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Agencies for Wage Fixing Machinery

a. Advisory Agency- National Wages and Productivity Commission 120, 121 and 126

Chapter V
WAGE STUDIES, WAGE AGREEMENTS AND WAGE DETERMINATION
Art. 120. 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).
Art. 121. Powers and functions of the Commission. The Commission shall have the following powers and functions:
1. To act as the national consultative and advisory body to the President of the Philippines and Congress on matters relating to
wages, incomes and productivity;

2. To formulate policies and guidelines on wages, incomes and productivity improvement at the enterprise, industry and
national levels;

3. To prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures at the
regional, provincial, or industry levels;

4. To review regional wage levels set by the Regional Tripartite Wages and Productivity Boards to determine if these are in
accordance with prescribed guidelines and national development plans;

5. To undertake studies, researches and surveys necessary for the attainment of its functions and objectives, and to collect
and compile data and periodically disseminate information on wages and productivity and other related information,
including, but not limited to, employment, cost-of-living, labor costs, investments and returns;

6. To review plans and programs of the Regional Tripartite Wages and Productivity Boards to determine whether these are
consistent with national development plans;

7. To exercise technical and administrative supervision over the Regional Tripartite Wages and Productivity Boards;

8. To call, from time to time, a national tripartite conference of representatives of government, workers and employers for the
consideration of measures to promote wage rationalization and productivity; and

9. To exercise such powers and functions as may be necessary to implement this Act.
The Commission shall be composed of the Secretary of Labor and Employment as ex-officio chairman, the Director-General of
the National Economic and Development Authority (NEDA) as ex-officio vice-chairman, and two (2) members each from workers
and employers sectors who shall be appointed by the President of the Philippines upon recommendation of the Secretary of
Labor and Employment to be made on the basis of the list of nominees submitted by the workers and employers sectors,
respectively, and who shall serve for a term of five (5) years. The Executive Director of the Commission shall also be a member of
the Commission.
The Commission shall be assisted by a Secretariat to be headed by an Executive Director and two (2) Deputy Directors, who shall
be appointed by the President of the Philippines, upon the recommendation of the Secretary of Labor and Employment.
The Executive Director shall have the same rank, salary, benefits and other emoluments as that of a Department Assistant
Secretary, while the Deputy Directors shall have the same rank, salary, benefits and other emoluments as that of a Bureau
Director. The members of the Commission representing labor and management shall have the same rank, emoluments,
allowances and other benefits as those prescribed by law for labor and management representatives in the Employees
Compensation Commission. (As amended by Republic Act No. 6727, June 9, 1989)
x x x x x
Art. 126. 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)

b. Wage Fixing Agency-Regional Tripartite Wages and Productivity Board- 122, 126, RA 6727

Art. 122. Creation of Regional Tripartite Wages and Productivity Boards. There is hereby created Regional Tripartite Wages and
Productivity Boards, hereinafter referred to as Regional Boards, in all regions, including autonomous regions as may be
established by law. The Commission shall determine the offices/headquarters of the respective Regional Boards.
The Regional Boards shall have the following powers and functions in their respective territorial jurisdictions:
1. To develop plans, programs and projects relative to wages, incomes and productivity improvement for their respective
regions;
2. To determine and fix minimum wage rates applicable in their regions, provinces or industries therein and to issue the
corresponding wage orders, subject to guidelines issued by the Commission;

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3. To undertake studies, researches, and surveys necessary for the attainment of their functions, objectives and programs, and
to collect and compile data on wages, incomes, productivity and other related information and periodically disseminate the
same;
4. To coordinate with the other Regional Boards as may be necessary to attain the policy and intention of this Code;
5. To receive, process and act on applications for exemption from prescribed wage rates as may be provided by law or any
Wage Order; and
6. To exercise such other powers and functions as may be necessary to carry out their mandate under this Code.
Implementation of the plans, programs, and projects of the Regional Boards referred to in the second paragraph, letter (a) of
this Article, shall be through the respective regional offices of the Department of Labor and Employment within their territorial
jurisdiction; Provided, however, That the Regional Boards shall have technical supervision over the regional office of the
Department of Labor and Employment with respect to the implementation of said plans, programs and projects.
Each Regional Board shall be composed of the Regional Director of the Department of Labor and Employment as chairman, the
Regional Directors of the National Economic and Development Authority and the Department of Trade and Industry as vice-
chairmen and two (2) members each from workers and employers sectors who shall be appointed by the President of the
Philippines, upon the recommendation of the Secretary of Labor and Employment, to be made on the basis of the list of
nominees submitted by the workers and employers sectors, respectively, and who shall serve for a term of five (5) years.
Each Regional Board to be headed by its chairman shall be assisted by a Secretariat. (As amended by Republic Act No. 6727, June
9, 1989)

Art. 126. 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)

2. Standards/Criteria for Minimum Wage Fixing- 124; EO 178

Art. 124. Standards/Criteria for minimum wage fixing. The regional minimum wages to be established by the Regional Board
shall be as nearly adequate as is economically feasible to maintain the minimum standards of living necessary for the health,
efficiency and general well-being of the employees within the framework of the national economic and social development
program. In the determination of such regional minimum wages, the Regional Board shall, among other relevant factors,
consider the following:

1. The demand for living wages;

2. Wage adjustment vis--vis the consumer price index;
3. The cost of living and changes or increases therein;
4. The needs of workers and their families;
5. The need to induce industries to invest in the countryside;
6. Improvements in standards of living;
7. The prevailing wage levels;
8. Fair return of the capital invested and capacity to pay of employers;
9. Effects on employment generation and family income; and
10. The equitable distribution of income and wealth along the imperatives of economic and social development.

The wages prescribed in accordance with the provisions of this Title shall be the standard prevailing minimum wages in every
region. These wages shall include wages varying with industries, provinces or localities if in the judgment of the Regional Board,
conditions make such local differentiation proper and necessary to effectuate the purpose of this Title.
Any person, company, corporation, partnership or any other entity engaged in business shall file and register annually with the
appropriate Regional Board, Commission and the National Statistics Office, an itemized listing of their labor component,
specifying the names of their workers and employees below the managerial level, including learners, apprentices and
disabled/handicapped workers who were hired under the terms prescribed in the employment contracts, and their
corresponding salaries and wages.
Where the application of any prescribed wage increase by virtue of a law or wage order issued by any Regional Board results in
distortions of the wage structure within an establishment, the employer and the union shall negotiate to correct the distortions.
Any dispute arising from wage distortions shall be resolved through the grievance procedure under their collective bargaining
agreement and, if it remains unresolved, through voluntary arbitration. Unless otherwise agreed by the parties in writing, such
dispute shall be decided by the voluntary arbitrators within ten (10) calendar days from the time said dispute was referred to
voluntary arbitration.
In cases where there are no collective agreements or recognized labor unions, the employers and workers shall endeavor to
correct such distortions. Any dispute arising therefrom shall be settled through the National Conciliation and Mediation Board
and, if it remains unresolved after ten (10) calendar days of conciliation, shall be referred to the appropriate branch of the
National Labor Relations Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous hearings and decide the
dispute within twenty (20) calendar days from the time said dispute is submitted for compulsory arbitration.

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The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of any increase in
prescribed wage rates pursuant to the provisions of law or wage order.
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.
All workers paid by result, including those who are paid on piecework, takay, pakyaw or task basis, shall receive not less than the
prescribed wage rates per eight (8) hours of work a day, or a proportion thereof for working less than eight (8) hours.
All recognized learnership and apprenticeship agreements shall be considered automatically modified insofar as their wage
clauses are concerned to reflect the prescribed wage rates. (As amended by Republic Act No. 6727, June 9, 1989)

52. Metropolitan Bank and Trust Company (Metrobank) vs. NWPC and RTWPB | G.R. No.144322 | February 6, 2007

Facts: The Regional Tripartite Wages and Productivity Board, Region II, Tuguegarao, Cagayan (RTWPB), by virtue of R.A. No.
6727, a.k.a. Wage Rationalization Act, issued Wage Order No. R02-03 (Wage Order), as follows: Section 1. Upon effectivity of this
Wage Order, all employees/workers in the private sector throughout Region II, regardless of the status of employment are
granted an across-the-board increase of P15.00 daily.

The Wage Order was published in a newspaper of general circulation on December 2, 1995 and took effect on January 1, 1996.
Its Implementing Rules were approved on February 14, 1996. Per Section 13 of the Wage Order, any party aggrieved by the
Wage Order may file an appeal with the National Wages and Productivity Commission (NWPC) through the RTWPB within 10
calendar days from the publication of the Wage Order.

Bankers Council in a letter inquiry to NWPC requested for ruling to seek exemption from coverage of the wage order since the
members bank are paying more than the regular wage. NWPC replied that the member banks are covered by the wage order
and does not fall with the exemptible categories. In another letter inquiry, Metrobank asked for the interpretation of the
applicability of the wage order. NWPC referred it to RTWPB. RTWPB in return clarified that establishments in Region 2 are
covered by the wage order. Metrobank filed a petition with the CA and denied the petition.

Issue: Whether or not the wage order is void thus it has no legal effect?

Ruling: Section 1, Wage Order No. R02-03 is void insofar as it grants a wage increase to employees earning more than the
minimum wage rate; and pursuant to the separability clause of the Wage Order, Section 1 is declared valid with respect to
employees earning the prevailing minimum wage rate. R.A. No. 6727 created the NWPC which is vested with the power to
prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures at the regional,
provincial or industry levels; and authorized the RTWPB to determine and fix the minimum wage rates applicable in their
respective regions, provinces, or industries therein and issue the corresponding wage orders, subject to the guidelines issued by
the NWPC. Pursuant to its wage fixing authority, the RTWPB may issue wage orders which set the daily minimum wage rates,
based on the standards or criteria set by Article 124 of the Labor Code.

There are two ways of fixing the minimum wage: the "floor-wage" method and the "salary-ceiling" method. The "floor-wage"
method involves the fixing of a determinate amount to be added to the prevailing statutory minimum wage rates. On the other
hand, in the "salary-ceiling" method, the wage adjustment was to be applied to employees receiving a certain denominated
salary ceiling. In other words, workers already being paid more than the existing minimum wage (up to a certain amount stated
in the Wage Order) are also to be given a wage increase. RTWPB did not determine or fix the minimum wage rate by the "floor-
wage method" or the "salary-ceiling method" in issuing the Wage Order. The RTWPB did not set a wage level nor a range to
which a wage adjustment or increase shall be added. Instead, it granted an across-the-board wage increase of P15.00 to all
employees and workers of Region.

3. Wage Distortion
How to resolve wage distortion

53. Prubankers Association vs. Prudential Bank and Trust Company|302 SCRA 74 (1999)
*Same with Case No. 49
Facts: RTWPB Region V issued Wage Order No. RB 05-03 which provided for a Cost of Living Allowance (COLA) to workers in the
private sector who had rendered service for at least three (3) months before its effectivity, and for the same period thereafter,
in the following categories: P17.50 in the cities of Naga and Legaspi; P15.50 in the municipalities of Tabaco, Daraga, Pili and the
city of Iriga; and P10.00 for all other areas in the Bicol Region.

RTWPB Region VII issued Wage Order No. RB VII-03, which directed the integration of the COLA mandated pursuant to
Wage Order No. RO VII-02-A into the basic pay of all workers. It also established an increase in the minimum wage rates for all
workers and employees in the private sector as follows: by Ten Pesos (P10.00) in the cities of Cebu, Mandaue and Lapulapu; Five
Pesos (P5.00) in the municipalities of Compostela, Liloan, Consolacion, Cordova, Talisay, Minglanilla, Naga and the cities of
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Davao, Toledo, Dumaguete, Bais, Canlaon, and Tagbilaran. The bank granted a COLA of P17.50 to its employees at its Naga
Branch, the only branch covered by Wage Order No. RB 5-03, and integrated the P150.00 per month COLA into the basic pay of
its rank-and-file employees at its Cebu, Mabolo and P. del Rosario branches, the branches covered by Wage Order No. RB VII-
03.

On June 7, 1994, Prubankers Association wrote the petitioner requesting that the Labor Management Committee be
immediately convened to discuss and resolve the alleged wage distortion created in the salary structure upon the
implementation of the said wage orders. It demanded in the Labor Management Committee meetings that the petitioner extend
the application of the wage orders to its employees outside Regions V and VII, claiming that the regional implementation of the
said orders created a wage distortion in the wage rates of petitioner's employees nationwide. As the grievance could not be
settled in the said meetings, the parties agreed to submit the matter to voluntary arbitration.

Issue: Whether or not a wage distortion resulted from respondent's implementation of the Wage Orders.

Held: The court ruled that there is no wage distortion since the wage order implementation covers all the branches of the bank.
The hierarchy of positions was still preserved. The levels of different pay classes was not eliminated. The statutory definition of
wage distortion is found in Article 124 of the Labor Code, as amended by Republic Act No. 6727, which reads: Standards/Criteria
for Minimum Wage Fixing . . ."As used herein, a wage distortion shall mean a situation where an increase in prescribed wage
results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and
among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based
on skills, length of service, or other logical bases of differentiation."

Wage distortion involves four elements: (1) An existing hierarchy of positions with corresponding salary rates; (2) A significant
change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one; (3)The
elimination of the distinction between the two levels and (4) The existence of the distortion in the same region of the country. A
disparity in wages between employees holding similar positions but in different regions does not constitute wage distortion as
contemplated by law. As stated, it is the hierarchy of positions and the disparity of their corresponding wages and other
emoluments that are sought to be preserved by the concept of wage distortion.

4. Freedom to bargain: RA 6727, Sec 2; LCP, Art 125

Art. 125. Freedom to bargain. No wage order shall be construed to prevent workers in particular firms or enterprises or
industries from bargaining for higher wages with their respective employers. (As amended by Republic Act No. 6727, June 9,
1989)

5. Penalty for Violation: RA 8188 (Double Indemnity Law), sec 12

REPUBLIC ACT No. 8188

AN ACT INCREASING THE PENALTY AND IMPOSING DOUBLE INDEMNITY FOR VIOLATION OF THE PRESCRIBED INCREASES OR
ADJUSTMENTS IN THE WAGE RATES. AMENDING FOR THE PURPOSE SECTION TWELVE OF REPUBLIC ACT NUMBERED SIXTY-
SEVEN HUNDRED TWENTY-SEVEN. OTHERWISE KNOWN AS THE WAGE RATIONALIZATION ACT.
Be it enacted by the Senate and House of Representatives of the Philippines in the Congress assembled :

SECTION 1. Section 12 of Republic Act Numbered Sixty-seven hundred twenty- seven is hereby amended to read to as follows:
SEC 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 rales 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 arnount 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, vicepresident,
chief executive officer, general manager, managing director or partner.

SECTION 2. All laws, presidential decrees, executive orders, rules and regulations or parts thereof inconsistent with the
provisions of this Act are hereby repealed or modified accordingly.

SECTION 3. This Act shall take effect fifteen (15) days after its complete publication in a newspaper of general circulation.
Approved.

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 6. Wage Order-123

Art. 123. Wage Order. Whenever conditions in the region so warrant, the Regional Board shall investigate and study all
pertinent facts; and based on the standards and criteria herein prescribed, shall proceed to determine whether a Wage Order
should be issued. Any such Wage Order shall take effect after fifteen (15) days from its complete publication in at least one (1)
newspaper of general circulation in the region.
In the performance of its wage-determining functions, the Regional Board shall conduct public hearings/consultations, giving
notices to employees and employers groups, provincial, city and municipal officials and other interested parties.
Any party aggrieved by the Wage Order issued by the Regional Board may appeal such order to the Commission within ten (10)
calendar days from the publication of such order. It shall be mandatory for the Commission to decide such appeal within sixty
(60) calendar days from the filing thereof.
The filing of the appeal does not stay the order unless the person appealing such order shall file with the Commission, an
undertaking with a surety or sureties satisfactory to the Commission for the payment to the employees affected by the order of
the corresponding increase, in the event such order is affirmed. (As amended by Republic Act No. 6727, June 9, 1989)

I. Wages and Protective measures

1. Wages and Salary- 97 (f)
Article 97 (f)Wage paid to any employee shall mean the remuneration or earnings, however designated, capable of
being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other
method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract
of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and
reasonable value, as determined by the Secretary of Labor and Employment, 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.

54. Rosario Gaa vs. COURT OF APPEALS| [140 SCRA 304]

Facts: It appears that Europhil Industries Corporation (Europhil) was formerly one of the tenants in Trinity Building at T.M. Kalaw
Street, Manila, while Rosario A. Gaa was then the building administrator. Europhil commenced an action (in the Court of First
Instance of Manila for damages against Gaa for having perpetrated certain acts that Europhil considered a trespass upon its
rights, namely, cutting of its electricity, and removing its name from the building directory and gate passes of its officials and
employees". Said court rendered judgment in favor of Europhil, ordering Gaa to pay the damages and costs. A writ of
garnishment was issued pursuant to which Deputy Sheriff Cesar A. Roxas served a Notice of Garnishment upon El Grande Hotel,
where Gaa was then employed, garnishing her "salary, commission and/or remuneration." Gaa then filed with the Court of First
Instance of Manila a motion to lift said garnishment on the ground that her "salaries, commission and or remuneration" are
exempted from execution under Article 1708 of the New Civil Code. Said motion was denied by the lower Court.
Court of Appeals dismissed the petition and held that Gaa is not a mere laborer as contemplated under Article 1708 as the term
laborer does not apply to one who holds a managerial or supervisory position like that of Gaa, but only to those laborers
occupying the lower strata.

Issue: Whether or not the Gaa is covered by Article 1708 of the New Civil Code?

Held: The Court ruled that Gaa is not covered by Article 1708 since she does not fall within the criteria of laborer. Said article
provides that, The laborer's wage shall not be subject to execution or attachment, except for debts incurred for food, shelter,
clothing and medical attendance." It is beyond dispute that petitioner is not an ordinary or rank and file laborer but a
responsibly place employee, of El Grande Hotel, responsible for planning, directing, controlling, and coordinating the activities of
all housekeeping personnel so as to ensure the cleanliness, maintenance and orderliness of all guest rooms, function rooms,
public areas, and the surroundings of the hotel. Considering the importance of Gaa's function in El Grande Hotel, it is undeniable
that he is occupying a position equivalent to that of a managerial or supervisory position.

The legislature does not intended the exemption in Article 1708 of the New Civil Code to operate in favor of any but
those who are laboring men or women in the sense that their work is manual. Persons belonging to this class usually look to the
reward of a day's labor for immediate or present support, and such persons are more in need of the exemption than any others.
Petitioner is definitely not within that class.

2. Wage Payment and Protection102 to 105, 1705 of NCC, RA 6727 (Sec 7)

Chapter III
PAYMENT OF WAGES
Art. 102. Forms of payment. No employer shall pay the wages of an employee by means of promissory notes, vouchers,
coupons, tokens, tickets, chits, or any object other than legal tender, even when expressly requested by the employee.

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 Payment of wages by check or money order shall be allowed when such manner of payment is customary on the date of
effectivity of this Code, or is necessary because of special circumstances as specified in appropriate regulations to be issued by
the Secretary of Labor and Employment or as stipulated in a collective bargaining agreement.
Art. 103. Time of payment. Wages shall be paid at least once every two (2) weeks or twice a month at intervals not exceeding
sixteen (16) days. If on account of force majeure or circumstances beyond the employers control, payment of wages on or
within the time herein provided cannot be made, the employer shall pay the wages immediately after such force majeure or
circumstances have ceased. No employer shall make payment with less frequency than once a month.
The payment of wages of employees engaged to perform a task which cannot be completed in two (2) weeks shall be subject to
the following conditions, in the absence of a collective bargaining agreement or arbitration award:
1. That payments are made at intervals not exceeding sixteen (16) days, in proportion to the amount of work completed;
2. That final settlement is made upon completion of the work.

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

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

NCC, Art. 1705. The laborer's wages shall be paid in legal currency.

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

Form, time, place and recipient of payment: 102-105, Art 1705 of NCC, Rule VIII, Book III, Secs 1-2

55. LMG Chemicals Corporation v. Sec. of the DOLE (April 17, 2001)
FACTS: LMG has three divisions and there are two unions within one of the divisions. One union represents the daily paid
employees and the other union represents the monthly paid employees. Chemical Workers Union, respondent, a duly registered
labor organization acts as the collective bargaining agent of all the daily paid employees of petitioners Inorganic Division.
Negotiations for a new CBA took place as the old CBA was about to expire. They were able to agree on the political provisions of
the new CBA, but no agreement was reached on the issue of wage increase and economic issues were also not settled so with
the negotiations at a deadlock. The union filed a Notice of Strike with the NCMB and despite several conferences and efforts of
the conciliator-mediator, the parties failed to reach an amicable settlement so the union staged a strike. In an attempt to end
the strike early, petitioner made an improved offer. Another conciliation meeting was held and petitioner reiterated its
improved offer but the union rejected it. The Secretary of Labor found the labor disputeimpressed with national interest and
assumed jurisdiction. Then petitioner stated that it could no longer afford to grant its previous offer due to serous losses of the
division so they made a lower offer. The union claims it has a positive performance in terms of income. The Secretary ordered
the company to increase the wages but all other economic demands of the union were rejected. Also since the new CBA
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wasnt signed within 6 months after the old one expired and the parties could not agree as to the retroactivity, the Secretary
fixed the date of retroactivity.

ISSUE: W/N the company should be made to pay increased wages despite losses and whether or not the Secretary of Labor
could fix the date of effectivity.

HELD: The SC ruled that the wage increases were justified. It is the income from all sources that determine financial condition. A
particular division may have lost money, but other divisions may make up for it so there will be net income as a whole. Also, the
company granted an increase to its supervisory employees so its unfair to deny a wage increase to the rank and file workers.

On the second ground, the SC ruled that the Secretarys authority to assume jurisdiction carries with its the power to determine
the retroactivity of the CBA. The authority of the Secretary to assume jurisdiction over a labor dispute includes and extends to all
questions and controversies arising there from. The power is plenary and discretionary in nature for an effective and efficient
disposal of the primary dispute. To deprive the Secretary of such power and discretion runs counter to the well-established rule
that all doubts in the interpretation of labor laws be resolved in favor of labor. The SC is only giving meaning to this rule as the
labor authorities should be helped in providing workers immediate benefits, without being hampered
by arbitration or litigation processes that prove to be nerve-wracking and financially burdensome.

56. Special Steel Products vs. Lutgardo Villareal & Frederick So

[G.R. No.143304. July 8, 2004]
Facts:
Special Steel Products, Inc., is a domestic corporation engaged in the principal business of importation, sale, and marketing of
BOHLER steel products. Respondents worked for petitioner as assistant manager and salesman. Villareal obtained a car loan
from Bank of Commerce with petitioner as surety wherein they are jointly and severally agreed to pay the bank in installment
basis. In January 1997, Villareal resigned and joined Hi-Grade Industrial and Technical Products as Executive vice-president.
Respondent So was sponsored by petitioner to attend a training course in Kapfenberg, Austria conducted by BOHLER. It
rewarded Sos outstanding sales performance. When So returned, the petitioner asked respondent So to sign a memorandum to
work for the company for three years. After 2 years and 4 months, So resigned from the company. Petitioner ordered
respondents an accounting of the various Christmas giveaways they received. In return, respondents also demanded payment of
their separation benefits, commissions, monetary benefits but petitioner refused and withheld the 13 th month pay and other
benefits.

Issue: Whether or not the employer can withhold its employees wages and benefits as lien to protect its interest as surety in
the car loan and for expenses in the training abroad.

Held: The employer cannot withhold respondents 13th month pay and other monetary benefits.
Article 116 of the Labor Code, as amended, provides:

Withholding of wages and kickbacks prohibited. It shall be unlawful for any person, directly or indirectly, to withhold any
amount from the wages (and benefits) of a worker or induce him to give up any part of his wages by force, stealth,
intimidation, threat or by any other means whatsoever without the workers consent.

The above provision is clear and needs no further elucidation. Indeed, petitioner has no legal authority to withhold respondents
13th month pay and other benefits. What an employee has worked for, his employer must pay. Thus, an employer cannot simply
refuse to pay the wages or benefits of its employee because he has either defaulted in paying a loan guaranteed by his
employer; or violated their memorandum of agreement; or failed to render an accounting of his employers property.

57. MAYON HOTEL & RESTAURANT vs. ROLANDO ADANA, et al.| G.R. No. 157634| May 16, 2005

FACTS: Petitioner Mayon Hotel & Restaurant (MHR) hired herein 16 respondents as employees in its business in Legaspi City. Its
operation was suspended on March 31, 1997 due to the expiration and non-renewal of the lease contract for the space it
rented. While waiting for the completion of the construction of its new site, MHR continued its operation in another site with 9
of the 16 employees. When the new site constructed and MHR resumed its business operation, none of the 16 employees was
recalled to work.
MHR alleged business losses as the reason for not reinstating the respondents. On various dates, respondents filed complaints
for underpayment of wages, money claims and illegal dismissal.

ISSUE: Whether or not respondents are entitled to their money claims due to underpayment of wages, and nonpayment of
holiday pay, rest day premium, SILP, COLA, overtime pay, and night shift differential pay.

7
HELD: Yes, they are entitled to money claims. The cost of meals and snacks purportedly provided to respondents cannot be
deducted as part of respondents minimum wage. Even granting that meals and snacks were provided and indeed constituted
facilities, such facilities could not be deducted without compliance with certain legal requirements. The employer simply cannot
deduct the value from the employees wages without satisfying the following:
1. proof that such facilities are customarily furnished by the trade;
2. the provision of deductible facilities is voluntarily accepted in writing by the employee; and
3. the facilities are charged at fair and reasonable value.
The law is clear that mere availment is not sufficient to allow deductions from employees wages. As for petitioners
repeated invocation of serious business losses, suffice to say that this is not a defense to payment of labor standard
benefits. The employer cannot exempt himself from liability to pay minimum wages because of poor financial condition of
the company. The payment of minimum wages is not dependent on the employers ability to pay.

Employee has the right to personally receive his wages EXCEPTION: Home Allotment Under PEOA Memorandum Circular No.
55, Series of 1996, Sec 8

58. SKIPPERS UNITED PACIFIC, INC. vs DOZA| G.R. No. 175558| February 8, 2012

FACTS: This arose from consolidated labor case against local manning agency Skippers United Pacific, Inc. and its foreign
principal, Skippers Maritime Services, Inc., Ltd. (Skippers) for unremitted home allotment, salaries for the unexpired portion of
their employment contracts, moral damages, exemplary damages, and attorneys fees. No award was given to Doza for lack of
factual basis. Hence, this Petition.

Paragraph 2 of all the employment contracts stated that: The terms and conditions of the Revised Employment Contract
Governing the Employment of All Seafarers approved per Department Order No. 33 and Memorandum Circular No. 55, both
series of 1996 shall be strictly and faithfully observed. No employment contract was submitted for Nathaniel Doza.

Claims against Skippers were filed and it admitted non-payment of home allotment for the month of December 1998, but
prayed for the offsetting of such amount with the repatriation expenses.

ISSUE: Whether nor not Skippers is liable to pay unremitted home allotment pay notwithstanding the baseless claims?

HELD: It depends. Skippers can seek the repatriation expenses to be offset with the home allotment pay if there was a legal
dismissal. However, if the dismissal was illegal, repatriation expenses were for the account of Skippers and could not be offset
with the home allotment pay. Contrary to the claim of the Labor Arbiter and NLRC that the home allotment pay is in the nature
of extraordinary money where the burden of proof is shifted to the worker who must prove he is entitled to such monetary
benefit, Section 8 of POEA Memorandum Circular No. 55, series of 1996, states that the allotment actually constitutes at least
eighty percent (80%) of the seafarers salary:

The seafarer is required to make an allotment which is payable once a month to his designated allottee in the
Philippines through any authorized Philippine bank. The master/employer/agency shall provide the seafarer with
facilities to do so at no expense to the seafarer. The allotment shall be at least eighty percent (80%) of the seafarers
monthly basic salary including backwages, if any.

Since said memorandum states that home allotment of seafarers actually constitutes at least eighty percent (80%) of their
salary, home allotment pay is not in the nature of an extraordinary money or benefit, but should actually be considered as salary
which should be paid for services rendered. For this reason, such non-remittance of home allotment pay should be considered
as unpaid salaries, and Skippers shall be liable to pay the home allotment pay.

3. LIABILITY FOR WAGES

1. Articles 105-111

Art. 105. Direct payment of wages. Wages shall be paid directly to the workers to whom they are due, except:
1. In cases of force majeure rendering such payment impossible or under other special circumstances to be
determined by the Secretary of Labor and Employment in appropriate regulations, in which case, the worker
may be paid through another person under written authority given by the worker for the purpose; or

2. Where the worker has died, in which case, the employer may pay the wages of the deceased worker to the
heirs of the latter without the necessity of intestate proceedings. The claimants, if they are all of age, shall
execute an affidavit attesting to their relationship to the deceased and the fact that they are his heirs, to the
exclusion of all other persons. If any of the heirs is a minor, the affidavit shall be executed on his behalf by his
natural guardian or next-of-kin. The affidavit shall be presented to the employer who shall make payment
through the Secretary of Labor and Employment or his representative. The representative of the Secretary of

8
 Labor and Employment shall act as referee in dividing the amount paid among the heirs. The payment of
wages under this Article shall absolve the employer of any further liability with respect to the amount paid.

Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the
performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall
be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this
Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to
the extent of the work performed under the contract, in the same manner and extent that he is liable to employees
directly employed by him.
The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of
labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make
appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these
types of contracting and determine who among the parties involved shall be considered the employer for purposes
of this Code, to prevent any violation or circumvention of any provision of this Code.
There is "labor-only" contracting where the person supplying workers to an employer does not have substantial
capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers
recruited and placed by such person are performing activities which are directly related to the principal business of
such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer
who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by
him.

Art. 107. Indirect employer. The provisions of the immediately preceding article shall likewise apply to any person,
partnership, association or corporation which, not being an employer, contracts with an independent contractor
for the performance of any work, task, job or project.

Art. 108. Posting of bond. An employer or indirect employer may require the contractor or subcontractor to
furnish a bond equal to the cost of labor under contract, on condition that the bond will answer for the wages due
the employees should the contractor or subcontractor, as the case may be, fail to pay the same.

Art. 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every employer or
indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision
of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be
considered as direct employers.

Art. 110. Worker preference in case of bankruptcy. In the event of bankruptcy or liquidation of an employers
business, his workers shall enjoy first preference as regards their wages and other monetary claims, any provisions
of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before claims
of the government and other creditors may be paid. (As amended by Section 1, Republic Act No. 6715, March 21,
1989)

Art. 111. Attorneys fees.

1. In cases of unlawful withholding of wages, the culpable party may be assessed attorneys fees equivalent to
ten percent of the amount of wages recovered.
2. It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the
recovery of wages, attorneys fees which exceed ten percent of the amount of wages recovered.

2. Book III, Rule VIII, Sections 7 to 11 of the Omnibus Implementing Rules

59. Development Bank of the Philippines ("DBP") vs NLRC| G.R. No. 86227| January 19, 1994

FACTS: DBP seeks the reversal of the decision of the NLRC, which holds DBP, along with Atlas Textile Development Corporation
("ATLAS"), a textile firm which hypothecated its certain assets to DBP, liable to the employees of ATLAS for wage differentials,
"illegal" salary deductions, separation pay, and similar money claims. Nevertheless, ATLAS is involved because it defaulted in its
obligations with DBP, which made DBP to foreclose the mortgage and acquired the mortgaged assets by virtue of the
foreclosure sale.

ISSUE: Whether or not is valid to consider the workers' preference under Article 110 of the Labor Code over that of DBP's
mortgage lien?

9
HELD: Article 110 of the Labor Code does not purport to create a lien in favor of workers or employees for unpaid wages either
upon all of the properties or upon any particular property owned by their employer. Claims for unpaid wages does not therefore
fall at all within the category of specially preferred claims established under Articles 2241 and 2242 of the Civil Code, except to
the extent that such claims for unpaid wages are already covered by Article 2241, number 6: "claims for laborers' wages, on the
goods manufactured or the work done;" or by Article 2242, number 3: "claims of laborers and other workers engaged in the
construction, reconstruction or repair of buildings, canals and other works upon said buildings, canals or other works."

To the extent that claims for unpaid wages fall outside the scope of Article 2241, number 6 and 2242, number 3, they would
come within the ambit of the category of ordinary preferred credits under Article 2244. Applying Article 2241, number 6 to the
instant case, the claims of the Unions for separation pay of their members constitute liens attaching to the processed leaf
tobacco, cigars and cigarettes and other products produced or manufactured by Insolvent, but not to other assets owned by the
Insolvent. And even in respect of such tobacco and tobacco products produced by Insolvent, the claims of the Unions may be
given effect only after the Bureau of Internal Revenue's claim for unpaid tobacco inspection fees shall have been satisfied out of
the products so manufactured by the Insolvent.

Article 110 of the Labor Code was later amended by Republic Act No. 6715 expands worker preference to cover not only unpaid
wages but also other monetary claims to which even claims of the Government must be deemed subordinate. Also, Article 110
of the Labor Code, as amended, must be viewed and read in conjunction with the provisions of the Civil Code on concurrence
and preferences of credits. The amendatory provisions of Republic Act 6715, which took effect on 21 March 1989, should only
be given prospective application.

60. Development Bank of the Philippines ("DBP") vs NLRC| G.R. No. 108031| March 1, 1995

FACTS: Leonor A. Ang started employment as Executive Secretary with Tropical Philippines Wood Industries, Inc. (TPWII), a
corporation engaged in the manufacture and sale of veneer, plywood and sawdust panel boards. She was promoted to the
position of Personnel Officer. Development Bank of the Philippines, as mortgagee of TPWII, foreclosed its plant facilities and
equipment. Nevertheless TPWII continued its business operations interrupted only by brief shutdowns for the purpose of
servicing its plant facilities and equipment. Later, DBP took possession of the foreclosed properties. From then on the company
ceased its operations. As a consequence, Ang was verbally terminated from the service. Hence, she filed a complaint for
separation pay, 13th month pay, vacation and sick leave pay, salaries and allowances. against TPWII, its General Manager, and
petitioner.

Labor Arbiter found TPWII primarily liable to private respondent but only for her separation pay and vacation and sick leave pay
because her claims for unpaid wages and 13th month pay were later paid after the complaint was filed. 1 The General Manager
was absolved of any liability. But with respect to DBP, it was held subsidiarily liable in the event the company failed to satisfy the
judgment. The Labor Arbiter rationalized that the right of an employee to be paid benefits due him from the properties of his
employer is superior to the right of the latter's mortgage notwithstanding the absence of any formal declaration of bankruptcy
or judicial liquidation of TPWII.

ISSUE: Whether or not the declaration of bankruptcy or judicial liquidation is required before the worker's preference may be
invoked under Article 110 of the Labor Code?

HELD: Yes. Art. 110 should not be treated apart from other laws but applied in conjunction with the pertinent provisions of the
Civil Code and the Insolvency Law to the extent that piece-meal distribution of the assets of the debtor is avoided. Art. 110, then
prevailing, provides:
Art. 110. Worker preference in case of bankruptcy. In the event of bankruptcy or liquidation of an
employer's business, his workers shall enjoy first preference as regards wages due them for services rendered
during the period prior to the bankruptcy or liquidation, any provision to the contrary notwithstanding. Unpaid
wages shall be paid in full before other creditors may establish any claim to a share in the assets of the
employer.
Complementing Art. 110, Sec. 10, Rule VIII, Book III, of the Revised Rules and Regulations Implementing the Labor Code
provides:
Sec. 10. Payment of wages in case of bankruptcy. Unpaid wages earned by the employees before the
declaration of bankruptcy or judicial liquidation of the employer's business shall be given first preference and
shall be paid in full before other creditors may establish any claim to a share in the assets of the employer.

Thus, . . . a declaration of bankruptcy or a judicial liquidation must be present before the worker's preference may be enforced.
The rationale is that to hold Art. 110 to be applicable also to extrajudicial proceedings would be putting the worker in a better
position than the State which could only assert its own prior preference in case of a judicial proceeding. Further, having no
declaration of bankruptcy or judicial liquidation of TPWII, it would be premature to enforce the worker's preference.

10
61. COMMANDO SECURITY AGENCY V. NLRC| G.R. No. 95844| July 20, 1992

FACTS: Nemesio Decierdo was a security guard of Commando Security Agency (Commando). It entered into a contract to
provide guarding services to the Alsons Development and Investment Corporation (ALSONS) for a period of one year, unless
renewed under such terms and conditions as may be mutually acceptable. The number of guards to be assigned by the
Commando would depend on ALSON's demand. Decierdo was one of the guards assigned.

Maria Mila D. Samonte, Properties Administration Head of ALSONS, requested the Commando for a "periodic reshuffling" of
guards. Decierdo was assigned to the Pacific Oil Company in Bunawan, Davao City, but he refused to accept the assignment.
Decierdo filed a complaint for illegal dismissal, unfair labor practice, underpayment of wages, overtime pay, night premium,
13th month pay, holiday pay, rest day pay and incentive leave pay.

Labor Arbiter rendered a decision ordering Commando to pay complainant Decierdo for his salary, holiday and rest day pay
differentials, 13th month pay differentials and service incentive leave pay and dismissing the complaint for illegal dismissal,
unfair labor practice, overtime pay and night premium for lack of merit. NLRC AFFIRMED the decision.

ISSUE: Whether or not Commando can deduct 25% share of Decierdos monthly salary as agreed between them?

HELD: Commandos contention that Decierdo is estopped from complaining about the 25% deduction from his salary
representing petitioner's share in procuring job placement for him, is not well taken. That provision of the employment contract
was illegal and inequitous, hence, null and void. The constitutional provisions on social justice (Sections 9 and 10, Article II) and
protection to labor (Sec. 18, Article II) in the declaration of Principles and State Policies, impose upon the courts the duty to be
ever vigilant in protecting the rights of workers who are placed in a contractually disadvantaged position and who sign waivers
or provisions contrary to law and public policy.

4. Wage Prohibition-Consti. Article III, Sec 1 (right to wage is a property right); LCP Article 112-117; 1708 of the
NCC; Rule VII, Book III, Section 13

a. Non-deductability: LCP, Article 113

62. APODACA vs. NLRC| G.R. No. 80039| April 18, 1989

FACTS:
Apocada was employed in Intrans Phils, Inc. He was persuaded by Mirasol to subscribe to 1,500 shares (P150,000.00). He paid
P37,500.00. He was appointed as President and General Manager of the corporation. Later, he instituted with the NLRC a
complaint against Mirasol and the corporation for the payment of his unpaid wages, his cost of living allowance, the balance of
his gasoline and representation expenses and his bonus compensation. The corporation admitted that there is due to Apocada
the amount of P17,060.07 but this was applied to the unpaid balance of his subscription in the amount of P95,439.93. Apocada
questioned the set-off alleging that there was no call or notice for the payment of the unpaid subscription and that, accordingly,
the alleged obligation is not enforceable.

ISSUES:
(1) Whether or not NLRC has jurisdiction to resolve a claim for non-payment of stock subscriptions to a corporation?
(2) If so, whether or not an obligation arising therefrom can be offset against a money claim of an employee against the
employer?

HELD:

(1) NLRC has no jurisdiction to determine such intra-corporate dispute between the stockholder and the corporation
as in the matter of unpaid subscriptions. This controversy is within the exclusive jurisdiction of the Securities and Exchange
Commission (SEC).

(2) No. the unpaid subscriptions are not due and payable until a call is made by the corporation for payment. Private
respondents have not presented a resolution of the board of directors of respondent corporation calling for the payment of the
unpaid subscriptions. It does not even appear that a notice of such call has been sent to petitioner by the respondent
corporation. As there was no notice or call for the payment of unpaid subscriptions, the same is not yet due and payable. Even if
there was a call for payment, the NLRC cannot validly set it off against the wages and other benefits due petitioner. Article 113
of the Labor Code allows such a deduction from the wages of the employees by the employer, only in three instances.
11
63. GENESIS TRANSPORT SERVICE INC, ET AL vs UNYON NG MALAYANG MANGGAGAWA NG GENESIS TRANSPORT, ET AL
GR 182114 April 05, 2010

FACTS:
ISSUE:
HELD:

b. Allowable deductions: LCP, Article 111 in relation to Art. 241 (o); Art. 258 (e) last sentence (agency fees)
NOTE: PAO LAW 10% attorneys fees allowed.
Art. 111. Attorneys fees.
1. In cases of unlawful withholding of wages, the culpable party may be assessed attorneys fees equivalent
to ten percent of the amount of wages recovered.
2. It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for
the recovery of wages, attorneys fees which exceed ten percent of the amount of wages recovered.

c. No deposits for loss or damage; LCP Art 114-115

64. DENTECH MANUFACTURING CORPORATION VS NLRC| G.R. No. 81477 April 19, 1989

FACTS: Dentech Manufacturing Corporation (Dentech) is a domestic corporation organized under Philippine laws. Before the
firm became a corporate entity, it was known as the J.L. Ledesma Enterprises, a sole proprietorship owned by Jacinto Ledesma.
At present, he is the president and general manager of the corporation as well as the owner of the controlling interest thereof.
The firm is engaged in the manufacture and sale of dental equipment and supplies.

Benjamin Marbella, Armando Torno, Juanito Tajan, Jr. and Joel Torno are members of the Confederation of Citizens Labor Union,
a labor organization registered with the Department of Labor and Employment. They used to be the employees of the petitioner
firm, working therein as welders, upholsterers and painters. They were already employed with the company when it was still a
sole proprietorship. They were dismissed from the firm. So, they filed a Complaint for illegal dismissal and violation of
Presidential Decree No. 851.

They seek the refund of the cash bond they filed with the company at the start of their employment. Dentech, however, aver
that the refund of the cash bond filed is improper inasmuch as the proceeds of the same had already been given to a
certain carinderia to pay for the outstanding accounts of the employees.

ISSUE: Whether or not the employees of Dentech seek the refund of the cash bond they filed with the company at the start of
their employment?

HELD: The refund of the cash bond filed by the employees is in order. Such cash bond required is disallowed under Article 114 of
the Labor Code which prohibits an employer from requiting his employees to file a cash bond or to make deposits, subject to
certain exceptions, to wit-
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 in appropriate rules and regulations.

Clearly, Dentech failed to show that the company is authorized by law to require the private respondents to file the cash bond in
question, the refund thereof is in order. The allegation of Dentech to the effect that the proceeds of the cash bond had already
been given to a certain carinderia to pay for the accounts of the employees does not merit serious consideration. As correctly
observed by the Solicitor General, no evidence or receipt has been shown to prove such payment.

65. Five J Taxi and/or Juan Armamiento vs. NLRC| 235 SCRA 556

Facts: Domingo Maldigan and Gilberto Sabsalon were hired by the Five J Taxi as taxi drivers and, as such, they worked for 4 days
weekly on a 24-hour shifting schedule. Aside from the daily boundary of P700.00 for air-conditioned taxi or P450.00 for non-air-
conditioned taxi, they were also required to pay P20.00 for car washing, and to further make a P15.00 deposit to answer for any
deficiency in their boundary, for every actual working day.

In less than 4 months after Maldigan was hired as an extra driver by the Five J Taxi, he already failed to report for work for
unknown reasons. Five J Taxi learned that he was working for Mine of Gold Taxi Company. With respect to Sabsalon, while
12
driving a taxicab of Five J Taxi on September 1983, he was held up by his armed passenger who took all his money and
thereafter stabbed him. He was hospitalized and after his discharge, he went to this home province to recuperate.

Sabsalon was re-admitted by Five J Taxi as a taxi driver under the same terms and conditions as when he was first employed, but
his working schedule was made on an alternative basis where he drove only every other day. However, on several occasions, he
failed to report for work during his schedule. Sabsalon failed to remit his boundary of P700.00 for the previous day. Also, he
abandoned his taxicab in Makati without fuel refill worth P300.00. Despite repeated requests of Five J Taxi for him to report for
work, he adamantly refused. Afterwards it was revealed that he was driving a taxi for Bulaklak Company.

Maldigan requested Five J Taxi for the reimbursement of his daily cash deposits for 2 years, but herein Five J Taxi told him that
not a single centavo was left of his deposits as these were not even enough to cover the amount spent for the repairs of the taxi
he was driving. This was allegedly the practice adopted by Five J Taxi to recoup the expenses incurred in the repair of their
taxicab units. When Maldigan insisted on the refund of his deposit, Five J Taxi terminated his services. Sabsalon, on his part,
claimed that his termination from employment was effected when he refused to pay for the washing of his taxi seat
covers. Hence, they filed a complaint with against Five J Taxi with illegal dismissal and illegal deductions.

Issue: Whether or not the deductions made were illegal and if illegal, considered a prohibition regarding wages?

Ruling: The Court declares that the deposits made amounts to the prohibition provided by law. The deposits made were illegal
and the respondents must be refunded.

Article 114 of the Labor Code provides as follows:

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 deposits is a recognized one, or is necessary or
desirable as determined by the Secretary of Labor in appropriate rules and regulations.

It can be deduced that the said article provides the rule on deposits for loss or damage to tools, materials or equipments
supplied by the employer. Clearly, the same does not apply to or permit deposits to defray any deficiency which the taxi driver
may incur in the remittance of his boundary.

On the matter of the car wash payments, the labor arbiter had this to say in his decision: "Anent the issue of illegal deductions,
there is no dispute that as a matter of practice in the taxi industry, after a tour of duty, it is incumbent upon the driver to restore
the unit he has given to the same clean condition when he took it out, and as claimed by the respondents (Five J Taxi in the
present case), complainant(s) (private respondents herein) were made to shoulder the expenses for washing, the amount doled
out was paid directly to the person who washed the unit, thus we find nothing illegal in this practice, much more (sic) to
consider the amount paid by the driver as illegal deduction in the context of the law."

Consequently, private respondents are not entitled to the refund of the P20.00 car wash payments they made. It will be noted
that there was nothing to prevent private respondents from cleaning the taxi units themselves, if they wanted to save their
P20.00. Also, as the Solicitor General correctly noted, car washing after a tour of duty is a practice in the taxi industry, and is, in
fact, dictated by fair play.

d. Whistleblower protection/false reporting/prohibited acts: LCP Arts. 118-119

66. Alert Security and Investigation Agency, Inc., et al. vs. Saidali Pasawilan, et al., G.R. No. 182397. September 14, 2011.

FACTS: Saidali Pasawilan, Wilfredo Verceles and Melchor Bulusan were all employed by Alert Security and Investigation Agency,
Inc. (Alert Security) as security guards. They were paid 165.00 pesos a day as regular employees, and assigned at the
Department of Science and Technology (DOST) pursuant to a security service contract between the DOST and Alert Security.
They aver that because they were underpaid, they filed a complaint for money claims against Alert Security. As a result of their
complaint, they were relieved from their posts in the DOST and were not given new assignments despite the lapse of six months.
Later, they filed a joint complaint for illegal dismissal against petitioners.

Labor Arbiter rendered decision finding complainants to have been illegally dismissed. Consequently, each complainant should
be paid in solidum by the respondents the individual awards. The NLRC affirmed the decision, however, dismissed the complaint
for illegal dismissal. The CA reversed the decision of the NLRC thus, decision of the Labor Arbiter is hereby revived.

ISSUE: Whether or not the security guards were illegally dismissed?

HELD: Yes, they were illegally dismissed. As a rule, employment cannot be terminated by an employer without any just or
authorized cause. Employers are barred from arbitrarily removing their workers whenever and however they want. The law
13
sets the valid grounds for termination as well as the proper procedure to take when terminating the services of an employee.
Although we recognize the right of employers to shape their own work force, this management prerogative must not curtail the
basic right of employees to security of tenure. There must be a valid and lawful reason for terminating the employment of a
worker. Otherwise, it is illegal and would be dealt with by the courts accordingly.
The security guards were relieved from their posts because they filed with the Labor Arbiter a complaint against their
employer for money claims due to underpayment of wages. This reason is unacceptable and illegal. Nowhere in the law
providing for the just and authorized causes of termination of employment is there any direct or indirect reference to filing a
legitimate complaint for money claims against the employer as a valid ground for termination. The Labor Code, as amended,
enumerates several just and authorized causes for a valid termination of employment. An employee asserting his right and
asking for minimum wage is not among those causes. Dismissing an employee on this ground amounts to retaliation by
management for an employees legitimate grievance without due process. Such stroke of retribution has no place in Philippine
Labor Laws.
Assuming that the security guard voluntarily abandoned their jobs when they failed to report for duty in the new
location, does not mean that they abandoned their posts. For abandonment of work to fall under Article 282 (b) of the Labor
Code, as amended, as gross and habitual neglect of duties there must be the concurrence of two elements. First, there should
be a failure of the employee to report for work without a valid or justifiable reason, and second, there should be a showing that
the employee intended to sever the employer-employee relationship, the second element being the more determinative factor
as manifested by overt acts. The employer cannot simply conclude that an employee is ipso facto notified of a transfer when
there is no evidence to indicate that the employee had knowledge of the transfer order. Hence, the failure of an employee to
report for work at the new location cannot be taken against him as an element of abandonment.

e. Payment of wages in calamity-stricken areas: DOLE Labor Advisory No. 01, August 8, 2012

14
APPENDICES

Republic of the Philippines

Congress of the Philippines
Metro Manila

Eighth Congress

Republic Act No. 6727 June 9, 1989

AN ACT TO RATIONALIZE WAGE POLICY DETERMINATION BY ESTABLISHING THE

MECHANISM AND PROPER STANDARDS THEREFOR, AMENDING FOR THE PURPOSE
ARTICLE 99 OF, AND INCORPORATING ARTICLES 120, 121, 122, 123, 124, 126 AND 127
INTO, PRESIDENTIAL DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR
CODE OF THE PHILIPPINES, FIXING NEW WAGE RATES, PROVIDING WAGE INCENTIVES FOR
INDUSTRIAL DISPERSAL TO THE COUNTRYSIDE, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled::

Section 1. This Act shall be known as the "Wage Rationalization Act."

Section 2. It is hereby declared the policy of the State to rationalize the fixing of minimum wages and
to promote productivity-improvement and gain-sharing measures to ensure a decent standard of living
for the workers and their families; to guarantee the rights of labor to its just share in the fruits of
production; to enhance employment generation in the countryside through industry dispersal; and to
allow business and industry reasonable returns on investment, expansion and growth.

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

Section 3. In line with the declared policy under this Act, Article 99 of Presidential Decree No. 442, as
amended, is hereby amended and Articles 120, 121, 122, 123, 124, 126 and 127 are hereby
incorporated into Presidential Decree No. 442, as amended, to read as follows:

"Art. 99. Regional Minimum Wages. The minimum wage rates for agricultural and non-
agricultural employees and workers in each and every region of the country shall be those
prescribed by the Regional Tripartite Wages and Productivity Boards."

"Art. 120. Creation of the 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."

"Art. 121. Powers and Functions of the Commission. The Commission shall have the
following powers and functions:

"(a) To act as the national consultative and advisory body to the President of the
Philippines and Congress on matters relating to wages, incomes and productivity;

"(b) To formulate policies and guidelines on wages, incomes and productivity

improvement at the enterprise, industry and national levels;
15
 "(c) To prescribe rules and guidelines for the determination of appropriate minimum
wage and productivity measures at the regional, provincial or industry levels;

"(d) To review regional wage levels set by the Regional Tripartite Wages and
Productivity Boards to determine if these are in accordance with prescribed guidelines
and national development plans;

"(e) To undertake studies, researches and surveys necessary for the attainment of its
functions and objectives, and to collect and compile data and periodically disseminate
information on wages and productivity and other related information, including, but not
limited to, employment, cost-of-living, labor costs, investments and returns;

"(f) To review plans and programs of the Regional Tripartite Wages and Productivity
Boards to determine whether these are consistent with national development plans;

"(g) To exercise technical and administrative supervision over the Regional Tripartite
Wages and Productivity Boards;

"(h) To call, from time to time, a national tripartite conference of representatives of

government, workers and employers for the consideration of measures to promote wage
rationalization and productivity; and

"(i) To exercise such powers and functions as may be necessary to implement this Act.

"The Commission shall be composed of the Secretary of Labor and Employment as ex-officio
chairman, the Director-General of the National Economic and Development Authority (NEDA)
as ex-officio vice-chairman, and two (2) members each from workers and employers sectors
who shall be appointed by the President of the Philippines upon recommendation of the
Secretary of Labor and Employment to be made on the basis of the list of nominees submitted
by the workers and employers sectors, respectively, and who shall serve for a term of five (5)
years. The Executive Director of the Commission shall also be a member of the Commission.

"The Commission shall be assisted by a Secretariat to be headed by an Executive Director and

two (2) Deputy Directors, who shall be appointed by the President of the Philippines, upon the
recommendation of the Secretary of Labor and Employment.

"The Executive Director shall have the same rank, salary, benefits and other emoluments as
that of a Department Assistant Secretary, while the Deputy Directors shall have the same rank,
salary, benefits and other emoluments as that of a Bureau Director. The members of the
Commission representing labor and management shall have the same rank, emoluments,
allowances and other benefits as those prescribed by law for labor and management
representatives in the Employees' Compensation Commission.

"Art. 122. Creation of Regional Tripartite Wages and Productivity Boards. There is hereby
created Regional Tripartite Wages and Productivity Boards, hereinafter referred to as Regional
Boards, in all regions, including autonomous regions as may be established by law. The
Commission shall determine the offices/headquarters of the respective Regional Boards.

"The Regional Boards shall have the following powers and functions in their respective territorial
jurisdiction:

"(a) To develop plans, programs and projects relative to wages, incomes and
productivity improvement for their respective regions;

"(b) To determine and fix minimum wage rates applicable in their region, provinces or
industries therein and to issue the corresponding wage orders, subject to guidelines
issued by the Commission;
16
 "(c) To undertake studies, researches and surveys necessary for the attainment of their
functions, objectives and programs, and to collect and compile data on wages, incomes,
productivity and other related information and periodically disseminate the same;

"(d) To coordinate with the other Regional Boards as may be necessary to attain the
policy and intention of this Code;

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

"(f) To exercise such other powers and functions as may be necessary to carry out their
mandate under this Code.

Implementation of the plans, programs and projects of the Regional Boards referred to in the
second paragraph, letter (a) of this Article, shall be through the respective regional offices of the
Department of Labor and Employment within their territorial jurisdiction; Provided, however,
That the Regional Boards shall have technical supervision over the regional office of the
Department of Labor and Employment with respect to the implementation of said plans,
programs and projects.

"Each Regional Board shall be composed of the Regional Director of the Department of Labor
and Employment as chairman, the Regional Directors of the National Economic and
Development Authority and the Department of Trade and Industry as vice-chairmen and two (2)
members each from workers and employers sectors who shall be appointed by the President of
the Philippines, upon the recommendation of the Secretary of Labor and Employment, to be
made on the basis of the list of nominees submitted by the workers and employers sectors,
respectively, and who shall serve for a term of five (5) years.

"Each Regional Board to be headed by its chairman shall be assisted by a Secretariat.

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

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

"Any party aggrieved by the Wage Order issued by the Regional Board may appeal such order
to the Commission within ten (10) calendar days from the publication of such order. It shall be
mandatory for the Commission to decide such appeal within sixty (60) calendar days from the
filing thereof.

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

"Art. 124. Standards/Criteria for Minimum Wage Fixing. The regional minimum wages to be
established by the Regional Board shall be as nearly adequate as is economically feasible to
maintain the minimum standards of living necessary for the health, efficiency and general well-
being of the employees within the framework of the national economic and social development
program. In the determination of such regional minimum wages, the Regional Board shall,
among other relevant factors, consider the following:

17
 "(a) The demand for living wages;

"(b) Wage adjustment vis-a-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.

"The wages prescribed in accordance with the provisions of this Title shall be the standard
prevailing minimum wages in every region. These wages shall include wages varying within
industries, provinces or localities if in the judgment of the Regional Board conditions make such
local differentiation proper and necessary to effectuate the purpose of this Title.

"Any person, company, corporation, partnership or any other entity engaged in business shall
file and register annually with the appropriate Regional Board, Commission and the National
Statistics Office an itemized listing of their labor component, specifying the names of their
workers and employees below the managerial level, including learners, apprentices and
disabled/handicapped workers who were hired under the terms prescribed in the employment
contracts, and their corresponding salaries and wages.

"Where the application of any prescribed wage increase by virtue of law or Wage order issued
by any Regional Board results in distortions of the wage structure within an establishment, the
employer and the union shall negotiate to correct the distortions. Any dispute arising from wage
distortions shall be resolved through the grievance procedure under their collective bargaining
agreement and, if it remains unresolved, through voluntary arbitration. Unless otherwise agreed
by the parties in writing, such dispute shall be decided by the voluntary arbitrator or panel of
voluntary arbitrators within ten (10) calendar days from the time said dispute was referred to
voluntary arbitration.

"In cases where there are no collective agreements or recognized labor unions, the employers
and workers shall endeavor to correct such distortions. Any dispute arising therefrom shall be
settled through the National Conciliation and Mediation Board and, if it remains unresolved after
ten (10) calendar days of conciliation, shall be referred to the appropriate branch of the National
Labor Relations Commission (NLRC). It shall be mandatory for the NLRC to conduct
continuous hearings and decide the dispute within twenty (20) calendar days from the time said
dispute is submitted for compulsory arbitration.

"The pendency of a dispute arising from a wage distortion shall not in any way delay the
applicability of any increase in prescribed wage rates pursuant to the provisions of law or Wage
Order.

"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
18
 obliterate the distinctions embodied in such wage structure based on skills, length of service, or
other logical bases of differentiation.

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

"All recognized learnership and apprenticeship agreements shall be considered automatically

modified insofar as their wage clauses are concerned to reflect the prescribed wage rates."

"Art. 126. 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."

"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."

Section 4. (a) Upon the effectivity of this Act, the statutory minimum wage rates of all workers and
employees in the private sector, whether agricultural or non-agricultural, shall be increased by twenty-
five pesos (P25.00) per day, except that workers and employees in plantation agricultural enterprises
outside of the National Capital Region (NCR) with an annual gross sales of less than five million pesos
(P5,000,000.00) in the preceding year shall be paid an increase of twenty pesos (P20.00), and except
further that workers and employees of cottage/handicraft industries, non-plantation agricultural
enterprises, retail/service establishments regularly employing not more than ten (10) workers, and
business enterprises with a capitalization of not more than five hundred thousand pesos (P500,000.00)
and employing not more than twenty (20) employees, which are located or operating outside the NCR,
shall be paid only an increase of fifteen pesos (P15.00): Provided, That those already receiving above
the minimum wage rates up to one hundred pesos (P100.00) shall also receive an increase of twenty-
five pesos (P25.00) per day, except that the workers and employees mentioned in the first exception
clause of this Section shall also be paid only an increase of twenty pesos (P20.00), and except further
that those employees enumerated in the second exception clause of this Section shall also be paid an
increase of fifteen pesos (P15.00): Provided, further, That the appropriate Regional Board is hereby
authorized to grant additional increases to the workers and employees mentioned in the exception
clauses of this Section if, on the basis of its determination pursuant to Article 124 of the Labor Code
such increases are necessary.

(b) The increase of twenty-five pesos (P25.00) prescribed under this Section shall apply to all workers
and employees entitled to the same in private educational institutions as soon as they have increased
or are granted authority to increase their tuition fees during school year 1989-1990. Otherwise, such
increase shall be so applicable not later than the opening of the next school year beginning 1990.

(c) Exempted from the provisions of this Act are household or domestic helpers and persons employed
in the personal service of another, including family drivers.

Retail/service establishments regularly employing not more than ten (10) workers may be exempted
from the applicability of this Act upon application with and as determined by the appropriate Regional
Board in accordance with the applicable rules and regulations issued by the Commission. Whenever
an application for exemption has been duly filed with the appropriate Regional Board, action on any
complaint for alleged non-compliance with this Act shall be deferred pending resolution of the
application for exemption by the appropriate Regional Board.

In the event that applications for exemptions are not granted, employees shall receive the appropriate
compensation due them as provided for by this Act plus interest of one per cent (1%) per month
retroactive to the effectivity of this Act.

(d) If expressly provided for and agreed upon in the collective bargaining agreements, all increases in
the daily basic wage rates granted by the employers three (3) months before the effectivity of this Act

19
shall be credited as compliance with the increases in the wage rates prescribed herein, provided that,
where such increases are less than the prescribed increases in the wage rates under this Act, the
employer shall pay the difference. Such increases shall not include anniversary wage increases, merit
wage increases and those resulting from the regularization or promotion of employees.

Where the application of the increases in the wage rates under this Section results in distortions as
defined under existing laws in the wage structure within an establishment and gives rise to a dispute
therein, such dispute shall first be settled voluntarily between the parties and in the event of a
deadlock, the same shall be finally resolved through compulsory arbitration by the regional branches of
the National Labor Relations Commission (NLRC) having jurisdiction over the workplace.

It shall be mandatory for the NLRC to conduct continuous hearings and decide any dispute arising
under this Section within twenty (20) calendar days from the time said dispute is formally submitted to
it for arbitration. The pendency of a dispute arising from a wage distortion shall not in any way delay
the applicability of the increase in the wage rates prescribed under this Section.

Section 5. Within a period of four (4) years from the effectivity of this Act and without prejudice to
collective bargaining negotiations or agreements or other employment contracts between employers
and workers, new business enterprises that may be established outside the NCR and export
processing zones whose operation or investments need initial assistance as may be determined by the
Department of Labor and Employment in consultation with the Department of Trade and Industry or the
Department of Agriculture, as the case may be, shall be exempt from the applicability of this Act for not
more than three (3) years from the start of their operations: Provided, That such new business
enterprises established in Region III (Central Luzon) and Region IV (Southern Tagalog) shall be
exempt from such increases only for two (2) years from the start of their operations, except those
established in the Provinces of Palawan, Oriental Mindoro, Occidental Mindoro, Marinduque, Romblon,
Quezon and Aurora, which shall enjoy such exemption for not more than three (3) years from the start
of their operations.

Section 6. In the case of contracts for construction projects and for security, janitorial and similar
services, the prescribed increases in the wage rates of the workers shall be borne by the principals or
clients of the construction/service contractors and the contract shall be deemed amended accordingly.
In the event, however, that the principal or client fails to pay the prescribed wage rates, the
construction/service contractor shall be jointly and severally liable with his principal or client.

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

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

Section 9. The Department of Labor and Employment shall conduct inspections as often as possible
within its manpower constraint of the payroll and other financial records kept by the company or
business to determine whether the workers are paid the prescribed minimum wage rates and other
benefits granted by law or any Wage Order. In unionized companies, the Department of Labor and
Employment inspectors shall always be accompanied by the president or any responsible officer of the
recognized bargaining unit or of any interested union in the conduct of the inspection. In non-unionized
companies, establishments or businesses, the inspection should be carried out in the presence of a
worker representing the workers in the said company. The workers' representative shall have the right
to submit his own findings to the Department of Labor and Employment and to testify on the same if he
cannot concur with the findings of the labor inspector.

20
Section 10. The funds necessary to carry out the provisions of this Act shall be taken from the
Compensation and Organizational Adjustment Fund, the Contingent Fund, and other savings under
the Republic Act No. 6688, otherwise known as the General Appropriations Act of 1989, or from any
unappropriated funds of the National Treasury: Provided, That the funding requirements necessary to
implement this Act shall be included in the annual General Appropriations Act for the succeeding
years.

Section 11. The National Wages Council created under Executive Order No. 614 and the National
Productivity Commission created under Executive Order No. 615 are hereby abolished. All properties,
records, equipment, buildings, facilities, and other assets, liabilities and appropriations of and
belonging to the abovementioned offices, as well as other matters pending therein, shall be transferred
to the Commission. All personnel of the above abolished offices shall continue to function in a holdover
capacity and shall be preferentially considered for appointments to or placement in the Commission.

Any official or employee separated from the service as a result of the abolition of office pursuant to this
Act shall be entitled to appropriate separation pay and retirement and other benefits accruing to them
under existing laws. In lieu, thereof, at the option of the employee, he shall be preferentially considered
for employment in the government or in any of its subdivisions, instrumentalities, or agencies, including
government-owned or controlled corporations and their subsidiaries.

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 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 Probations 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, vice-president, chief executive officer, general manager, managing director or
partner.

Section 13. The Secretary of Labor and Employment shall promulgate the necessary rules and
regulations to implement the provisions of this Act.

Section 14. Al laws, orders, issuances, rules and regulations or parts thereof inconsistent with the
provisions of this Act are hereby repealed, amended or modified accordingly. If any provision or part of
this Act, or the application thereof to any person or circumstance, is held invalid or unconstitutional, the
remainder of this Act or the application of such provision or part thereof to other persons or
circumstances shall not be affected thereby.

Nothing in this Act shall be construed to reduce any existing wage rates, allowances and benefits of
any form under existing laws, decrees, issuances, executive orders, and/or under any contract or
agreement between the workers and the employers.

Section 15. This Act take effect fifteen (15) days after its complete publication in the Official Gazette or
in at least two (2) national newspapers of general circulation, whichever comes earlier.

Approved: June 9, 1989

RULES IMPLEMENTING REPUBLIC ACT NO. 6727

Pursuant to the authority granted to the Secretary of Labor and Employment under Section 13 of
Republic Act No. 6727, otherwise known as the Wage Rationalization Act, the following rules are
hereby issued for guidance and compliance by all concerned:

21
Definition of Terms. As used in this Rules

a) "Act" means Republic Act No. 6727;

b) "Commission" means the National Wages and Productivity Commission;

c) "Board" means the Regional Tripartite Wages and Productivity Board;

d) "Agriculture" refers to farming in all its branches and among others, includes the cultivation
and tillage of the soil, production, cultivation, growing and harvesting of any agricultural or
horticultural commodities, dairying, raising of livestock or poultry, the culture of fish and other
aquatic products in farms or ponds, and any activities performed by a farmer or on a farm as an
incident to or in conjunction with such farming operations, but does not include the
manufacturing and/or processing of sugar, coconut, abaca, tobacco, pineapple, aquatic or other
farm products;

e) "Plantation Agricultural Enterprise" is one engaged in agriculture with an area of more than
24 hectares in a locality or which employs at least 20 workers. Any other agricultural enterprise
shall be considered as "Non-Plantation Agricultural Enterprise";

f) "Retail Establishment" is one principally engaged in the sale of goods to end-users for
personal or household use;

g) "Service Establishment" is one principally engaged in the sale of service to individuals for
their own or household use and is generally recognized as such;

h) "Cottage/Handicraft Establishment" is one engaged in an economic endeavor in which the

products are primarily done in the home or such other places for profit which requires manual
dexterity and craftmanship and whose capitalization does not exceed P500,000, regardless of
previous registration with the defunct NACIDA;

i) "National Capital Region" covers the cities of Kalookan, Manila, Pasay and Quezon and the
municipalities of Las Pias, Makati, Malabon, Mandaluyong, Marikina, Muntinlupa, Navotas,
Paraaque, Pasig, Pateros, San Juan, Taguig and Valenzuela;

j) "Region III" covers the provinces of Bataan, Bulacan, Nueva Ecija, Pampanga, Tarlac, and
Zambales and the cities of Angeles, Cabanatuan, Olongapo, Palayan and San Jose;

k) "Region IV" covers the provinces of Aurora, Batangas, Cavite, Laguna, Marinduque,
Occidental Mindoro, Oriental Mindoro, Palawan, Quezon, Rizal and Romblon and the cities of
Batangas, Cavite, Lipa, Lucena, Puerto Princesa, San Pablo, Tagaytay and Trece Martires;

l) "Department" refers to the Department of Labor and Employment;

m) "Secretary" means the Secretary of Labor and Employment;

n) "Basic Wage" means all remuneration or earnings paid by an employer to a worker for
services rendered on normal working days and hours but does not include cost-of-living
allowances, profit sharing payments, premium payments, 13th month pay or other monetary
benefits which are not considered as part of or integrated into the regular salary of the workers
on the date the Act became effective;

o) "Statutory Minimum Wage" is the lowest wage rate fixed by law that an employer can pay his
workers;

p) "Wage Distortion" means a situation where an increase in prescribed wage rates results in
the elimination or severe contraction of intentional quantitative differences in wage or salary
22
 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;

q) "Capitalization" means paid-up capital, in the case of a corporation, and total invested
capital, in the case of a partnership or single proprietorship.

CHAPTER I

Wage Increase

SECTION 1. Coverage. The wage increase prescribed under the Act shall apply to all workers and
employees in the private sector regardless of their position, designation or status, and irrespective of
the method by which their wages are paid, except;

a) Household or domestic helpers, including family drivers and workers in the personal service
of another;

b) Workers and employees in retail/service establishments regularly employing not more than
10 workers, when exempted from compliance with the Act, for a period fixed by the
Commission/Boards in accordance with Section 4 (c) of the Act and Section 15, Chapter 1 of
this Rules;

c) Workers and employees in new business enterprises outside the National Capital Region
and export processing zones for a period of not more than two or three years, as the case may
be, from the start of operations when exempted in accordance with Section 5 of the Act and
Section 15, Chapter 1 of this Rules;

d) Workers and employees receiving a basic wage of more than P100.00 per day.

Section 2. Effectivity. The Act takes effect on July 1, 1989, 15 days following its complete
publication in two newspapers of general circulation on June 15, 1989 pursuant to Section 15 thereof.

Section 3. Amount of Minimum Wage Increase. Effective July 1, 1989, the daily statutory
minimum wage rates of covered workers and employees shall be increased as follows:

a) P25.00 for those in the National Capital Region;

b) P25.00 for those outside the National Capital Region, except for the following:

P20.00 for those in plantation agricultural enterprises with an annual gross sales of
less than P5 million in the fiscal year immediately preceding the effectivity of the Act;

P15.00 for those in the following enterprises:

1. Non-plantation agriculture

2. Cottage/handicraft

3. Retail/Service regularly employing not more than 10 workers.

4. Business enterprises with a capitalization of not more than P500,000 and

employing not more than 20 workers.

Section 4. When Wage Increase Due Other Workers.

23
 a) All workers and employees who, prior to July 1, 1989, were already receiving a basic wage
above the statutory minimum wage rates provided under Republic Act 6640 but not over
P100.00 per day shall receive a wage increase equivalent to that provided in the preceding
Section.

b) Those receiving not more than the following monthly wage rates prior to July 1, 1989 shall be
deemed covered by the preceding subsection:

(i) P3,257.50 where the workers and employees work everyday, including premium
payments for Sundays or rest days, special days and regular holidays.

(ii) P3,041.67 where the workers and employees do not work but considered paid on
rest days, special days and regular holidays.

(iii) P2,616.67 where the workers and employees do not work and are not considered
paid on Sundays or rest days.

(iv) P2,183.33 where the workers and employees do not work and are not considered
paid on Saturdays and Sundays or rest days.

c) Workers and employees who, prior to July 1, 1989, were receiving a basic wage of more than
P100.00 per day or its monthly equivalent, are not by law entitled to the wage increase provided
under the Act. They may, however, receive wage increases through the correction of wage
distortions in accordance with Section 16, Chapter 1 of this Rules.

Section 5. Daily Statutory Minimum Wage Rates. The daily statutory minimum wage rates of
workers and employees shall be as follows:

Under RA 6640 Under RA 6727

Sector/Industry (Effective (Effective

Dec. 14, 1987) July 1, 1989 )

A. NATIONAL CAPITAL REGION

Non-Agriculture P64.00 P89.00

Agriculture

Plantation 54.00 79.00

Non-Plantation 43.50 68.50

Cottage/Handicraft

Employing more than 30 workers 52.00 77.00

Employing not more than 30 workers 50.00 75.00

Private hospitals

With bed capacity of more than 100 64.00 89.00

With bed capacity or 100 or less 60.00 85.00

24
Retail/Service

Employing more than 15 workers 64.00 89.00

Employing 11 to 15 workers 60.00 85.00

Employing not more than 10 workers 43.00 68.00

B. OUTSIDE NATIONAL CAPITAL REGION

Non-agriculture 64.00 89.00

Agriculture

Plantation with annual

gross sales of P5M or more 54.00 79.00

Plantation with annual gross

sales less than P5M 54.00 74.00

Non-Plantation 43.50 58.50

Cottage/Handicraft

Employing more than 30 workers 52.00 67.00

Employing not more than 30 workers 50.00 65.00

Private Hospitals 60.00 85.00

Retail/Service

Cities w/ population of more than 150,000

Employing more than 15 workers 64.00 89.00

Employing 11 to 15 workers 60.00 85.00

Employing not more than 10 workers 43.00 58.00

Municipalities and Cities with

population not more than 150,000

Employing more than 10 workers 60.00 85.00

Employing not more than 10 workers 43.00 58.00

Sugar Mills 66.00 91.00

Agriculture

Plantation with annual gross

25
sales of P5M or more 48.50 73.50

Plantation with annual gross

sales of less than P5M 48.50 68.50

Non-plantation 43.50 58.50

Business Enterprises with Capitalization

of not more than P500,000 and employing

not more than 20 workers

Non-Agriculture 64.00 79.00

Agriculture Plantation

Products Other than Sugar 54.00 69.00

Sugar 48.50 63.50

Private Hospitals 60.00 75.00

Retail/Service

Cities w/ population of more than P150,000

Employing more than 15 workers 64.00 79.00

Employing 11 to 15 workers 60.00 75.00

Municipalities and Cities w/ population

of not more than 150,000

Employing more than 10 workers 60.00 75.00

Section 6. Suggested Formula in Determining the Equivalent Monthly Statutory Minimum Wage
Rates. Without prejudice to existing company practices, agreements or policies, the following
formula may be used as guides in determining the equivalent monthly statutory minimum wage rates:

a) For those who are required to work everyday including Sundays or rest days, special days
and regular holidays:

Equivalent Applicable daily wage rate

Monthly = (ADR) x 390.90 days

Rate (EMR) 12

Where 390.90 days =

302 days Ordinary working days

26
 20 days 10 regular holidays x 200%

66.30 days 51 rest days x 130%

2.60 days 2 special days x 130%

390.90 days Total equivalent number of days.

Note: For workers whose rest days fall on Sundays, the number of rest days in a year is reduced from
52 to 51 days, the last Sunday of August being a regular holiday under Executive Order No. 203. For
purposes of computation, said holiday, although still a rest day for them, is included in the ten regular
holidays. For workers whose rest days do not fall on Sundays, the number of rest days is 52 days, as
there are 52 weeks in a year.

Nothing herein shall be construed as authorizing the reduction of benefits granted under existing
agreements or employer practices/policies.

Section 7. Basis of Minimum Wage Rates. The statutory minimum wage rates prescribed under
the Act shall be for the normal working hours, which shall not exceed eight hours of work a day.

Section 8. Credible Wage Increase.

a) No wage increase shall be credited as compliance with the increases prescribed under the
Act unless expressly provided under collective bargaining agreements, and, such wage
increase was granted not earlier than April 1, 1989 but not later than July 1, 1989. Where the
wage increase granted is less than the prescribed increase under the Act, the employer shall
pay the difference.

b) Anniversary wage increase provided in collective agreements, merit wage increase, and
those resulting from the regularization or promotion of employees shall not be credited as
compliance thereto.

Section 9. Workers Paid by Results.

a) All workers paid by results, including those who are paid on piecework, takay, pakyaw, or
task basis, shall receive not less than the applicable statutory minimum wage rates prescribed
under the Act for the normal working hours which shall not exceed eight hours work a day, or a
proportion thereof for work of less than the normal working hours.

The adjusted minimum wage rates for workers paid by results shall be computed in accordance
with the following steps:

1) Amount of increase in AMW* Previous AMW x 100 = % increase;

2) Existing rate/piece x % increase = increase in rate/piece;

3) Existing rate/piece + increase in rate/piece = Adjusted rate/piece.

*Where AMW is the applicable minimum wage rate.

b) The wage rates of workers who are paid by results shall continue to be established in
accordance with Article 101 of the Labor Code, as amended and its implementing regulations.

Section 10. Wages of Special Groups of Workers. Wages of apprentices, learners and
handicapped workers shall in no case be less than 75 percent of the applicable statutory minimum
wage rates.

27
All recognized learnership and apprenticeship agreements entered into before July 1, 1989 shall be
considered as automatically modified insofar as their wage clauses are concerned to reflect the
increases prescribed under the Act.

Section 11. Application to Contractors. In the case of contracts for construction projects and for
security, janitorial and similar services, the prescribed wage increases shall be borne by the principals
or clients of the construction/service contractors and the contract shall be deemed amended
accordingly. In the event, however, that the principal or client fails to pay the prescribed wage rates,
the construction/service contractor shall be jointly and severally liable with his principal or client.

Section 12. Application to Private Educational Institutions. Private educational institutions

which increased tuition fees beginning school year 1989-1990 shall comply with the P250.00 per day
wage increase prescribed under the Act effective as follows:

a) In cases where the tuition fee increase was effected before the effectivity of the Act, the
wage increase shall take effect on July 1, 1989.

b) In cases where the tuition fee increase was effected on or after the effectivity of the Act, the
wage increase shall take effect not later than the date the school actually increased tuition fees
but in the latter case, such wage increase may not be made retroactive to July 1, 1989.

Beginning school year 1990-1991, all schools shall implement the wage increase regardless of
whether or not they have actually increased tuition fees.

Section 13. Mobile and Branch Workers. The statutory minimum wage rates of workers, who by
the nature of their work have to travel, shall be those applicable in the domicile or head office of the
employer.

The minimum wage rates of workers working in branches or agencies of establishments in or outside
the National Capital Region shall be those applicable in the place where they are stationed.

Section 14. Transfer of Personnel. The transfer of personnel to areas outside the National Capital
Region shall not be a valid ground for the reduction workers transferred to the National Capital Region
shall be entitled to the minimum wage rate applicable therein.

Section 15. Exemptions.

a) The following establishments may be exempted from compliance with the wage increase
prescribed under the Act:

1) Retail/Service establishments regularly employing not more than 10 workers upon

application with and as determined by the appropriate Board in accordance with
applicable guidelines to be issued by the Commission.

2) New business enterprises that may be established outside the National Capital
Region and export processing zones from July 1, 1989 to June 30, 1993, whose
operation or investments need initial assistance may be exempted for not more than
three years from the start of operations, subject to guidelines to be issued by the
Secretary in consultation with the Department of Trade and Industry and the Department
of Agriculture.

New business enterprises in Region III (Central Luzon) and Region IV (Southern Tagalog) may
be exempted for two years only from start of operations, except those that may be established
in the provinces of Palawan, Oriental Mindoro, Occidental Mindoro, Marinduque, Romblon,
Quezon and Aurora, which may also be exempted for not more than three years from the start
of operations.

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 b) Whenever an application for exemption has been duly filed with the appropriate office in the
Department/Board, action by the Regional Office of the Department on any complaint for
alleged non-compliance with the Act shall be deferred pending resolution of the application for
exemption.

c) In the event that the application for exemption is not granted, the workers and employees
shall receive the appropriate compensation due them as provided for under the Act plus interest
of one percent per month retroactive to July 1, 1989 or the start of operations whichever is
applicable.

Section 16. Effects on Existing Wage Structure. Where the application of the wage increase
prescribed herein results in distortions in the wage structure within an establishment which gives rise
to a dispute therein, such dispute shall first be settled voluntarily between the parties. In the event of a
deadlock, such dispute shall be finally resolved through compulsory arbitration by the regional
arbitration branch of the National Labor Relations Commission (NLRC) having jurisdiction over the
workplace.

The NLRC shall conduct continuous hearings and decide any dispute arising from wage distortions
within twenty calendar days from the time said dispute is formally submitted to it for arbitration.

The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of
the increases in the wage rates prescribed under the Act.

Any issue involving wage distortion shall not be a ground for a strike/lockout.

Section 17. Complaints for Non-Compliance. Complaints for non-compliance with the wage
increases prescribed under the Act shall be filed with the Regional Offices of the Department having
jurisdiction over the workplace and shall be the subject of enforcement proceedings under Articles 128
and 129 of the Labor Code, as amended.

Section 18. Conduct of Inspection by the Department. The Department shall conduct
inspections of establishments, as often as necessary, to determine whether the workers are paid the
prescribed wage rates and other benefits granted by law or any Wage Order. In the conduct of
inspection in unionized companies, Department inspectors shall always be accompanied by the
president or other responsible officer of the recognized bargaining unit or of any interested union. In
the case of non-unionized establishments, a worker representing the workers in the said company
shall accompany the inspector.

The workers' representative shall have the right to submit his own findings to the Department and to
testify on the same if he does not concur with the findings of the labor inspector.

Section 19. Payment of Wages. Upon written petition of the majority of the workers and
employees concerned, all private establishments, companies, businesses and other entities with at
least twenty-five workers and located within one kilometer radius to a commercial, savings or rural
bank, shall pay the wages and other benefits of their workers through any of said banks within the
period and in the manner and form prescribed under the Labor Code as amended.

Section 20. Duty of Bank. Whenever applicable and upon request of a concerned worker or union,
the bank through which wages and other benefits are paid shall issue a certification of the record of
payment of said wages and benefits of a particular worker or workers for a particular payroll period.

CHAPTER II

The National Wages and Productivity Commission and Regional Tripartite Wages and
Productivity Boards

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SECTION 1. Commission. The National Wages and Productivity Commission created under the
Act shall hold office in the National Capital Region. The Commission shall be attached to the
Department for policy and program coordination.

Section 2. Powers and Functions of the Commission. The Commission shall have the following
powers and functions:

a) To act as the national consultative and advisory body to the President of the Philippines and
Congress on matters relating to wages, incomes and productivity;

b) To formulate policies and guidelines on wages, incomes and productivity improvement at the
enterprise, industry and national levels;

c) To prescribe rules and guidelines for the determination of appropriate minimum wage and
productivity measures at the regional, provincial or industry levels;

d) To review regional wage levels set by the Regional Tripartite Wages and Productivity Boards
to determine if these are in accordance with prescribed guidelines and national development
plans;

e) To undertake studies, researches and surveys necessary for the attainment of its functions
and objectives, and to collect and complete data and periodically disseminate information on
wages and productivity and other related information, including, but not limited to, employment,
cost-of-living, labor costs, investments and returns;

f) To review plans and programs of the Regional Tripartite Wages and Productivity Boards to
determine whether these are consistent with national development plans;

g) To exercise technical and administrative supervision over the Regional Tripartite Wages and
Productivity Boards;

h) To call, from time to time, a national tripartite conference of representatives of government,

workers and employers for the consideration of measures to promote wage rationalization and
productivity; and

i) To exercise such powers and functions as may be necessary to implement this Act.

Section 3. Composition of the Commission. The Commission shall be composed of the

Secretary as ex-officio Chairman, the Director General of the National Economic and Development
Authority (NEDA) as ex-officio Vice-Chairman and two members each from workers and employers
sectors who shall be appointed by the President for a term of five years upon recommendation of the
Secretary. The recommendees shall be selected from the list of nominees submitted by the workers
and employers sectors. The Executive Director of the Commission Secretariat shall also be a member
of the Commission.

The members of the Commission representing labor and management shall have the same rank,
emoluments, allowances and other benefits as those prescribed by law for labor and management
representatives in the Employees Compensation Commission.

Section 4. Commission Secretariat. The Commission shall be assisted by a Secretariat to be

headed by an Executive Director and two Deputy Directors, who shall be appointed by the President
upon recommendation of the Secretary.

The Executive Director shall have the rank of a Department Assistant Secretary, while the Deputy
Directors that of a Bureau Director shall receive the corresponding salary, benefits and other
emoluments of the positions.

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Section 5. Regional Tripartite Wages and Productivity Boards. The Regional Wages and
Productivity Boards created under the Act in all regions, including autonomous regions as may be
established by law, shall hold offices in areas where the Regional Offices of the Department are
located.

Section 6. Powers and Functions of the Boards. The Boards shall have the following powers and
functions:

a) To develop plans, programs and projects relative to wages, incomes and productivity
improvements for their respective regions;

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;

c) To undertake studies, researches, and surveys necessary for the attainment of their
functions, objectives and programs, and to collect and compile data on wages, incomes,
productivity and other related information and periodically disseminate the same;

d) To coordinate with the other Boards as may be necessary to attain the policy and intention of
the Labor Code;

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

f) To exercise such other powers and functions as may be necessary to carry out their mandate
under the Labor Code.

Implementation of the plans, programs and projects of the Boards shall be through the respective
Regional Offices of the Department, provided, however, that the Boards shall have technical
supervision over the Regional Office of the Department with respect to the implementation of these
plans, programs and projects.

Section 7. Composition of the Boards. Each Board shall be composed of the Regional Director of
the Department as Chairman, the Regional Directors of the National Economic and Development
Authority (NEDA) and Department of Trade and Industry (DTI) as Vice-Chairmen and two members
each of workers and employers sectors who shall be appointed by the President for a term of five
years upon the recommendation of the Secretary. The recommendees shall be selected from the lists
of nominees submitted by the workers and employers sectors.

Each Board shall be assisted by a Secretariat.

Section 8. Authority to Organize and Appoint Personnel. The Chairman of the Commission
shall organize such units and appoint the necessary personnel of the Commission and Board
Secretariats, subject to pertinent laws, rules and regulations.

CHAPTER III

Minimum Wage Determination

SECTION 1. Regional Minimum Wages. The minimum wage rates for agricultural and non-
agricultural workers and employees in every region shall be those prescribed by the Boards which
shall in no case be lower than the statutory minimum wage rates. These wage rates may include
wages by industry, province or locality as may be deemed necessary by the Boards.

Section 2. Standards/Criteria for Minimum Wage Fixing. The regional minimum wages to be
established by the Boards shall be as nearly adequate as is economically feasible to maintain the
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minimum standards of living necessary for the health, efficiency and general well-being of the workers
within the framework of the national, economic, and social development programs. In the
determination of regional minimum wages, the Boards, shall, among other relevant factors, consider
the following:

a) The demand for living wages;

b) Wage adjustment vis-a-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.

Section 3. Wage Order. Whenever conditions in the region so warrant, the Board shall investigate
and study all pertinent facts; and, based on standards and criteria prescribed herein, shall determine
whether a Wage Order should be issued.

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

Section 4. Effectivity of Wage Order. Any Wage Order issued by the Boards shall take effect 15
days after its complete publication in at least one newspaper of general circulation in the region.

Section 5. Appeal to the Commission. Any party aggrieved by the Wage Order issued by the
Board may file an appeal with the Commission within ten calendar days from the publication of the
Order. The Commission shall decide the appeal within sixty calendar days from the date of filing.

Section 6. Effect of Appeal. The filing of the appeal shall not suspend the effectivity of the Wage
Order unless the person appealing such order files with the Commission an undertaking with a surety
or sureties in such amount as may be fixed by the Commission.

Section 7. Wage Distortions. Where the application of any wage increase resulting from a Wage
Order issued by any Board results in distortions in the wage structure within an establishment, the
employer and the union shall negotiate to correct the distortions using the grievance procedure under
the collective bargaining agreement. If it remains unresolved, it shall be decided through voluntary
arbitration within ten calendar days from the time the dispute was referred for voluntary arbitration,
unless otherwise agreed by the parties in writing.

Where there are no collective agreements or recognized labor unions, the employer and workers shall
endeavor to correct the wage distortion. Any dispute arising therefrom shall be settled through the
National Conciliation and Mediation Board and if it remains unresolved after ten calendar days of
conciliation, it shall be referred to the appropriate branch of the National Labor Relations Commission

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(NLRC). The NLRC shall conduct continuous hearings and decide the dispute within twenty calendar
days from the time said dispute is submitted for compulsory arbitration.

The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of
any wage increase prescribed pursuant to the provisions of law or Wage Order.

Section 8. Non-Diminution of Benefits. Nothing in the Act and in this Rules shall be construed to
reduce any existing wage rates, allowances and benefits of any form under existing laws, decrees,
issuances, executive orders and/or under any contract or agreement between the workers and
employers.

Section 9. 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 Boards.

Section 10. Penal Provisions. 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 the Act shall be punished by a fine not exceeding P25,000 and/or
imprisonment of not less than one year nor more than two years: Provided, that any person convicted
under the 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 upon the entity's responsible officers, including, but not
limited to, the president, vice-president, chief executive officer, general manager, managing director or
partner.

Section 11. Registration/Reporting Requirement. Any person, company, corporation, partnership

or any other entity engaged in business shall submit annually a verified itemized listing of their labor
component to the appropriate Board and the National Statistics Office not later than January 31 of
each year, starting on January 31, 1990 in accordance with the form to be prescribed by the
Commission. The listing shall specify the names, salaries and wages of their workers and employees
below the managerial level including learners, apprentices and disabled/handicapped workers.

CHAPTER IV

Transitory Provisions

SECTION 1. Abolition of the National Wages Council and the National Productivity
Commission. The National Wages Council created under Executive Order No. 614 and the
National Productivity Commission created under Executive Order No. 615 are abolished. All
properties, records, equipment, buildings, facilities, and other assets, liabilities and appropriations of
and belonging to the abovementioned offices, as well as other matters pending therein, shall be
transferred to the Commission. All personnel of the above-abolished offices shall continue to function
in a hold-over capacity and shall be preferentially considered for appointments to or placements in the
Commission/ Boards.

Any official or employee separated from the service as a result of the abolition of offices pursuant to
the Act shall be entitled to appropriate separation pay of one month salary for every year of service
and/or retirement and other benefits accruing to them under existing laws. In lieu thereof, at the option
of the employee, he shall be preferentially considered for employment in the government or in any of
its subdivisions, instrumentalities, or agencies, including government-owned or controlled corporations
and their subsidiaries.

Section 2. Interim Processing of Applications for Exemption and Submission of Reports.

Pending the operationalization of the Commission and Boards, the National Wages Council shall, in
the interim, receive and process applications for exemption subject to guidelines to be issued by the
Secretary in accordance with Section 11 of the Act.

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Reports of establishments on their labor component, including wages and salaries of their workers
prescribed under the Act, shall be submitted to the National Wages Council through the Regional
Offices of the Department.

Section 3. Funding Requirement. The funds necessary to carry out the provisions of the Act shall
be taken from the Compensation and Organizational Adjustment Fund, the Contingent Fund, and other
savings under Republic Act No. 6688, otherwise known as the General Appropriations Act of 1989, or
from any unappropriated funds of the National Treasury; Provided that the funding requirements
necessary to implement the Act shall be included in the Annual General Appropriations Act for the
succeeding years.

Section 4. Repealing Clause. All laws, orders, issuances, rules and regulations or parts thereof
inconsistent with the provisions of the Act and this Rules are hereby repealed, amended or modified
accordingly. If any provision or part of the Act and this Rules, or the application thereof to any person
or circumstance shall not be affected thereby.

Section 5. Effectivity. This Rules shall take effect on July 1, 1989.

Done in the City of Manila, Republic of the Philippines this 7th day of July 1989.

Approved: June 9, 1989

EXECUTIVE ORDER NO. 178 May 1, 1987

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 INCREASING THE STATUTORY DAILY MINIMUM WAGES AFTER INTEGRATING THE COST OF LIVING
ALLOWANCE UNDER WAGE ORDERS NOS. 1, 2, 3, 5 and 6 INTO THE BASIC PAY OF ALL COVERED WORKERS

WHEREAS, the National Tripartite Conference, held on April 10-11, 1987, has agreed in principle on the integration of
existing cost-of-living-allowances (COLAs) into the basic pay, leaving to the President of the Philippines the decision on the
manner and schedule of integration;

NOW, THEREFORE, I, CORAZON C. AQUINO, President of the Philippines, do hereby order:

Sec. 1. The cost-of-living allowances mandated under existing Wage Orders shall be integrated into the basic wage of all
covered workers based on the following schedule:

a) COLAs under Wage Orders Nos. 1, 2 and 3, effective May 1, 1987

b) COLAs under Wage Orders Nos. 5 and 6, effective October 1, 1987

For establishments with less than 30 employees and paid-up capital of P500,000 or less:

a) COLAs under Wage Orders Nos. 1 and 2, effective May 1, 1987

b) COLA under Wage Order No. 3, effective October 1, 1987

c) COLAs under Wage Orders Nos. 5 and 6, effective January 1, 1988

Sec. 2. The Secretary of Labor and Employment, as Chairman of the National Wages Council, shall promulgated the
necessary rules and regulations to implement this Executive Order.

Sec. 3. All laws, orders, issuances, rules and regulations or parts thereof inconsistent with this Executive Order are hereby
repealed or modified accordingly.

Sec. 4. This Executive Order shall take effect on May 1, 1987.

Done in the City of Manila, this 1st day of June, in the year of Our Lord, nineteen hundred and eighty-seven.

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