by RTC, 20 days. Can it be extended? NO.

Note that a Special Civil Action is an original action and the RTC, CA and SC have concurrent and original jurisdiction. However, always follow the principle of HIERARCHY OF COURTS. At this stage where the NLRC decision is the subject of the certiorari, the RTC does not have jurisdiction because the RTC is of the same level as the NLRC and the LA is of the same level as the lower courts.

LEGAL FORM Before the LA: JUAN DE LA CRUZ (COMPLAINANT) VS SHOEMART (RESPONDENT) If both parties appeal: JUAN DE LA CRUZ (COMPLAINANT-APPELLANT) VS SHOEMART (RESPONDENT-APPELLANT) If SM files a Petition for Certiorari: SHOEMART (PETITIONER) VS JUAN DE LA DRUZ (PRIVATE RESPONDENT) AND NLRC (PUBLIC RESPONDENT) In a certiorari case under Rule 65, there is a need to identify or implead the public respondent because the petitioner imputes grave abuse of discretion. The petition will again be docketed by the CA From the NLRC, you should file it directly to the CA because it is an original action. The petition should be copy-furnished the other party.

 144 The NLRC is represented by the OFFICE OF THE SOLICITOR-GENERAL located in Amorsolo, Makati City. Once the petition is filed before the CA, it will require the respondent to file a COMMENT. The OSG will file the comment for NLRC. The private respondent will also file a comment. Thereafter the CA will determine if there is a need for the petitioner to file a REPLY TO THE COMMENT, ordinarily within an extendible period of 10 days. If the CA gives due course to the petition, the CA will require BOTH parties to file their respective MEMORANDA which is akin to a position paper which summarizes their respective claims and allegations. Thereafter, the case shall be submitted for decision by the CA without prejudice to the prayer for injunctive writ (TRO or WPI). If the CA believes that the case is meritorious, the CA will make the TRO permanent.

From the CA, is there still a Motion For Reconsideration? YES. To be filed within 15 days, which the CA may either grant or deny. From the CA, is there a remedy? YES. Appeal by Certiorari under Rules 45 of the Rules of Court to be filed within 15 days from receipt of the decision of the CA on the ground of pure questions of law. If is involves the application of the rules or the law, it is a question of law.

The SC is not a trier of facts but factual findings of the SC may be reviewed in exceptional cases.

Will the Appeal by Certiorari under Rule 45 prevent the decision of the CA from becoming final and executory? It will become final and executory. But if you file an appeal by certiorari under Rule 45 within the prescribed period, the decision of the CA will be stayed. LEGAL FORM If the CA reverses NLRC decision, the caption of the appeal by certiorari under Rule 45 to the SC shall read: JUAN DE LA CRUZ (PETITIONER) VS SHOEMART (RESPONDENT) We do not need to implead the CA as respondent. This is found in Rule 45 Section 4.