Sun Tzu Notes

SUN TZU NOTES Al L. Beronque Employee  includes any individual employed by an employer [art 97c]  one who works for an employer, a person working for salary or wages; any person in the service of another under a contract for hire, express or implied, oral or written [alcantara].  always a natural person [may include Filipino citizens and foreigners] Employer-Employee Relationship 



it is in personam, involves the rendition of personal service by the employee, and partakes of master and servant relationship. contractual in character, it arises from the agreement of the parties.



Principal-Agent Relationship Art 1868 CC: 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.    

Four-Fold Test

It is the principal who selects the agent An agent is compensated under the contract of agency for services rendered. An agent is disciplined by the principal because former is under the authority of the latter. The principal controls the means and methods of the work of an agent. [Relate above to the four-fold test]

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.

Employer-Employee relationship is governed by the Labor Code whereas Principal-Agent relationship is by Civil Code.

The employer’s power to control the employee with respect to the means and methods by which the work is to be accomplished. This is also known as the “control test”.

Control Test  the most important element  that is, whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished [investment planning corp v. sss 11/18/67] Q: Why is it important to determine whether the relationship between the parties is that of employer and employee or that of principal and independent contractor or of principal-agent? A: To determine what laws will govern the rights and liabilities of the parties, and what tribunal or court will have jurisdiction over their disputes.



There is only one party in a principal-agent relationship, 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.

Note: To make a distinction between a principal-agent relationship and that of an employer-employee relationship, the four-fold test will not be used because the 1) agent is selected by the principal 2) compensated by the principal 3) and most oftentimes, the principal also substitutes his own judgment for that of the agent. Employer-Employee vs. Principal-Contractor 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 [DO 9].  Maybe an individual, corporate or juridical contractor Principal-Contractor Relationship

Relationship EmployerEmployee PrincipalIndependent Contractor PrincipalAgent

Governing Laws Labor laws

Tribunal

 

principal selects the contractor contractor is compensated for services rendered.

Labor tribunal

The contractor is not under the discipline of the principal.

obligations and Contracts [CC] Civil Code

Regular courts

 

Regular courts

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, to perform job, work or service, according to his own means and methods, free from control and direction of the principal except as to the results thereof. [relate above with four-fold test]

Employer-Employee vs. Principal-Agent 

this relationship exists also in situations under art 106109 LC.

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU Page 1 of 28

SUN TZU NOTES Al L. Beronque

3. RIGHT TO HIRE Right or Prerogative?



Strictly speaking, the employer has no right to hire a person as his employee. The matter of selecting a person as one’s 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 another’s employee. No person can be compelled against his will to do an act whether legal 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 employee 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. Exercise of Right or Prerogative Absolute?  No, it is regulated by law. Legal Limitations/Prohibitions Prior to Hiring A. Under the Labor Code 1. Prohibition on Stipulation Against Marriage Art 136. Stipulation against marriage. - It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman employee shall not get married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage. Marquez: It prohibits the employer from imposing as a condition of employment that a woman employee shall not get married.  

Applies to women in ordinary and special occupations It 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 [pt&t v. nlrc 272 scra 596]

2. Minimum Employable Age

ART. 139. Minimum employable age. - (a) No child below fifteen (15) years of age shall be employed, except when he works directly under the sole responsibility of his parents or guardian, and his employment does not in any way interfere with his schooling. [see RA 7610 as amended] (b) Any person between fifteen (15) and eighteen (18) years of age may be employed for such number of hours and such periods of the day as determined by the Secretary of Labor and Employment in appropriate regulations. (c) The foregoing provisions shall in no case allow the employment of a person below eighteen (18) years of age in an undertaking which is hazardous or deleterious in nature as determined by the Secretary of Labor and Employment. 3. ART. 248. Unfair labor practices of employers. - It shall be unlawful for an employer to commit any of the following unfair labor practice: (b) To require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs [yellow dog contract] B. Under Special Laws 1. REPUBLIC ACT NO. 7610 [Special Protection Against Child Abuse, Exploitation and Discrimination Act]  

Amended Art 139 Subsequently amended by RA 7658 & 9231



RA 9231 is implemented by DO 65-04

Sec. 12. Employment of Children. – Children below fifteen (15) years of age may 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 employer’s family are employed: Provided, however, That his employment neither endangers his life, safety and health and morals, nor impairs his normal development: Provided, further, That the parent or legal guardian shall provide the said minor child with the prescribed primary and/or secondary education; or (2) When a child’s employment or participation in public & entertainment or information through cinema, theater, radio or television is essential: Provided, The employment contract concluded by the child’s parent or guardian, with the express agreement of the child concerned, if possible, and the approval of the Department of Labor and Employment: Provided, That the following requirements in all instances are strictly complied with: (a) The employer shall ensure the protection, health, safety and morals of the child; (b) the employer shall institute measures to prevent the child’s exploitation or discrimination taking into account the

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU Page 2 of 28

SUN TZU NOTES Al L. Beronque system and level of remuneration, and the duration and arrangement of working time; and

(a) The employer shall ensure the protection, health, safety, morals and normal development of the child;

© The employer shall formulate and implement, subject to the approval and supervision of competent authorities, a continuing program for training and skill acquisition of the child.

(b) The employer shall institute measures to prevent the child’s exploitation or discrimination taking into account the system and level of remuneration, and the duration and arrangement of working time; and © 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. In the above exceptional cases where any such child may be employed, the employer shall first secure, before engaging such child, a work permit from the Department of Labor and Employment which shall ensure observance of the above requirements. The Department of Labor and Employment shall promulgate rules and regulations necessary for the effective implementation of this Section.”

In the above exceptional cases where any such child may be employed, the employer shall first secure, before engaging such child, a work permit from the Department of Labor and Employment which shall ensure observance of the above requirement. The Department of Labor and Employment shall promulgate rules and regulations necessary for the effective implementation of this Section. Sec. 14. Prohibition on the Employment of Children in Certain Advertisements. – No person shall employ child models in all commercials or advertisements promoting alcoholic beverages, intoxicating drinks, tobacco and its byproducts and violence. 

RA 7610 amended art 139 LC

REPUBLIC ACT NO. 7658 An act prohibiting the employment of children below 15 years of age in public and private undertakings, amending for this purpose section 12, article viii of r. a. 7610. Section 1. Section 12, Article VIII of R. A. No. 7610 otherwise known as the “Special Protection of Children Against Child Abuse, Exploitation and Discrimination Act” is hereby amended to read as follows: “Sec. 12. Employment of Children. — Children below fifteen (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 employer’s family are employed: Provided, however, That his employment neither endangers his life, safety, health and morals, nor impairs his normal development; Provided, further, That the parent or legal guardian shall provide the said minor child with the prescribed primary and/or secondary education; or (2) Where a child’s employment or participation in public entertainment or information through cinema, theater, radio or television is essential: Provided, The employment contract is concluded by the child’s parents or legal guardian, with the express agreement of the child concerned, if possible, and the approval of the Department of Labor and Employment: and Provided, That the following requirements in all instances are strictly complied with:

REPUBLIC ACT NO. 9231 An act providing for the elimination of the worst forms of child labor and affording stronger protection for the working child, amending for this purpose republic act no. 7610, as amended, otherwise known as the “special protection of children against child abuse, exploitation and discrimination act” Section 1. Section 2 of Republic Act No. 7610, as amended, otherwise known as the “Special Protection of Children Against Child Abuse, Exploitation and Discrimination Act”, is hereby amended to read as follows: Sec. 2. Section 12 of the same Act, as amended, is hereby further amended to read as follows: “Sec. 2. Employment of Children – Children below fifteen (15) years of age shall not be employed except: “1) When a child works directly under the sole responsibility of his/her parents or legal guardian and where only members of his/her family are employed: Provided, however, That his/her employment neither endangers his/her life, safety, health, and morals, nor impairs his/her normal development: Provided, further, That the parent or legal guardian shall provide the said child with the prescribed primary and/or secondary education; or “2) Where a child’s employment or participation in public entertainment or information through cinema, theater, radio, television or other forms of media is essential: Provided, That the employment contract is concluded by the child’s parents or legal guardian, with the express agreement of the child concerned, if possible, and the approval of the Department of Labor and Employment: Provided, further, That the following requirements in all instances are strictly complied with: “(a) The employer shall ensure the protection, health, safety, morals and normal development of the child; “(b) The employer shall institute measures to prevent the child’s exploitation or discrimination taking into account the

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU Page 3 of 28

SUN TZU NOTES Al L. Beronque system and level of remuneration, and the duration and arrangement of working time; and “© 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. “In the above exceptional cases where any such child may be employed, the employer shall first secure, before engaging such child, a work permit from the Department of Labor and Employment which shall ensure observance of the above requirements. “For purposes of this Article, the term “child” shall apply to all persons under eighteen (18) years of age.” Sec. 3. The same Act, as amended, is hereby further amended by adding new sections to be denominated as Sections 12-A, 12-B, 12-C, and 12D to read as follows: “Sec. 12-A. Hours of Work of a Working Child. – Under the exceptions provided in Section 12 of this Act, as amended: “(1) A child below fifteen (15) years of age may be allowed to work for not more than twenty (20) hours a week: Provided, That the work shall not be more than four (4) hours at any given day; “(2) A child fifteen (15) years of age but below eighteen (18) shall not be allowed to work for more than eight (8) hours a day, and in no case beyond forty (40) hours a week; “(3) No child below fifteen (15) years of age shall be allowed to work between eight o’clock in the evening and six o’clock in the morning of the following day and no child fifteen (15) years of age but below eighteen (18) shall be allowed to work between ten o’clock in the evening and six o’clock in the morning of the following day.” “Sec. 12-D. Prohibition Against Worst Forms of Child Labor. – No child shall be engaged in the worst forms of child labor. The phrase “worst forms of child labor” shall refer to any of the following: “(1) All forms of slavery, as defined under the “Antitrafficking in Persons Act of 2003”, or practices similar to slavery such as sale and trafficking of children, debt bondage and serfdom and forced or compulsory labor, including recruitment of children for use in armed conflict; or “(2) The use, procuring, offering or exposing of a child for prostitution, for the production of pornography or for pornographic performances; or

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU Page 4 of 28

SUN TZU NOTES Al L. Beronque “(3) The use, procuring or offering of a child for illegal or illicit activities, including the production and trafficking of dangerous drugs and volatile substances prohibited under existing laws; or “(4) Work which, by its nature or the circumstances in which it is carried out, is hazardous or likely to be harmful to the health, safety or morals of children, such that it: “a) Debases, degrades or demeans the intrinsic worth and dignity of a child as a human being; or

“b) Exposes the child to physical, emotional or sexual abuse, or is found to be highly stressful psychologically or may prejudice morals; or “c) Is performed underground, underwater or at dangerous heights; or “d) Involves the use of dangerous machinery, equipment and tools such as power-driven or explosive power-actuated tools; or “e) Exposes the child to physical danger such as, but not limited to the dangerous feats of balancing, physical strength or contortion, or which requires the manual transport of heavy loads; or “f) Is performed in an unhealthy environment exposing the child to hazardous working conditions, elements, substances, co-agents or processes involving ionizing, radiation, fire, flammable substances, noxious components and the like, or to extreme temperatures, noise levels, or vibrations; or “g) Is performed conditions; or

under

particularly

difficult

“h) Exposes the child to biological agents such as bacteria, fungi, viruses, protozoans, nematodes and other parasites; or “i) Involves the manufacture or handling explosives and other pyrotechnic products.”

of

Section 5. Section 14 of the same Act is hereby amended to read as follows: “Sec. 14. Prohibition on the Employment of Children in Certain Advertisements. – No child shall be employed as a model in any advertisement directly or indirectly promoting alcoholic beverages, intoxicating drinks, tobacco and its byproducts, gambling or any form of violence or pornography.” Department Order No. 65-04 series of 2004 [see on separate sheet]

2. REPUBLIC ACT NO. 7877 [Anti-Sexual Harassment Act of 1995]

SECTION 3. Work, Education or Training -Related, Sexual Harassment Defined. - Work, education or training-related sexual harassment is committed by an employer, employee, manager, supervisor, agent of the employer, teacher, instructor, professor, coach, trainor, or any other person who, having authority, influence or moral ascendancy over another in a work or training or education environment, demands, requests or otherwise requires any sexual favor from the other, regardless of whether the demand, request or requirement for submission is accepted by the object of said Act. (a) In a work-related or employment environment, sexual harassment is committed when: (1) The sexual favor is made as a condition in the hiring or in the employment, re-employment or continued employment of said individual, or in granting said individual favorable compensation, terms of conditions, promotions, or privileges; or the refusal to grant the sexual favor results in limiting, segregating or classifying the employee which in any way would discriminate, deprive ordiminish employment opportunities or otherwise adversely affect said employee; 3.REPUBLIC ACT NO. 8504 [Philippine Aids and Prevention Control Act of 1998] ARTICLE VII DISCRIMINATORY ACTS AND POLICIES SECTION 35. Discrimination in the workplace. — Discrimination in any form from pre-employment to postemployment, including hiring, promotion or assignment, based on the actual, perceived or suspected HIV status of an individual is prohibited. Termination from work on the sole basis of actual, perceived or suspected HIV status is deemed unlawful. 4. RA 9208 [Anti-trafficking of Persons Act of 2003] (d) Forced Labor and Slavery - refer to the extraction of work or services from any person by means of enticement, violence, intimidation or threat, use of force or coercion, including deprivation of freedom, abuse of authority or moral ascendancy, debt-bondage or deception. Sec. 4. Acts of Trafficking in Persons. - It shall be unlawful for any person, natural or juridical, to commit any of the following acts: (a) To recruit, transport, transfer; harbor, provide, or receive a person by any means, including those done under the pretext of domestic or overseas employment or training or apprenticeship, for the purpose of prostitution, pornography, sexual exploitation, forced labor, slavery, involuntary servitude or debt bondage;

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU Page 5 of 28

SUN TZU NOTES Al L. Beronque (b) To introduce or match for money, profit, or material, economic or other consideration, any person or, as provided for under Republic Act No. 6955, any Filipino woman to a foreign national, for marriage for the purpose of acquiring, buying, offering, selling or trading him/her to engage in prostitution, pornography, sexual exploitation, forced labor, slavery, involuntary servitude or debt bondage; 

(f) Re-assigning or transferring a disabled employee to a job or position he cannot perform by reason of his disability; (g) Dismissing or terminating the services of a disabled employee by reason of his disability unless the employer can prove that he impairs the satisfactory performance of the work involved to the prejudice of the business entity: Provided, however, That the employer first sought to provide reasonable accommodations for disabled persons; (h) Failing to select or administer in the most effective manner employment tests which accurately reflect the skills, aptitude or other factor of the disabled applicant or employee that such tests purports to measure, rather than the impaired sensory, manual or speaking skills of such applicant or employee, if any; and

Please refer to the whole text of this law

(i) Excluding disabled persons from membership in labor unions or similar organizations.

5. REPUBLIC ACT NO. 7277 [Magna Carta for Disabled Persons] Prohibition on Discrimination Against Disabled Persons

5. REPUBLIC ACT NO. 8791 [General Banking Laws of 2000]

Sec. 32. Discrimination on Employment. — No entity, whether public or private, shall discriminate against a qualified disabled person by reason of disability in regard to job application procedures, the hiring, promotion, or discharge of employees, employee compensation, job training, and other terms, conditions, and privileges of employment. The following constitute acts of discrimination:

Sec 55.4. Consistent with the provisions of Republic Act No. 1405, otherwise known as the Banks Secrecy Law, no bank shall employ casual or non regular personnel or too lengthy probationary personnel in the conduct of its business involving bank deposits.

(a) Limiting, segregating or classifying a disabled job applicant in such a manner that adversely affects his work opportunities;

Art. 1703. No contract which practically amounts to involuntary servitude, under any guise whatsoever, shall be valid.

(b) Using qualification standards, employment tests or other selection criteria that screen out or tend to screen out a disabled person unless such standards, tests or other selection criteria are shown to be jobrelated for the position in question and are consistent with business necessity; (c) Utilizing standards, administration that:

criteria,

or

methods

of

(1) have the effect of discrimination on the basis of disability; or

Involuntary Servitude

DOLE Memo Cir. No. 2 series of 1998 [Technical Guidelines for Classifying Hazardous and NonHazardous Establishments, Workplaces and Work Processes], see appendix AAA page 590 FOZ. DO No. 4, Series of 1999 [Hazardous Work and Activities for Persons Below 18 years of age], see appendix WW page 583 FOZ Art 97(f)



Wage paid to 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.

(2) perpetuate the discrimination of others who are subject to common administrative control. (d) Providing less compensation, such as salary, wage or other forms of remuneration and fringe benefits, to a qualified disabled employee, by reason of his disability, than the amount to which a non-disabled person performing the same work is entitled; (e) Favoring a non-disabled employee over a qualified disabled employee with respect to promotion, training opportunities, study and scholarship grants, solely on account of the latter's disability;

Wage vs. Salary

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU Page 6 of 28

SUN TZU NOTES Al L. Beronque

Wages  applies to the compensation for manual labor, skilled or unskilled, paid at stated times, and measured by the day, week, month, or season.  Indicates inconsiderable pay for a lower and less responsible character of employment. as distinguished from Salary  denotes a higher degree of employment or a superior grade of services, and implies a position or office.  Suggestive of a larger and more permanent or fixed compensation for more important service. By some of the authorities, the word “wages” in its ordinary acceptance, has a less extensive meaning than the word “salary”, “wages” being ordinarily restricted to sums paid to artisans, mechanics, laborers, and other employees of like class, as distinguished from the compensation of clerks, officers of public corporations, and public offices. In many situations, however, the words “wages” and “salary” are synonymous. [35 Am. Jur. Sec. 63, p. 496-497] Our SC reached the same conclusion, the words “wages” and “salary” are in essence synonymous.





If there is no work performed by the employee there can be no wage or pay unless the laborer was able, willing and ready to work but was prevented by management or was illegally locked out, suspended or dismissed. Where the employee’s dismissal was for a just cause, it would neither be fair nor just to allow the employee to recover something he has not earned and could not have earned. [Phil Airlines v. NLRC 6/22/89]

Where the failure of workers to work was not due to the employer’s fault, the burden of economic loss suffered by the employees should not be shifted to the employer. Each party must bear his own loss. [SSS v. SSS Supervisor’s Union 10/23/82] Equal Pay for Equal Work  Employees in the Philippines, if they are performing similar functions and responsibilities under similar working conditions, should be paid under this principle. Facilities





Are items of expense necessary for the laborer’s and his family’s existence and subsistence. [AtokBig Wedge Assn v. Atok-Big Wedge Co. 97 phil 294] Shall include articles or services for the benefit of the employee or his family but shall not include tools of the trade or articles or service primarily for the benefit of the employer or necessary to

Art 97f provides that “wage” 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.

This means that an employer may provide, for instance, food and housing to his employees but he may deduct their values from the employees’ wages. Requisites for facilities to be considered as an integral part of an employee’s wage 1. Must be customarily furnished by the employer to the employee 2. Must be charged at fair and reasonable value 3. The provision on deductible facilities must be voluntarily accepted by the employee in writing. [Mabeza v. NLRC 271 scra 670] 

If the requisites are all present, that facilities may take the place of the cash payment of the employee’s wage. This is one exception of the requirement that an employee’s wage shall be paid in legal tender, you cannot pay it in kind.

Supplements



Fair Day’s Wage for a Fair Day’s Labor



the conduct of the employer’s business. [book 3 rule 7 sec 5] Wage includes facilities or commodities

Constitute extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. [Atok-Big Wedge Assn v. Atok-Big Wedge Co. 97 phil 294]

Facilities v. Supplements  Facilities are wage-deductible, supplements are not.

 

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 employee’s wage.

Worker’s Lien Art 1707 CC: The laborer’s wages shall be a lien on the goods manufactured or the work done. Reason: By virtue of this new lien, the laborers who are not paid by an unscrupulous and irresponsible industrialist or manager may by legal means have the goods manufactured thru the sweat of their brow sold, and out of the proceeds get their salary, returning the excess, if any [Report Code Commission, p.14] Goods Manufactured or the work done



Refers to personal property, not real property. And even here, the lien is allowed the laborer only if he was directly employed or engaged by the owner. The rule does not apply if contractor, with men under him, had undertaken the job.

Exemption from execution or attachment

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU Page 7 of 28

SUN TZU NOTES Al L. Beronque SECOND, by giving the boards enough powers to achieve this objective.

Show Desktop.scf

Art 1708 CC: The laborer’s wages shall not be subject to execution or attachment, except for debts incurred for food, shelter, clothing and medical attendance. GR: Wages are not subject to execution. Exception: Debts incurred for support such as food, shelter, clothing, medical attendance. 

Policies of the State

1.

To rationalize [important]



It has been rationalized because article 124 of this RA 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 employee’s wage in order to rationalize it.



Before RA 6727, it was only Malacañang through a PD 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.

The rule applies even when the wages are still in the possession of the employer whose properties may have been attached.

Salaries due to government employees cannot be garnished before they are paid to the employees concerned because: 1. The incentive for work would be lost 2. Generally, the state cannot be sued; and 3. Finallly, technically, before disbursements, the money still belongs to the government. Art 1709 CC: The employer shall neither seize nor retain any tool or other articles belonging to the laborer. 

No seizure or retention by the employer

Methods of Fixing Compensation [see art 97f] 4. 5. 6. 7.

Time [daily and monthly paid workers] Commission Job or task basis 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 LC because under Art 82, workers paid by results are exempted from overtime pay, service incentive leave, etc. (conditions of employment).

4. WAGE RATIONALIZATION ACT RA 6727 Wage Rationalization Act 

See the full text page 450 FOZ

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.

the

fixing

of

the

minimum

wage.

With the advent of RA 6727, the law deems it necessary that there shall be tandard criteria in fixing the employee’s wage. Art 124 RA 6727: Wage Fixing

Standards or Criteria for Minimum

a. The demand for living wages; b. Wage adjustment vis-à-vis the consumer price index; c. The cost of living and changes or increases therein; d. The needs of workers and their families e. The need to induce industries to invest in the countryside; f. Improvements in standards of living g. The prevailing wage levels; h. Fair return of the capital invested and capacity to pay of employers; i. Effects on employment generation and family income; and j. The equitable distribution of income and wealth along the imperatives of economic and social development. 2. To promote productivity-improvement and gain-sharing measures to ensure a decent standard of living for the workers and their family. 3. To guarantee the rights of labor to its just share in the fruits of production 4. To enhance employment generations in the countryside through industry dispersal. 5. To allow business and industry reasonable returns on investment, expansion and growth.

6.

The state shall 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 sociao-economic factors and the national economic and social development plans. [important]

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU Page 8 of 28

SUN TZU NOTES Al L. Beronque 

This is an important policy because it promotes collective bargaining as a mode of settling labor disputes

GOVERNMENT AGENCIES INVOLVED A. National Wages and Productivity Commission [NWPC] ART. 120 LC. Creation of National Wages and Productivity Commission. - There is hereby created a National Wages and Productivity Commission, hereinafter referred to as the Commission, which shall be attached to the Department of Labor and Employment (DOLE) for policy and program coordination. (As amended by Republic Act No. 6727, June 9, 1989). 

Determines the offices/headquarters of the respective Regional Tripartite Wages and Productivity Boards.



Art 121C (As amended by Republic Act No. 6727, June 9, 1989) grants the NWPC the power to prescribe rules and guidelines for the determination of appropriate wages in the country.

Note: Guidelines issued by the RTWPB without the approval of, or worse, contrary to those promulgated by the NWPC are ineffectual, void and cannot be the source of rights and privileges. Composition [7]



Art 121 LC (As amended by Republic Act No. 6727, June 9, 1989).

1. Ex-Officio Chairman Secretary of DOLE 2. Ex-Officio Vice-Chairman Director-General of NEDA 3. Two (2) members each from workers and employers sectors who shall be appointed by the President of the Phil upon recommendation of the Secretary of DOLE to be made on the basis of the list of nominees submitted by the workers and employers sectors, respectively. 4. The Executive Director shall also be a member of the Commission Secretariat [headed by Executive Director]

B. Regional Tripartite Wages and Productivity Boards [RTWPB] ART. 122 LC. Creation of Regional Tripartite Wages and Productivity Boards. - There is hereby created Regional Tripartite Wages and Productivity Boards, hereinafter referred to as Regional Boards, in all regions, including autonomous regions as may be established by law. The Commission shall determine the offices/headquarters of the respective Regional Boards. (As amended by Republic Act No. 6727, June 9, 1989). 

The SC is of the opinion that Congress meant the boards to be creative in resolving the annual question of wages without labor and management knocking on the legislature’s door at every turn. The Court’s opinion is that if RA 6727 intended the board alone to set floor wages, the Act would have no need for a board but an accountant to keep track of the latest consumer price index, or better would have Congress done it as the need arises, as the legislature, prior to the Act has done so for years.

Composition [7]



Art 122 LC (As amended by Republic Act No. 6727, June 9, 1989).

1. Chairman Regional Director of DOLE 2. Vice-Chairmen Regional Director of NEDA Regional Director of DTI 3. Two (2) members each from workers and employers sectors who shall be appointed by the President of the Phil, upon the recommendation of the Secretary of DOLE, to be made on the basis of the list of nominees submitted by the workers and employers sectors, respectively. Secretariat Assisting each Board Art 126 LC. Prohibition Against Injunction.—No preliminary or permanent injunction or temporary restraining order may be issued by any court, tribunal or other entity against any proceedings before the Commission or the Regional Boards (As amended by Republic Act No. 6727, June 9, 1989). Revised Rules of Procedures on Minimum Wage Fixing, Series of 1995 NWPC Guidelines No. 001-95

Executive Director shall be appointed by the President of the Phil upon recommendation of the Secretary of DOLE



this is adopted and promulgated by NWPC pursuant to Art 121C LC (As amended by Republic Act No. 6727, June 9, 1989)

2 Deputy Directors shall be appointed by the President of the Phil upon recommendation of the Secretary of DOLE



these are rules governing proceedings in the NWPC and the RTWPB in the fixing of minimum wage rates.

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SUN TZU NOTES Al L. Beronque 

For full text refer to page 476 Appendix AA FOZ

ART. 121 LC. Powers and functions of the Commission. - The Commission shall have the following powers and functions: (c) To prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures at the regional, provincial, or industry levels (As amended by Republic Act No. 6727, June 9, 1989)

5. Helps employees pay off the needed social security program. 

Disadvantages of Minimum Wage Rates 

Statutory Minimum Wage





Compensation which is less than such minimum rate is considered an underpayment that violates the law.

Purpose of Minimum Wage 1. To promote productivity-improvement and gainsharing measures to ensure a decent standard of living for the workers and their families. 2. To guarantee the rights of labor to its just share in the fruits of production. 3. To enhance employment generation in the countryside through industry dispersal and to allow business and industry reasonable returns on investment, expansion and growth. 4. To affirm, as the Constitution expresses it, labor as a primary social economic force. 5. That wages are distributed evenly, and more importantly, social justice is subserved.

wa gyud nako kit-i!!! Sorry! REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARD [RTWPB]

Refers to the lowest basic wages as provided by law. [NWPC Guidelines 001-95]

Minimum Wage  Is the lowest wage rate fixed by law that an employer can pay to his workers [Rules Implementing RA 6727]

This program would require contribution from the employees themselves, and would be unjust to require such a contribution of those whose wages are not enough for their subsistence. It is unreasonable to ask a man to set aside something for the future when he does not have enough to eat today.

Power to Issue Wage Orders Art 122b LC. The Regional Boards shall have the following powers and functions in their respective jurisdiction: b. To determine and fix minimum wage rates applicable in their region, provinces or industries therein and to issue the corresponding wage orders subject to guidelines issued by the Commission (As amended by Republic Act No. 6727, June 9, 1989).



See page 477 Sec 3 Rule 2 NWPC Guidelines No. 001-95 for the procedures in minimum wage fixing.



Wage Orders issued by the Boards cover only private sector workers, except for household helpers and persons in the personal employ of another, including family drivers. PROCEDURES IN MINIMUM WAGE FIXING

Section 3. Procedures in Minimum

Wage Fixing.

Advantages of Minimum Wage Rates 1. Reduces the evils of the “sweating system”. Sweating System:  the exploiting of workers at wages so low as to be insufficient to meet the bare cost of living. 2. Benefits directly the low-paid employees, who now receive inadequate wages on which to support themselves and their families. 3. Benefits all wage earners indirectly by setting a floor below which their remuneration cannot fall. 4. It raises the standard of competition among employers, since it would protect the fair-minded employer who voluntarily pays a wage that supports the wage earner from the competition of the employer who operates at lower cost only by reason of paying his workers a wage below subsistence.

(a) Motu Proprio by the Board Whenever conditions in the region, province or industry so warrant, the Board may, motu proprio or as directed by the Commission, initiate action or inquiry to determine whether a wage order should be issued. The Board shall conduct public hearings in the manner prescribed under this Rule and Rule III. 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 petition for wage increase with the appropriate Board in ten (10) typewritten legible copies which shall contain the following:

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SUN TZU NOTES Al L. Beronque (a) name/s, and address/es of petitioner/s and signature/s of authorized official/s; (b) grounds relied upon to justify the increase being sought; (c) amount of increase being sought; (d) area and/or industry covered. 2) Board Action. If the petition conforms with the requirements prescribed in the preceding sub-section b.1., the Board shall conduct public hearings in the manner prescribed under this Rule and Rule III, to determine whether a wage order should be issued. The Board may also conduct consultations with concerned sectors/industries. 3) Publication of Notice of Petition/Public Hearing. A notice of the petition and/or public hearing shall be published in a newspaper of general circulation in the region and/or posted in public places as determined by the Board. The notice shall include the name/s and address/es of the petitioner/s, the subject of the petition and the date/s, place/s and time of the hearings. The publication or posting shall be made at least fifteen (15) days before the date of initial hearing and shall be in accordance with the suggested form attached as Annex "A".

The Board may enlist the assistance and cooperation of any government agency or private person or organization to furnish information in aid of its wage fixing function. Appeal Procedure [NWPC]



The Commission may review the Wage Order issued by the Board motu proprio or upon appeal

Section 1. Appeal to the Commission. 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 three (3) typewritten legible copies, not later than ten (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. Failure to file an appeal within the reglamentary period fixed under this section or to submit the required documents shall be a ground for dismissal of the appeal. Section 2. Grounds for Appeal. An appeal may be filed on the following grounds: (a) non-conformity with prescribed guidelines and/or procedures; (b) questions of law; (c) grave abuse of discretion.

4) Opposition. Any party may file his opposition to the petition on or before the initial hearing, copy furnished the petitioner/s. The opposition shall be filed with the appropriate Board in ten (10) typewritten legible copies which shall contain the following: (a) name/s and address/es of the oppositor/s and signature/s of authorized official/s; (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 propio 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/posting requirement. 6) Assistance of Other Government and Private Organizations.

Section 3. Transmittal of Records. Immediately upon receipt of the appeal, the Board Secretariat shall transmit to the Commission Secretariat the appeal and a copy of the subject Wage Order together with the complete records of the case and all relevant documents. Section 4. Period to Act on Appeal. The Commission shall decide on the appeal within sixty (60) days from the filing of said appeal. Section 5. Effect of Appeal. 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. WAGE ORDERS APPLICABLE IN CEBU, MANDAUE AND LAPU-LAPU CITY CURRENT DAILY MINIMUM WAGE RATES REGION VII (Central Visayas) Per Wage Order No. ROVII-11a/ Effective June 16, 2005 (In pesos)

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SUN TZU NOTES Al L. Beronque

INDUSTRY/ SECTOR NONAGRICULTURAL SECTOR AGRICULTURAL SECTOR Non-Sugar Sugar SUGAR MILLS

MINIMUM WAGE RATES CLS A

CLS B

CLS C

CLS D

223

210

200

190

208 -

195 -

185 173

175 -

-

-

188

-

2. New Business Enterprises 3. Retail/Service Establishments Regularly Employing Not More Than Ten Workers 4. Establishments Adversely Affected by Natural Calamities Note: The Board, upon strong and justifiable reasons, subject to the review or approval by the Commission may exempt establishments other than those enumerated above if they are in accord with the rationale of exemption. 2. Exemption under the Labor Code Art 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.

 Granted wage increase to all minimum wage workers in the region as follows: P15.00 - Class A; in the Sugar industry both agricultural and sugar mills. P12.00 - class B, C, and D. Issued on 2 June 2005 and published in Sun Star Daily on 15 July 2005. Class A - Cities of Cebu, Danao, Mandaue, Lapulapu, and Talisay and the municipalities of Carcar, Minglanilla, Naga, Consolacion, Liloan, Compostela, Cordova, and San Fernando; Class B - City of Toledo and the rest of the municipalities in the Province of Cebu except the municipalities in the island of Bantayan and Camotes. Class C - All the cities in the Provinces of Bohol and Negros Oriental and the municipalities of Sibulan, Manjuyod, and Tanjay, and the rest of the municipalities in the Provinces of Bohol and Negros Oriental. Class D - Municipalities in the Province of Siquijor and the Islands of Bantayan and Camotes.

3. Exemption Under Special Law Barangay Micro Business Enterprises Act of 2002 [RA 9178]





refers to any business entity or enterprise engaged in the production, processing or manufacturing of products or commodities, including agro-processing, trading and services, whose total assets including those arising from loans but exclusive of the land on which the particular business entity's office, plant and equipment are situated, shall not be more than Three Million Pesos (P3,000,000.00) The Above definition shall be subjected to review and upward adjustment by the SMED Council, as mandated under Republic Act No. 6977, as amended by Republic Act No. 8289.



For the purpose of this Act, "service" shall exclude those rendered by any one, who is duly licensed government after having passed a government licensure examination, in connection with the exercise of one's profession.

1. Revised Guidelines on Exemption from Wage orders NWPC Guidelines No. 01 Series of 1996



See page 469 FOZ Appendix Z for the full text These are rules on exemption from compliance with the prescribed wage increases/cost of living allowances granted by the RTWPBs. This is pursuant to Sec 3, Art 121b of RA 6727 and Sec 1 Rule 8 of the Revised Rules of Procedure on Minimum Wage Fixing [NWPC Guidelines 001-95]

Exempted from Wage Orders Issued by Boards

See separate page for full text

Barangay Micro Business Enterprise [BMBE]

EXEMPTION FROM MINIMUM WAGE

 

Relate this to employment of home workers, page 33 FOZ. If a home worker performs needle work 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 house helper, 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 prevailing minimum wage.

Power to Issue Rules on Exemption NWPC

1. Distressed Establishments

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SUN TZU NOTES Al L. Beronque ART. 121. Powers and functions of the Commission. - The Commission shall have the following powers and functions: (b) To formulate policies and guidelines on wages, incomes and productivity improvement at the enterprise, industry and national levels; (As amended by Republic Act No. 6727, June 9, 1989)

advantage (due to nature of job) has been significantly reduced from P27 to P2 only. Example: If “A” was receiving a daily salary which was P100 higher than that of “B” who is “A’s” subordinate, but, because of a wage order increase given to “B”, the P100 advantage disappeared or was reduced to say, P30, then it may be said that the salary distinction between A and B has been distorted. “A” may complain of a salary distortion.

Power to Grant Exemptions [RTWP]



ART. 122. Creation of Regional Tripartite Wages and Productivity Boards. – xxx The Regional Boards shall have the following powers and functions in their respective territorial jurisdictions:

Disparity in pay of two or more employees holding the same position does not necessarily mean salary distortion referred to in Art 124.



There is no distortion if the employees, whose wages are being compared, are located in different regions. This is because wage-fixing has been regionalized by RA 6727.



How to rectify the distortion is not specified in the law. The Court has pointed out that through Art. 124 the law recognizes the validity of negotiated wage increases to correct wage distortions. The legislative intent is to encourage the parties to seek solution to the problem of wage distortions through voluntary negotiation or arbitration, rather than strikes, lockouts, or other concerted activities of the employees or management.

(e) To receive, process and act on applications for exemption from prescribed wage rates as may be provided by law or any Wage Order; and 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.

The Court has adopted the following formula as "just and equitable" to correct a salary distortion:

Wage Distortion ART. 124. Standards/Criteria wage fixing.

for

minimum

xxx As used herein, a wage distortion shall mean a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation.xxx (As amended by Republic Act No. 6727, June 9, 1989).



For salary distortion to exist, as defined in Art. 124, the law does not require that there be an elimination or total abrogation of quantitative wage or salary differences; a severe contraction is enough.



This means, briefly, the disappearance or virtual disappearance of pay differentials between lower and higher positions in an enterprise because of compliance with a wage order.



An employee has reason to complain whose pay level advantage is equaled or almost equaled or overtaken through a mandated wage increase. For instance, if a wage order raised a messenger's daily pay from P198 to P223, almost equaling a technician's pay of P225, the technician may complain of salary distortion because his pay

Mini Wage „, -------------- = % Actual salary

x

_„ . Prescribed Increase = Distortion Adjustment

Any issue involving wage distortion is not a valid ground for a strike or lockout.



Each region has a regional wage board which, in fixing the wage level, considers criteria or standards existing in the region. Since those criteria vary from one region to another, the pay levels of comparable jobs also tend to vary among regions. But pay disparity of same or comparable jobs in different regions cannot be considered wage distortion. Wage distortion, in other words, involves comparison of jobs located in the same region. Examination of alleged salary distortion is limited to jobs or positions in the same employer within a region. Therefore, the comparison of salaries has to be intraregion not inter-region region.

Q: Is an employer legally obliged to try and correct a wage distortion? A: It appears so, under Art. 124- It says that "the employer and the union shall negotiate to correct the distortions." If there is no union, "the employer and workers shall endeavor to correct such distortions." Q: Must the previous pay advantage be restored? A: That indeed is the aim but not necessarily to the last peso. An appreciable differential, a significant pay gap, should suffice as correction of the distortion. Q: When does wage distortion happen?

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SUN TZU NOTES Al L. Beronque A: When the employer grants an increase only to a certain group of employees drastically reducing or eliminating the normal salary differential or gap.



Where there is no recognized bargaining agreement.

union

or

collective

B. If Not Unionized Possible Causes of Wage Distortion 1. 2. 3. 4.

Government decreed increase through wage orders. Merger of establishments [confusion or elimination of the status of the employee] Increase granted by the employers Passage of RA 6727 or the Wage Rationalization Act

Methods of Resolving Wage Distortion (Brought about by the enactment or passage of a wage order)



The court has pointed out that thru the passage of Art 124, the law recognizes the validity of negotiated wage increases to correct wage distortion.



The legislative intent is to encourage the parties to seek solution to the problem of wage distortions through voluntary negotiation or arbitration, rather than strikes, lockouts, or other concerted activities of the employees or management.

Organized Establishment



b) If negotiations fail, the matter should be brought to the National Conciliation and Mediation Board (NCMB) c) If no settlement is arrived 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. Jurisdiction over wage distortion disputes 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: 1. Voluntary Arbitration



It is the policy of the State to encourage voluntary arbitration on all labor-management disputes. Before or at any stage of the compulsory arbitration process, the parties may opt to submit their dispute to voluntary arbitration. (Implementing Rules, Book V, Rule XIX, Sec. 5.)



Defined as 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.



Under voluntary arbitration, the "judge" is named by the parties, pursuant to a voluntary arbitration clause in their collective agreement. He is an impartial third person authorized by the parties to make a final and binding decision or award.



A voluntary arbitrator "is not a public tribunal imposed upon the parties by a superior authority which the parties are obliged to accept. He has no general character to administer justice for a community. He is rather part of a system of self-government created by and confined to the parties." [Maurice S. Trotta, Arbitration of Labor Management Disputes, American Management Association, New York, 1974, p. 73.]



Voluntary arbitration, indeed, is a private judicial system.



The judge is called a VOLUNTARY ARBITRATOR.

Refers to a firm or a company where there is a recognized or certified exclusive bargaining agreement.

What should be contained in a CBA 1. 2. 3. 4.

a) The employer and the workers should negotiate to correct the distortion.

terms and conditions of employment wages hours of work procedure for resolving grievances

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

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SUN TZU NOTES Al L. Beronque 

The power of voluntary arbitrator to try and decide the case is the same as that of a Labor Arbiter.



The parties can agree to select a Labor Arbiter as a voluntary arbitrator because it is as to the agreement of the parties.



Arbitration may be initiated either by 1) a Submission Agreement or 2) by a Demand or Notice invoking a collective agreement arbitration clause. Sometimes both instruments are used in a case.





Although the contract may establish the breadth of the arbitrator's power and the limits of his authority, his power may be more sharply defined in the submission agreement. In Philippine context, the "judge" in voluntary arbitration is called arbitrator, while that in compulsory arbitration is labor arbiter.

Voluntary Arbitrator   



Any person accredited by the Board as such; or Any person named or designated in the CBA by the parties to act as their voluntary arbitrator; or One chosen, with or without the assistance of the NCMB, pursuant to selection procedure agreed upon in the CBA; or Any official that may be authorized by the Sec of Labor to act as voluntary arbitrator upon the written request and agreement or the parties to a labor dispute.

2. 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 forgo their right to strike



A disinterested person 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 NLRC [refer to Art 217]





or

party

is

usually

It is an adversarial proceeding initiated by a complaint [usually by a union] for wage distortion before the Labor Arbiter. The other party is required to answer.

ART. 217. Jurisdiction of the Labor Arbiters and the Commission. –

(a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 2. Termination disputes; 3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment; 4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. (b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. (c) Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. (As amended by Section 9, Republic Act No. 6715, March 21, 1989). Compulsory Arbitration



In labor cases compulsory arbitration is the process of settlement of labor disputes by a government agency that has the authority to investigate and make an award which is binding on all the parties.



It is the Labor Arbiter who is clothed with the original and exclusive authority to conduct compulsory arbitration under Art. 217.



Proceedings after a labor arbiter's decision is brought up to the National Labor Relations Commission cannot be considered as part of the arbitration proceedings. This is because in the appeal stage, the Commission merely reviews the Labor Arbiter's decision for errors of fact or law. It does not duplicate the proceedings held at the Labor Arbiter's level. Thus, the clause "pending final resolution of

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SUN TZU NOTES Al L. Beronque the case by arbitration" should be understood to be limited only to the proceedings before the Labor Arbiter, so that when the latter rendered his decision, the case could be considered finally resolved by arbitration. [See Philippine Airlines, Inc. vs. National Labor Relations Commission, G.R. No. 55159, Dec. 22, 1989.]



The Commission itself, through any of its divisions, also conducts compulsory arbitration, but only in "national interest cases" certified or referred to it by the DOLE secretary under Art. 263(g).

adjustments in the wage rates made in accordance with this Act shall be punished by a fine not exceeding Twenty-five thousand pesos [P25,000.00] and/or imprisonment of not less than one [1] year nor more than two [2] years: Provided, That any person convicted under this Act shall not be entitled to the benefits provided for 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 entity's responsible officers, including, but not limited to, the president, vicepresident, chief executive officer, general manager, managing director or partner.

Labor Arbiter's Jurisdiction RA 8188







This Article enumerates the cases falling under "original and exclusive" jurisdiction of labor arbiters. This gives the impression that none but a labor arbiter can hear and decide the six categories of cases listed. But this is not really so. Any or all of these cases can, by agreement of the parties, be presented to and decided with finality by a voluntary arbitrator or panel of voluntary arbitrators. (See Articles 261 and 262.) The law prefers or gives primacy to voluntary arbitration (Art. 211) instead of compulsory arbitration. And this, in turn, is the reason the law (Art. 261, last paragraph, and Art. 217 [c]) forbids a labor arbiter from entertaining a dispute properly belonging to the jurisdiction of a voluntary arbitrator. The cases a labor arbiter can hear and decide are employment-related. One unifying element runs through all the cases and disputes enumerated in Art. 217. That element is employment connection. But, additionally, as regards money claims, the law applicable to grant the relief sought should likewise be considered. If the principal relief sought will be resolved by applying the Labor Code or other labor relations statute or a collective bargaining agreement, then the case belongs to the labor arbiter. But if the applicable law is the general civil law, the jurisdiction over the dispute belongs to the regular courts, such as the regional trial court. (See San Miguel Corf. vs. NLRC, G.R. No. 80774, May 31,1988.)

Appeal Procedure



Rules of Civil Procedure [pili lang Rule 43, 45 or 65]

5. VIOALTION OF WAGE ORDERS RA 6727 [amended by RA 8188] Sec. 12. Any person, corporation, trust, firm, partnership, association or entity which refuses or fails to pay any of the prescribed increases or



an act increasing the penalty and increasing double indemnity for violation of the prescribed increases or adjustment in the wage rates, amending for the purpose section twelve of republic act numbered sixty-seven hundred twenty-seven, otherwise known as the wage rationalization act

SECTION 1. Section 12 of Republic Act Numbered Sixtyseven hundred twenty-seven is hereby amended to read to as follows: Section 12. Any person, corporation, trust, firm, partnership, association or entity which refuses or fails to pay any of the prescribed increases or adjustments in the wage rates made in accordance with this Act shall be punished by a fine not less than Twenty-five thousand pesos (P25,000) nor more than One hundred thousand pesos (P100,000) or imprisonment of not less than two (2) years nor more than four (4) years, or both such fine and imprisonment at the discretion of the court: Provided, That any person convicted under this Act shall not be entitled to the benefits provided for under the Probation Law. "The employer concerned shall be ordered to pay an amount equivalent to double the unpaid benefits owing to the employees: Provided, That payment of indemnity shall not absolve the employer from the criminal liability imposable under this Act. "If the violation is committed by a corporation, trust or firm, partnership, association or any other entity the penalty of imprisonment shall be imposed upon the entity's responsible officers, including, but not limited to, the president, vice-president, chief executive officer, general manager, managing director or partner."



Failure or refusal to pay mandatory wage increase is considered a criminal offense under Republic Act No. 8188, approved on June 11, 1996. The violator may be sentenced to imprisonment of not less than two (2) years nor more than four (4) years. He may also be punished by a fine of P25,000 to PIOO.OOO.OO. Moreover, he shall be ordered to pay an amount equivalent to double the unpaid benefits owing to the employee.

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SUN TZU NOTES Al L. Beronque

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; or

2.

Imprisonment for not less than 2 years nor more than 4 years, the imprisonment being non-probationable. (The case should therefore be filed with the MTC pursuant to BP 129 as amended by RA 7691); or

3.

Both imprisonment and 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.

fine,

at

the

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.

JURISDICTION Regular Courts RA 7691  see separate page Regional Director ART. 128. Visitorial and enforcement power. – (a) The Secretary of Labor and Employment or his duly authorized representatives, including labor regulation officers, shall have access to employer’s records and premises at any time of the day or night whenever work is being undertaken therein, and the

right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules and regulations issued pursuant thereto. (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. 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 issues* supported by documentary proofs which were not considered in the course of inspection. (As amended by Republic Act No. 7730, June 2, 1994). [* The phrase after the word “issues”, was an amendment by RA 7730 to delete the clause “which cannot be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection.”] An order issued by the duly authorized representative of the Secretary of Labor and Employment 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 Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from. (As amended by Republic Act No. 7730, June 2, 1994). (c) The Secretary of Labor and Employment 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 twenty-four hours, a hearing shall be conducted to determine whether an order for the stoppage of work or suspension of operations shall be lifted or not. In case the violation is attributable to the fault of the employer, he shall pay the employees concerned their salaries or wages during the period of such stoppage of work or suspension of operation. (d) It shall be unlawful for any person or entity to obstruct, impede, delay or otherwise render ineffective the orders of the Secretary of Labor and Employment 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

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SUN TZU NOTES Al L. Beronque administrative investigation, be subject to summary dismissal from the service. (f) The Secretary of Labor and Employment 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.



This Article is the nucleus of administrative enforcement of Philippine labor laws. The job is lodged with the Secretary of Labor and Employment, the regional directors and other duly authorized representatives. The enforcement function is broad. It covers "any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement" of the Code and any labor law, wage order or regulations.



Law enforcement includes inspection of establishments, but every inspection should be supported by an authorization duly issued. Where violations are found, appropriate report will be submitted. Subsequently, a "compliance order" may issue which is a command to rectify the violation found and proven.



The issuance of a Compliance Order must observe the "cardinal primary requirements" of due process in administrative proceedings.

changed Art. 128(b) to its present wording so as to free it from the jurisdictional limitations found in Art. 129 and 217.



In the exercise of his power under this Article the Secretary of Labor and Employment may even order the stoppage of work or suspension of operations of the inspected establishment or parts of it. The employer, if at fault, may be ordered to pay the employees' wages during the work stoppage or suspension of operations. But, again, due process of law must be observed.



A regional director of DOLE has the power to order rectification of a labor standards violation even if such violation is not mentioned in the employee's complaint. (See Aboitiz Shipping Corp. vs. De la Sema, etc.,G.R. No. 88538, April 25, 1990.)



The regional director, in cases where employeremployee relationship still exists, has the power to order and administer, after due notice and hearing, compliance with the labor standards provisions of the Labor Code and other legislation based on the findings of labor regulation officers or industrial safety engineers made in the course of inspection. He may also issue writs of execution to the appropriate authority for the enforcement of his orders in line with the provisions of Article 128 in relation to Article 289 and 290 of the Labor Code.



However, in those cases where the employer contests the findings of the labor standards and welfare officers and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection, the regional director must endorse the case to the appropriate arbitration branch (laborarbiter) of the NLRC for adjudication (Sec. 1, Rule X, Book III, Omnibus Rules Implementing the Labor Code).



The visitorial enforcement power is thorough and piercing; it extends even to issues not formally included in the complaint.

The requirements are: (1) The alleged violator (employer or anyone else) must first be heard and given adequate opportunity to present evidence on his behalf; (2) The evidence presented must be duly considered before any decision is reached; (3) The decision should be based on substantial evidence which means evidence adequate for a reasonable mind to support a conclusion; (4) the decision is based on evidence presented in the hearing, or at least contained in the record and disclosed to the parties; (5) The decision is that of the decisionmaking authority and not mere views of subordinates; and (6) the decision should explain the issues involved and the reasons for the decision rendered.



It should be noted that the authority under Art. 128 may be exercised regardless of monetary value involved, unlike in Art 129 which fixes a maximum of P5,000.00 per claimant. R.A. No. 7730 (June 2, 1994)

Labor Arbiter ART. 217. Jurisdiction of the Labor Arbiters and the Commission. – (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 2. Termination disputes;

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SUN TZU NOTES Al L. Beronque 3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment;

grant the relief sought should likewise be considered. If the principal relief sought will be resolved by applying the Labor Code or other labor relations statute or a collective bargaining agreement, then the case belongs to the labor arbiter. But if the applicable law is the general civil law, the jurisdiction over the dispute belongs to the regular courts, such as the regional trial court. (See San Miguel Corf. vs. NLRC, G.R. No. 80774, May 31,1988.)

4. Claims for actual, moral, exemplary and other forms of damages arising from the employeremployee relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and

6. WAGE ENFORCEMENT AND RECOVERY 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

Enforcement Process (a) (b)

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. (c) Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. (As amended by Section 9, Republic Act No. 6715, March 21, 1989). Labor Arbiter's Jurisdiction







This Article enumerates the cases falling under "original and exclusive" jurisdiction of labor arbiters. This gives the impression that none but a labor arbiter can hear and decide the six categories of cases listed. But this is not really so. Any or all of these cases can, by agreement of the parties, be presented to and decided with finality by a voluntary arbitrator or panel of voluntary arbitrators. (See Articles 261 and 262.) The law prefers or gives primacy to voluntary arbitration (Art. 211) instead of compulsory arbitration. And this, in turn, is the reason the law (Art. 261, last paragraph, and Art. 217 [c]) forbids a labor arbiter from entertaining a dispute properly belonging to the jurisdiction of a voluntary arbitrator. The cases a labor arbiter can hear and decide are employment-related. One unifying element runs through all the cases and disputes enumerated in Art. 217. That element is employment connection. But, additionally, as regards money claims, the law applicable to

(c)

(d)

(e) (f) (g)

(h)

There is a report on the non-compliance of the employer with the minimum wage law. 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. This inspection authority will then be implemented by a Labor and Employment Officer of the DOLE. And this person will visit the employer’s premises and then conduct an inspection.  He will inspect the payroll to determine if indeed there was underpayment of wages, inspect the employer’s 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. 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 employer’s premises will be enumerated and be put as his findings in the notice. The employer is first informed of the results of the inspection. The employer is given the opportunity to comply within 7 days or 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.  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. 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

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SUN TZU NOTES Al L. Beronque

(i)

(j)

(k)

compliance ordering this time the employer to pay the following workers the following sums of money. 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. 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. 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.

(a)



shall have access to employer’s records and premises at any time of the day or night whenever work is being undertaken therein, and

  

the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules and regulations issued pursuant thereto.

(b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. 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 noncompliance 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

Visitorial and Enforcement Power Article 128. Visitorial and Enforcement Power-

The Secretary of Labor or his duly authorized representatives, including labor regulation officers,

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SUN TZU NOTES Al L. Beronque 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)

(f)

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. 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 to:

(1)

inspect and documents,

(2) (3)

interview any employee and

copy

pertinent

records

and

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.

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

Enforcement Power on Health/Safety of Workers Article 128. Visitorial and enforcement power. – (c) The Secretary of Labor and Employment 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 twenty-four hours, a hearing shall be conducted to determine whether an order for the stoppage of work or suspension of operations shall be lifted or not. In case the violation is attributable to the fault of the employer, he shall pay the employees concerned their salaries or wages

during the period of such stoppage of work or suspension of operation.  This provision does not refer to violation of minimum wage laws. It refers to the instance that when the noncompliance 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. Q: Is the power of SOLE to order suspension of operation similar to Article 286 on bona fide suspension of operations? A: 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 company’s 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 employer’s 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.

Q: In the exercise of the visitorial power, can the SOLE be interfered with by the courts? A: NO. This is pursuant to Article 128 (d). If the SOLE or the Regional Director, for that matter, decides to inspect the employer’s 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. Bona fide Suspension of Operations

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SUN TZU NOTES Al L. Beronque ART. 286. When employment not deemed terminated. - The bona-fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty.





Article 283 speaks of a permanent retrenchment as opposed to a temporary lay-off. There is no specific provision of law which treats of a temporary retrenchment or lay-off. To remedy this situation or fill the hiatus, Article 286 may be applied but only by analogy to set a specific period that employees may remain temporarily laid-off or in floating status. Six months is the period set by law that the operation of a business or undertaking may be suspended thereby suspending the employment of the employees concerned. The temporary lay-off wherein the employees likewise cease to work should also not last longer than six months. After six months, the employees should either be recalled to work or permanently retrenched following the requirements of the law. Failing to comply with this would be tantamount to dismissing the employees and the employer would thus be liable for such dismissal. (Sebuguero,et al. vs. NLRC, G.T.I. Sportswear Corp., etal, G.R. No. 115394, September 27, 1995.) When the "floating status" of the employees lasts more than six (6) months, they may be considered to have been constructively dismissed from the service. Thus, they are entitled to the corresponding benefits for their separation. (Agro Commercial Security Services Agency, Inc. vs. National Labor Relations Commission, G.R. Nos. 82823-24, July 31, 1989.)

Disposition of Labor Standard Cases 

A Labor Standard Case is processed administratively under Articles 128 and 129 of the LC, as amended.

Labor Standards refer to the minimum requirements prescribed by existing laws, rules arid regulations relating to wages, hours of work, cost-of-living allowance and other monetary and welfare benefits including occupational, safety, and health standards.



Under the present rules, a Regional Director exercises both visitoria! and enforcement power over labor standard cases, and is, therefore, empowered to adjudicate money claims, provided there still exists an employer-employee relationship, and the

findings of the regional office are not contested by the employer concerned. (Maternity Children's Hospital vs. Secretary of Labor and Regional Director oj Labor, G.R. No. 78909, June 30, 1989.)



Pursuant to the provisions of Article 5, in relation to Article 128[b] of the Labor Code, the Secretary of Labor and Employment issued on September 16, 1987 the Rules on the Disposition of Labor Standards Cases in the Regional Offices to govern the enforcement of labor standards at the regional level. After the issuance of those Rules, Article 12$[b] was amended by Republic Act No. 7730 on June 2, !9U1 whose >-ions are now reflected in the present Article 128,

Revised Rules on Disposition of Labor Standard Cases 1987 series  See FOZ page 513 for full text  See diagram in separate page Department Order No. 7-A series of 1995  Wa pa kit i! DOLE Memo Circular No. 02-A series of 1992  See FOZ Appeal Procedure 

An order issued under this Article is appealable to the DOLE secretary, the administrative superior of the regional director.



Following the rationale of St. Martin ruling, decisions of the Secretary of Labor, such as those in Articles 128, 239, 259, and 263 maybe elevated initially to the CA through certiorari. [National Federation of Labor vs. Laguesma]

Anti-injunction ART. 128. Visitorial and enforcement power. – (d) It shall be unlawful for any person or entity to obstruct, impede, delay or otherwise render ineffective the orders of the Secretary of Labor and Employment 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. Maintenance of Employment Records ART. 128. Visitorial and enforcement power. – (f) The Secretary of Labor and Employment 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. Simple Money Claims and jurisdiction

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SUN TZU NOTES Al L. Beronque ART. 129. Recovery of wages, simple money claims and other benefits. - Upon complaint of any interested party, the Regional Director of the Department of Labor and Employment 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 Five thousand pesos (P5,000.00). The Regional Director or hearing officer shall decide or resolve the complaint within thirty (30) calendar days from the date of the filing of the same. Any sum thus 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 Secretary of Labor and Employment 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 three (3) years, shall be held as a special fund of the Department of Labor and Employment to be used exclusively for the amelioration and benefit of workers. Any decision or resolution of the Regional Director or hearing officer pursuant to this provision may be appealed on the same grounds provided in Article 223 of this Code, within five (5) calendar days from receipt of a copy of said decision or resolution, to the National Labor Relations Commission which shall resolve the appeal within ten (10) calendar days from the submission of the last pleading required or allowed under its rules. The Secretary of Labor and Employment 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. (As amended by Section 2, Republic Act No. 6715, March 21, 1989). 

This is the second method of the enforcement and recovery of minimum wage provisions, which refers to simple money claims.

Articles 128 and 129 compared 

Art. 129 is more limited in scope than Art. 128

Art 128 empowers the Secretary of Labor or any "duly authorized representative covers all matters

Art 129 empowers only the regional director or authorized hearing officers refers only to money

affected by the Labor Code or any labor law Jurisdictional limits in Art 129 do not apply to the exercise of powers under Art 128. Par B of Art 128 was changed to its present wording by RA 7730 purposely to strengthen the visitorial enforcement power by freeing it from the limitations of Art 129. A decision under Article 128, on the other hand, is administrative and therefore appealable to the Secretary of Labor who is the administrative superior of all regional directors of the Department.



claims and benefits The regional director's authority under Art. 129 is subject to four requisites

A decision rendered under this Article, being adjudicatory in nature, is appealable to the National Labor Relations Commission (NLRC)

Read page 319 azucena for elaborated explanations of the distinctions

The regional director's authority under Art. 129 is subject to four requisites, namely:

1. The

claim is presented by an employee or a person employed in domestic or household service, or a househelper. 2. The claim arises from employer-employee relations. 3. The claimant does not seek reinstatement.

4. The

aggregate money claim of each househelper does not exceed P5,000.00.

employee

or



If there is question of reinstatement or if the claimant's demand exceeds P5,000.00, the labor arbiter has jurisdiction over the case, pursuant to Art. 217, paragraph 6, except claims for employees' compensation, social security, Medicare (Philhealth) and maternity benefits. Even as regards labor arbiter, however, employeremployee relation is a prerequisite as basis of the claim.



Articles 128 and 129 are operative only in the context of employment relationship. A regular court , not DOLE or NLRC, has jurisdiction over claim of an independent contractor ot adjust contractual fee.

Procedure under Article 129: a. b. c.

The employee files a pro-forma complaint with the Regional Director. The Regional Director dockets the complaint as simple money claim. 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.

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SUN TZU NOTES Al L. Beronque d. e.

f.

The employer-respondent is given 5 calendar days to answer the complaint. The employer can either admit the allegations or deny it. 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. 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.

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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. 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.

h.

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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 rulemaking power to promulgate rules on exemption and minimum wage fixing, and not the RTWPB.

Art 217. Jurisdiction of the Labor Arbiters and the Commission. – 

Already discussed under violation of wage orders



Dispute resolution through compromise is a pervading philosophy of Philippine labor laws. This is emphasized in this Article 227 and it conforms with the statement of basic policy in Art. 211 (a) and the second paragraph of Art. 221.

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The law looks with disfavor upon quitclaims and releases by employees who are inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities. On the other hand, there are legitimate waivers that represent a voluntary settlement of a laborer's claims that should be respected by the courts as the law between the parties.

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Not all waivers 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.

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A judgment rendered in accordance with a compromise agreement is not appealable and is immediately executory, unless a motion is filed to set aside the agreement on the ground of fraud, mistake, or duress, in which case an appeal may be taken against the order denying the motion. (Master Tours and Travel Corp. vs. CA, 219 SCRA 321; United Housing Corp. vs. Dayrit, 181 SCRA 285.)

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A compromise agreement by union officers must be authorized by the union members. The authority must be produced in evidence. Each laborer must authorize the union officers to enter into a compromise before the laborer's right may be affected. (Kaisahan ng mga Manggagawa sa La Campana vs. Sarmiento, 133 SCRA 220 [1984].) See further discussion under Art. 242.

Art 2028 CC. A compromise is a contract where the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced.

Appeal Procedure Compromise of Labor Standard Cases ART. 227. Compromise agreements. - Any compromise settlement, including those involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau or the regional office of the Department of Labor, shall be final and binding upon the parties. The National Labor Relations Commission or any court, shall not assume jurisdiction over issues involved therein except in case of non-compliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation, or coercion.

ART. 223. Appeal. - Decisions, 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. Such appeal may be entertained only on any of the following grounds: (a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter; (b) If the decision, order or award was secured through fraud or coercion, including graft and corruption; (c) If made purely on questions of law; and

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU Page 24 of 28

SUN TZU NOTES Al L. Beronque (d) If serious errors in the findings of facts are raised which would cause grave or irreparable damage or injury to the appellant. 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 herein.

thereof, the relief sought and, in appropriate cases, posting of an appeal bond. PERIODS

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The 10-day period provided in Article 223 refers to ten calendar days, not working days. This means that Saturdays, Sundays and Legal Holidays are not to be excluded, but included, in counting the 10-day period. Where the 10th day is a Sunday or Legal Holiday, the appeal can be filed on the next business day. (SM Agri and General Machineries vs. National Labor Relations Commission, G.R. No. 748906, January 9, 1989.)

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If the tenth day to perfect an appeal from the decision of the Labor Arbiter to the NLRC falls on a Saturday, the appeal shall be made on the next working day. (Aquino vs. NLRC and Robktt Industrial Construction, Inc., G.R. No. 98101, September 3, 1993.)

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There is a clear distinction between the filing of an appeal within the reglementary period and its perfection. The appeal from the Labor Arbiter to the Commission must be filed within the reglementary period. But the appeal may be perfected after that period. (Star Angel Handicraft vs. NLRC and Spouses FribaMas, G.R. No. 108914, September 20, 1994.)

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The payment of the appeal fee is by no means a mere technicality but is an essential requirement in the perfection of an appeal. However, where the fee had been paid belatedly, the broader interest of justice and the desired objective in deciding the case on the merits demand that the appeal be given due course. (C.W. Tan Mfg. vs. National Labor Relations Commission, G.R. No. 79596, February 10, 1989.)

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Rules of technicality must yield to the broader interests of substantial justice. The dismissal of an appeal on purely technical grounds is frowned upon. (Modem Fishing Gear Labor Union vs. NLRC, G.R. No. 53907, Ma-y 6, 1988.)

To discourage frivolous or dilatory appeals, the Commission or the Labor Arbiter shall impose reasonable penalty, including fines or censures, upon the erring parties. In all cases, the appellant shall furnish a copy of the memorandum of appeal to the other party who shall file an answer not later than ten (10) calendar days from receipt thereof. The Commission shall decide all cases within twenty (20) calendar days from receipt of the answer of the appellee. The decision of the Commission shall be final and executory after ten (10) calendar days from receipt thereof by the parties. Any law enforcement agency may be deputized by the Secretary of Labor and Employment or the Commission in the enforcement of decisions, awards or orders. (As amended by Section 12, Republic Act No. 6715, March 21, 1989).



Appeal means the elevation by an aggrieved party of any decision, order 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 prated for. A. mere notice of appeal, therefore, does not constitute the appeal as herein defined and understood, and shall not stop the running of the period for perfecting an appeal. (Implementing Rules, Book V, Rule I, Sec. 1)



“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

ISSUES ON APPEAL; REMEDIES

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Under Section 5 (c) of the Rules of Procedure of the National Labor Relations Commission, the Commission shall, in cases of perfected appeals, limit itself to reviewing those issues which are raised on appeal. Those which are not raised shall be final and executory. The issues raised on appeal, however, shall be open for review and any actions taken thereon by the Commission are within the parameters of its jurisdiction. (Roche Philippines vs. National Labor Relations Commission, G.R. No. 83335, October 5, 1989.)

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A party who failed to appeal on time from the decision of Labor Arbiter may still file a motion for reconsideration of the NLRC decision. (Sodol vs. Filipinos Koo, Inc., Requito Vega, Belen Gomez, Arturo Gomez, NLRC, G.R. No. 87530, June 13, 1990.)

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU Page 25 of 28

SUN TZU NOTES Al L. Beronque





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The decision of the Commission shall be final and executory after ten calendar days from receipt by the parties. The losing party, however, is not without recourse. Under the New Rules of the National Labor Relations Commission, a party is allowed to file a motion for reconsideration of any order, resolution or decision of the Commission based on palpable or patent errors, provided that the motion is under oath and filed within ten (10) calendar days from receipt of the order, resolution or decision. (Pure Foods Corporation vs. National Labor Relations Commission, G.R. No. 78591, March 21,1989.) In addition, the party may also seasonably avail of the special civil action for certiorari under Rule 65 of the Rules of Court. The action is allowed if the tribunal, board or officer exercising judicial functions has acted without or in excess of its jurisdiction, or with grave abuse of discretion.

When and Where to File Petition Under the 1997 Rules of Civil Procedure, effective July 1, 1997, the petition for certiorari may be filed not later than sixty (60) days from notice of the judgment, order of resolution sought to be assailed in the Supreme Court x x x. It may also be filed in the Court of Appeals whether or not the same is in aid of its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its jurisdiction. (Sec. 4, Rule 65, Rules of Court.) But the same Section and Rule provide that "if [the petition] involves the acts or omissions of a quasi-judicial agency, and unless otherwise provided by law or [the] Rules, the petition shall be filed and cognizable only by the Court of Appeals." Solidly buttressing the CA's jurisdiction is the Supreme Court ruling in the St. Martin case. After a discreet analysis of the legislative intent in delineating judicial jurisdictions, the Court (through Mr. Justice Regalado) declared that both the Supreme Court and the Court of Appeals have the power to review NLRC decisions. However, the peti-tion by certiorari should initially be filed with the Court of Appeals, in line with the principle of hierarchy of courts. J$t. Martin Funeral Homes vs. NLRC, G.R. No. 130866, September 16, 1998.) Furthermore, in National Federation of Labor (NFL) vs. Laguesma, G.R. No. 123426, March 10, 1999, the Supreme Court held that challenges against rulings of the labor secretary and those acting on his behalf, like the director of labor relations, shall be acted upon by the Court of Appeals, which has concurrent jurisdiction with the Supreme Court over petitions for certiorari.

FINDINGS OF FACTS, FINAL Quasi-judicial agencies like the National Labor Relations Commission have acquired expertise because their jurisdiction is confined to specific matters. Hence, their findings of facts are generally accorded not only respect but at times even finality if such findings are supported by substantial evidence. (Manila Mandarin Employees Union vs. National Labor Relations Commission, G.R. No. 76989, September 21, 1987.) Exceptions However, the Supreme Court has never hesitated to exercise its corrective powers and to reverse administrative decisions in the following cases: (1) the conclusion is a finding grounded on speculations, surmises and conjectures; (2) the inferences made are manifestly mistaken, absurd or impossible; (3) there is a grave abuse of discretion; (4) there is a misapprehension of facts; (5) the court [or quasi-judicial body] in arriving at its findings went beyond the issues of the case and the same are contrary to the admissions of the parties or the evidence presented; (6) where respondent commission has sustained irregular procedures and through the invocation of summary methods, including rules on appeal, has affirmed an order which tolerates a violation of due process; and (7) where the rights of a party were prejudiced because the administrative findings, conclusions or decisions were in violation of constitutional provisions, in excess of statutory authority, or jurisdiction, made upon irregular procedure, vitiated by fraud, imposition or mistake, not supported by substantial evidence adduced at the hearing or contained in the records or disclosed to the parties, or arbitrary, or capricious. (Industrial Timber Corp. vs. NLRC, Concordia Dos Pueblos, et al., G.R. No. 83616, January 20, 1989.) Regarding compromise agreements and quitclaims the provisions of and the notes to Art. 227 are pertinent. Legal Remedies Special Civil Action (Rule 65, 1997 Rules of Civil Procedure)  See on separate page Petition for Review (Rule 43 and Rule 45, 1997 Rules of Civil Procedure)  See on separate page 7. PROHIBITIONS REGARDING WAGES Valid Deductions  wa pa kit i!

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SUN TZU NOTES Al L. Beronque

Non-interference in disposal of wages

the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the worker’s consent.

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

Deduction to ensure employment

Wage Deduction ART. 113. Wage deduction. - No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except: (a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance; (b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and (c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment. ART. 114. Deposits for loss or damage. - No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations or business where the practice of making deductions or requiring deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor and Employment in appropriate rules and regulations. Deposits for Loss/Damage ART. 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. Withholding/Kickbacks ART. 116. Withholding of wages and kickbacks prohibited. - It shall be unlawful for any person, directly or indirectly, to withhold any amount from

ART. 117. Deduction to ensure employment. - It shall be unlawful to make any deduction from the wages of any employee for the benefit of the employer or his representative or intermediary as consideration of a promise of employment or retention in employment. Retaliatory Measures ART. 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.

False Reporting ART. 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. Withholding of Wages  1705-1709 cc wa pa kit i! Principle of Non-diminution of benefits ART. 100. Prohibition against elimination or diminution of benefits. - Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.

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it essentially means that benefits being given to employees cannot be taken back or reduced unilaterally by the employer because the benefit has become part of the employment contract, written or unwritten.

The rule against diminution of supplements or benefits is applicable if it is shown that:

1. The

grant of the benefit is based on an express policy or has ripened into a practice over a long period of time;

2. The practice is consistent and deliberate. 3. The practice is not due to error in the construction

or

application of a doubtful or difficult question of law.

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU Page 27 of 28

SUN TZU NOTES Al L. Beronque 4. The diminution or discontinuance unilaterally by the employer.

isdone

ART. 127. Non-diminution of benefits. - No wage order issued by any regional board shall provide for wage rates lower than the statutory minimum wage rates prescribed by Congress. (As amended by Republic Act No. 6727, June 9, 1989).

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU Page 28 of 28