ARTICLE 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. NOTES: - Must be read with the New Civil Code provisions on concurrence and preferences of wages - Requisites: 1. declaration of bankruptcy 2. judicial liquidation proceedings 3. Filing of claims by the workers - This article CAN ONLY BE INVOKED upon the institution of insolvency and judicial liquidation proceedings. This does not apply to rehabilitation proceedings, since companies under rehabilitation continue to operate, thus its assets are not up for distribution to creditors. - Most bar questions focus on the difference between PREFERENCE (Art. 110) vsMORTGAGE LIEN Preference: claims that do not attach to specific properties Lien: attaches to a particular property - GENERALLY, Art 110 does NOT establish a lien but merely a Preference of Credit
In case employees have unpaid wages, these must be paid first ahead of other claims During bankruptcy proceedings, the employees have the benefit that their wages be satisfied first before other claims

EXCEPTIONS: Special Preferred Credits these are CLAIMS that creates a LIEN to a specific property (i.e., exception to the rule nga it does not create a lien): a. Article 2241. With reference to specific movable property of the debtor, the following claims or liens shall be preferred: (6) Claims for laborers' wages, on the goods manufactured or the work done. b. Article 2242. With reference to specific immovable property and real rights of the debtor, the following claims, mortgages and liens shall be preferred, and shall constitute an encumbrance on the immovable or real right: (3) Claims of laborers, masons, mechanics and other workmen, as well as of architects, engineers and contractors, engaged in the construction, reconstruction or repair of buildings, canals or other works, upon said buildings, canals or other works. This article does not sweep away the overriding (?) preference afforded the scheme of the Civil Code to tax claims of the government. (reviewhonradawnisa credit transactions) Mortgage is a special preferred credit, therefore takes precedence over monetary claims of workers, except if those claims are fall within the ambit of the Special Preferred Credit, in which case, both claims will be have to be treated equally and satisfied concurrently and proportionately, after the tax lien shall have been satisfied.

BAR QUESTIONS: 1. Under the Labor Code, is the right of first preference a lien on the property of the insolvent debtor in favor of the workers? Explain. 1995 Ans.: No. It is not a lien since it does not attach to specific property. A lien creates charges on a particular property. The right of first preference as regards on the unpaid wages does not constitute a lien on the property of an insolvent debtor. 1

2. Premiere Bank, a banking corporation, being the creditor-mortgagee of XYZ & Co., a garment firm, foreclosed the hypothecated assets of the latter. Despite the foreclosure, XYZ & Co. continued its business operations. A year later, the bank took possession of the foreclosed property. The garment firm's business operations ceased without a declaration of bankruptcy. Jose Caspar, an employee of XYZ & Co., was dismissed from employment due to the cessation of business of the firm. He filed a complaint against XYZ & Co. and the bank. The Labor Arbiter, after hearing, so found the company liable, as claimed by Jose Caspar, for separation pay. Premiere Bank was additionally found subsidiarily liable upon the thesis that the satisfaction of labor benefits due to the employee is superior to the right of a mortgagee of property. Was the Labor Arbiter correct in his decision? Ans.: NO. The LA is incorrect. There was no declaration of bankruptcy or insolvency, or general judicial liquidation proceedings of the employers business. Secondly, Art. 110 establishes NOT A LIEN but merely a preference of credit in favor of the employees. Since the mortgage in favor of the bank creates a lien, therefore the mortgage must be satisfied ahead of the claims of the employees. 3. Distinguish the mortgage created under the Civil Code from the right of first preference created by the Labor Code as regards the unpaid wages of workers. Explain. Ans.: A MORTGAGE directly subjects the property upon which it is imposed, whoever the possessor may be, to the fulfillment of the obligation for which it was constituted. It creates a real right which is enforceable against the whole world. It is therefore a lien on an identified real property.MORTGAGE CREDIT is a special preferred credit under the Civil Code in the classification of credits. The preference given by the Labor Code, when not attached to any specific property, is an ordinary preferred credit. 4. FACTS: Lowland Cement & Factory Company (LCFC) borrowed P500M from the Development Bank of the Philippines and mortgaged the entire company, inclusive of its land, buildings and equipment, to guarantee the payment of the loan.However, because of the economic conditions,LCFC incurred heavy losses and eventually failedto pay DBP the required monthly amortizationsover a period of more than one (1) year. In duetime, DBP foreclosed the mortgaged assets ofLCTC resulting in the closure of the company andthe displacement of all its employees for want ofwork. The LCFC Labor Union [Union] filed in behalf ofthe displaced workers a labor case against DBP asthe new owner of the defunct cement factory forwage differentials, retirement pay and other moneyclaims. The Labor Arbiter decided in the favor ofthe Union. DBP appealed to the NLRC. DBP contended in its appeal that its acquisition ofthe mortgage assets of LCFC through foreclosuresale did not make it the owner of the defunctLowland Cement, and that the doctrine ofsuccessor-employer is not applicable in this case,since DBP did not continue the business operationof LCFC. The NLRC while finding merit in DBP's contention,nonetheless held DBP liable to the extent of theproceeds of the foreclosure sale since the Union'sclaims in behalf of the workers constitute a firstpreference with respect thereto pursuant to article110 of the Labor Code. Is the NLRC correct in holding DBP liable to theextent of the proceeds of the foreclosure sale?Explain briefly (5%) Ans.:No. DBP is not liable. DBP has a lien over the properties of LCFC which were mortgaged to DBP and said lien is superior to the preference that the workers have under the Labor Code (in Article 110) with respect to their claims as workers against LCFC. 2

Panel: All claims must be filed in insolvency proceedings, which are outside the jurisdiction of the NLRC (Republic v. Peralta) ARTICLE 111. Attorneys fees. - (a) 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. (b) 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. 17:02 NOTES: - Proper when: 1. there is unlawful withholding of wages; and 2. arising from Collective Bargaining Negotiations. - The award of attorneys fees is proper and there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. There need only be a showing that the lawful wages were not paid accordingly. (SMC v. Del Rosario, GR Nos. 168194 & 168603, 12/13/2005) - Maximum: 10% of the amount of wages recovered - In its extraordinary concept, payable not to the lawyer but to the client unless otherwise agreed that the award shall pertain to the lawyer as an additional compensation or as a part thereof. - Pertains to the parties, not to the lawyer. The lawyer cannot prevent the former from compromising and/or withdrawing the complaint just to protect his anticipated attorneys interests. (states primary consideration in labor cases = mediation) BAR QUESTIONS: 1. (a) Eduardo Santiago, a project worker, was being assigned by his employer, Bagsak Builders, to Laoag, Ilocos Norte. Santiago refused to comply with the transfer claiming that it, in effect, constituted a constructive dismissal because it would take him away from his family and his usual work assignments in Metro Manila. The Labor Arbiter found that there was no constructive dismissal but ordered the payment of separation pay due to strained relations between Santiago and Bagsak Builders plus attorney's fees equivalent to ten percent (10%) of the value of Santiago's separation pay. Is the award of attorney's fees valid? State the reasons for your answer. (2%). Ans.: No, the award of attorney's fees is not valid. According to the Labor Code (Art. 111 (a)), attorney's fees may be assessed in cases of unlawful withholding of wages which does not exist in the case. The worker refused to comply with a lawful transfer order, and hence, a refusal to work. Given this fact, there can be no basis for the payment of attorney's fees. ARTICLE 112. Non-interference in disposal of wages. - No employer shall limit or otherwise interfere with the freedom of any employee to dispose of his wages. He shall not in any manner force, compel, or oblige his employees to purchase merchandise, commodities or other property from any other person, or otherwise make use of any store or services of such employer or any other person. 20:50 (Just read the provision langdaw.) :P

ARTICLE 113. Wage deduction. - No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except: (a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance; (b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and (c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment. 20:57 NOTES: - These are the employees obligation to a 3rd person. - Deductible if authorized in writing by the employee - Even if there is an authorization in writing, employer is not obliged to do so.He must not receive any pecuniary benefit directly or indirectly from the transaction. When he does not want to deduct from the employees wage in case the employee is indebted to another - Lawful Deductions: 1. Union dues also called check-off 2. Agency fees i.e. when not a member of the union, yet receiving the same benefit as those of a member of the union. DOES NOT REQUIRE a written authorization from the employee concerned 3. SSS, PhilHealth, PAG-IBIG BAR QUESTIONS: 1. An explosion in a mine site resulted in the death of fifty (50) miners. At the time of the accident, (1) The Mining Company has not yet paid the wages, overtime, holiday and rest day compensation of the deceased miners; (2) All the deceased miners owed the Miners Cooperative Union sums of money; (3) The Mining Company was served by a sheriff Writs of Garnishment of Wages of some of the deceased miners by virtue of final Judgments in several collection suits. After the accident, the wives, paramours, brothers, sisters and parents of the deceased miners filed their claims for unpaid wages, overtime, holiday, and rest day compensation. The Company has acknowledged its obligations. However, it is in a quandary as to how to adjudicate the conflicting claims; and whether it can deduct from the monies due the miners their unpaid debts with the credit union. How will you advise the mining company on the following: 1) Can the Mining Company defer payment of the money claims until an appropriate court has ruled on the conflicting claims? [3%] 2) Can the Mining Company deduct from the amount due to each miner an amount equivalent to their debt and remit the same to the Credit Union?(2%) 4

Ans.: 1) I will advise the Mining Company to pay to the respective heirs of the deceased miners whatever were the unpaid wages, overtime, holiday and rest day compensation of said deceased miners 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 or his representative. The representative of the Secretary of Labor shall act as referee in dividing the amount paid among the heirs. {See Art. 105 (b) of the Labor Code) 2)I will advise the Mining Company not to deduct from the amount due to each miner the amount equivalent to his debt to the Credit Union. The debts of a deceased worker to the Credit Union isnot one of the allowable deductions under the Labor Code, or any rules and regulations of the Department of Labor and Employment. (See Art. 113 of the Labor Code) ANOTHER SUGGESTED ANSWER: Yes, if pursuant to CBA provision or authorized by worker in writing; otherwise. No. 2. Corporation X is owned by Ls family. L is the President. M, Ls wife, occasionally gives loans to employees of Corporation X. It was customary that loan payment were paid to M by directly deducting from the employees monthly salary. Is this practice of directly deducting payments of debts from the employees wages allowed? a. Yes, because where the employee is indebted to the employer, it is sanctioned by the law on compensation under Article 1706 of the Civil Code; b. Yes, because it has already become customary such that no express authorization is required; c. No, because an employees payment of obligation to a third person is deductible from the employees wages if the deduction is authorized in writing; d. No, because Article 116 of the Labor Code absolutely prohibits the withholding of wages and kickbacks. Article 116 provides for no exception. 3. Which of the following is not a valid wage deduction? a. Where the worker was insured with his consent by the employer, and the deduction is allowed to recompense the employer for the amount paid by him as the premium on the insurance; b. When the wage is subject of execution or attachment, but only for debts incurred for food, shelter, clothing and medical attendance; c. Payment for lost or damaged equipment provided the deduction does not exceed 25% of the employee's salary for a week; (N.B.: Must NOT exceed 20%. Check out Art. 114) d. Union dues. ARTICLE 114. Deposits for loss or damage. - No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss 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 Secretary of Labor and Employment in appropriate rules and regulations. 30:19

TAKE NOTE of the exceptions.

ARTICLE 115.Limitations. - No deduction from the deposits of an employee for the actual amount of the loss or damage shall be made unless the employee has been heard thereon, and his responsibility has been clearly shown. 30:59 Requirements for a deduction of from the deposit in case of loss (IRR): 1. Employee must clearly show to be responsible to the loss or the damage; 2. Employee was given ample opportunity to show why the deduction must not be made; 3. The amount of the deduction is fair and reasonable, and should not exceed the actual loss or damage; and 4. The deduction from the employees wage does not exceed 20 percent of the employees wages in a week.

ARTICLE 116. Withholding of wages and kickbacks prohibited. - It shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the workers consent. 31:42 ARTICLE 117. Deduction to ensure employment. - It shall be unlawful to make any deduction from the wages of any employee for the benefit of the employer or his representative or intermediary as consideration of a promise of employment or retention in employment. (JUST READ 116-118: NOT EMPHASIZED DURING THE DISCUSSION) ARTICLE 118. Retaliatory measures. - It shall be unlawful for an employer to refuse to pay or reduce the wages and benefits, discharge or in any manner discriminate against any employee who has filed any complaint or instituted any proceeding under this Title or has testified or is about to testify in such proceedings. 31:47 NOTES: - The subject of the testimony under this article is wages. This is unlawful, but not Unfair Labor Practice (ULP). This applies to implicit or unspoken testimony of an imployee. ARTICLE 119. False reporting. - It shall be unlawful for any person to make any statement, report, or record filed or kept pursuant to the provisions of this Code knowing such statement, report or record to be false in any material respect. 32:00 NOTES: - records which the employers must keep: 1. payrolls; 2. time records; and 3. records of workers paid by result. - must be kept within 3 years from the date of the last entry in the records, and should be kept and maintained in or about the premises of the workplace.

Chapter V WAGE STUDIES, WAGE AGREEMENTS AND WAGE DETERMINATION

ARTICLE 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. 32:49 NOTES: - Advisory body to the President and Congress on matters concerning wages, income and productivity - Exercises technical and administrative supervision over the Regional Tripartate Wages and Productivity Board (RTWPB) ARTICLE 121. Powers and functions of the Commission. - The Commission shall have the following powers and functions: x xx (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; x xx (f) To review plans and programs of the Regional Tripartite Wages and Productivity Boards to determine whether these are consistent with national development plans; 32:22

ARTICLE 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: (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 regions, 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 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. 32:52 NOTES: - ALL REGIONS have a RTWPB o Bstah the wage order is subject to review by the commission (par. a); and o subject to guidelines prescribed by the commission (par. b).

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. 34:39

NOTES: - The issuance of wage order should be within 30 days after conclusion of public hearing which is mandatory. - It shall include wages by industry, province or locality. - Commission may review the wage order issued by the board motuproprioor upon appeal. o Grounds of appeal: a. Non-conformity with the prescribed guidelines and/or procedure; b. Questions of law; and c. Grave abuse of discretion. - Filing of appeal does not stay the order unlessthe appellant files to the commission an undertaking with a surety bond, satisfactory to the commission for the payment to the employees affected by the order of the corresponding increase in the event that said order is affirmed. - Takes effect after 15 days of publication in at least 1 newspaper of general circulation. - Shall not be disturbed for 1 year, and no petition for increase shall be entertained within the said period. Unless there is an extraordinary increase in petroleum products and other basic goods and services, the board may proceed with its wage fixing function even before the expiration of the said period - Wage order issued by RTWPB. BAR QUESTIONS: 1. A wage order may be reviewed on appeal by the National Wages and Productivity Commission under these grounds, except: a. b. c. d. grave abuse of discretion; non-conformity with prescribed procedure; questions of law; gross under or over-valuation.

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: a. The demand for living wages; b. Wage adjustment vis--vis the consumer price index; c. The cost of living and changes or increases therein; d. The needs of workers and their families; e. The need to induce industries to invest in the countryside; f. Improvements in standards of living; g. The prevailing wage levels; h. Fair return of the capital invested and capacity to pay of employers; i. Effects on employment generation and family income; and j. The equitable distribution of income and wealth along 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 anyRegional 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. 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 10

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. 32:10 NOTES: - Just read the criteria (par. 1) IMPORTANT CONCEPT in Art 124: Wage Distortion a situation where an increase in prescribed wage rate 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. (MEMORIZE!MEMORIZE!MEMORIZE!) Wage Distortion disappearance or virtual elimination of paid differentials between lower and higher positions in an enterprise because of the compliance of an order. The law does not require total elimination of quantitative wage or salary differences a severe contraction is enough. Elements: 1) Existing hierarchy of positions with corresponding salary rates; 2) Significant change in the salary rate of a lower paid class without concomitant increase in the salary of the higher one; 3) Elimination or severe contraction between the two positions; and 4) Existence of the distortion must be in the same region of the country The wage increase in the lowest level must be due to a wage order, if not, there is no distortion. Wage distortion should be corrected. Ways to Correct a Wage Distortion Order:depends whether the establishment has an organized union or not.
- union exists, and that union is the recognized or certified by the employee as the exclusive bargaining representative

ORGANIZED

-many unions exist, but there is no representative (e.g. failure of election)

UNORGANIZED

The employer and employees must negotiate to correct the distortion, if not resolved, they will go to the grievance machinery, if still unresolved, they will go to the voluntary arbitrator or panel of voluntary arbitrators. 11

The employer and employees must negotiate to correct the distortion, if not resolved, they will go to the National Conciliation and Mediation Board, if still unresolved, they will go to the Labor Arbiter.

BAR QUESTIONS: 1. When is there a wage distortion? (2006) 2. Define wage distortion. (1997) Ans.: No choice jud. Memorize ang definition sa Wage Distortion. 3. How should a wage distortion be resolved (1) in case there is a collective bargaining agreement and (2) in case there is none? Explain briefly. 2002 4. How should a wage distortion be settled? 2006 Ans.: Refer above. 5. What is wage distortion? Can a Labor Union invoke wage distortion as a valid ground to go on strike? Explain. 2009 Ans.: NO. Under Labor Relations, the ff. are valid grounds of a strike: (a) Unfair Labor Practice and (b) Bargaining Deadlock. 6. What procedural remedies are open to workers who seek correction of wage distortion? 2009 Ans.: Provide similar answer to nos. 3 & 4. 7. Which is not a procedural requirement for the correction of wage distortion in an unorganized establishment? a. Both employer and employee will attempt to correct the distortion; b. Settlement of the dispute through National Conciliation and Mediation Board (NCMB); c. Settlement of the dispute through voluntary arbitration in case of failure to resolve dispute through CBA dispute mechanism; d. A and B. 8. In what instances do labor arbiters have jurisdiction over wage distortion cases? a. When jurisdiction is invoked by the employer and employees in organized establishments; b. When the case is unresolved by Grievance Committee; c. After the panel of voluntarily arbitrators has made a decision and the same is contested by either party; d. In unorganized establishments when the same is not voluntarily resolved by the parties before the NCMM. 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) 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) Art. 127. Non-diminution of benefits. No wage order issued by any regional board shall provide for wage rates lower than the statutory minimum wage rates prescribed by Congress. (As amended by Republic Act No. 6727, June 9, 1989) JUST READ THROUGH ARTICLES 125-127 12

Chapter VI Administration and Enforcement

Art. 128. Visitorial and enforcement power. a. The Secretary of Labor and Employment or his duly authorized representatives, including labor regulation officers, shall have access to employers records and premises at any time of the day or night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules and regulations issued pursuant thereto. b. Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. (As amended by Republic Act No. 7730, June 2,1994). An order issued by the duly authorized representative of the Secretary of Labor and Employment under this Article may be appealed to the latter. In case said order involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from. (As amended by Republic Act No. 7730, June 2, 1994) c. The Secretary of Labor and Employment may likewise order stoppage of work or suspension of operations of any unit or department of an establishment when noncompliance with the law or implementing rules and regulations poses grave and imminent danger to the health and safety of workers in the workplace. Within twenty-four hours, a hearing shall be conducted to determine whether an order for the stoppage of work or suspension of operations shall be lifted or not. In case the violation is attributable to the fault of the employer, he shall pay the employees concerned their salaries or wages during the period of such stoppage of work or suspension of operation. d. It shall be unlawful for any person or entity to obstruct, impede, delay or otherwise render ineffective the orders of the Secretary of Labor and Employment or his duly authorized representatives issued pursuant to the authority granted under this Article, and no inferior court or entity shall issue temporary or permanent injunction or restraining order or otherwise assume jurisdiction over any case involving the enforcement orders issued in accordance with this Article. e. Any government employee found guilty of violation of, or abuse of authority, under this Article shall, after appropriate administrative investigation, be subject to summary dismissal from the service. 13

f. The Secretary of Labor and Employment may, by appropriate regulations, require employers to keep and maintain such employment records as may be necessary in aid of his visitorialand enforcement powers under this Code. 1:00:36 NOTES: - No jurisdictional limits ang Secretary of Labor(bisagpilaang amount ang aggregate claims) - A. Visitorial Power and Investigatory Power (par. a) o Broad enough to cover any fact, condition, or matter related to the enforcement, not only to the Labor Code, but any other Labor Law. o Either done in a: routine inspection or complaint inspection - B. Enforcement Power (par. b) o To compel the employer to comply with the Labor Standards upon finding of violation discovered in the course of the exercise of the visitorial powers o Power to issue compliance orders - For 128 to apply, employer-employee relationship must exist, and that the employee must still be working, otherwise, the next article applies (article 129) - Remedies of employer: 1. File a motion of reconsideration within 7 calendar days from receipt of the order; 2. If not favorable, then appeal to Sec. of Labor within 10 calendar days (just check the provision for more details) (NB: par. 4. The decision of the Sec. becomes final and executor upon the receipt of the records of the case; a motion for reconsideration is necessary as a pre-condition for any further or subsequent remedy.) Instances when the Sec. of Labor is divested with jurisdiction (under Art. 128): 1. If EER no longer exists; and 2. When the employer contests the findings of labor regulations regulation officer and raises issues. And In order to resolve the issue, there is a need to examine evidentiary matters which are not verifiable in the normal cause of inspection. THAT ISSUE HAS TO BE RESOLVED BY THE LABOR ARBITER. (Nota Bene: Mere disagreement of an employerwith the findings of an LO, or simple act of presenting controverting evidence does not automatically divest the Secretary of Labor or any of his authorized representative such as Regional Directors to exercise their visitorial or enforcement powers under the Labor Code. x xx Thus, the key requirement for the Regional Director and the DOLE Secretary to be divested of jurisdiction is that the evidentiary matters are not verifiable in the course of inspection. Where the evidence presented was verifiable in the normal course of inspection, even if presented belatedly by the employer, the Regional Director, and later the DOLE Secretary, may still examine them; and these officers are not divested of jurisdiction to decide the case.Bay Haven v. Abuan, GR No. 160859, 7/30/2008) C. Power the Secretary of Labor to suspend operations of an establishment whose noncompliance with the regulations causes grave and imminent danger to the health and safety of workers in the workplace.

14

Art. 129. Recovery of wages, simple money claims and other benefits. Upon complaint of any interested party, the Regional Director of the Department of Labor and Employment or any of the duly authorized hearing officers of the Department is empowered, through summary proceeding and after due notice, to hear and decide any matter involving the recovery of wages and other monetary claims and benefits, including legal interest, owing to an employee or person employed in domestic or household service or househelper under this Code, arising from employer-employee relations: Provided, That such complaint does not include a claim for reinstatement: Provided further, That the aggregate money claims of each employee or househelper does not exceed Five thousand pesos (P5,000.00). The Regional Director or hearing officer shall decide or resolve the complaint within thirty (30) calendar days from the date of the filing of the same. Any sum thus recovered on behalf of any employee or househelper pursuant to this Article shall be held in a special deposit account by, and shall be paid on order of, the Secretary of Labor and Employment or the Regional Director directly to the employee or househelper concerned. Any such sum not paid to the employee or househelper because he cannot be located after diligent and reasonable effort to locate him within a period of three (3) years, shall be held as a special fund of the Department of Labor and Employment to be used exclusively for the amelioration and benefit of workers. Any decision or resolution of the Regional Director or hearing officer pursuant to this provision may be appealed on the same grounds provided in Article 223 of this Code, within five (5) calendar days from receipt of a copy of said decision or resolution, to the National Labor Relations Commission which shall resolve the appeal within ten (10) calendar days from the submission of the last pleading required or allowed under its rules. The Secretary of Labor and Employment or his duly authorized representative may supervise the payment of unpaid wages and other monetary claims and benefits, including legal interest, found owing to any employee or househelper under this Code. (As amended by Section 2, Republic Act No. 6715, March 21, 1989) 1:14:38 NOTES: - The Regional Director is empowered, through summary proceedings and after due notice, to hear and decide cases involving recovery of wages and other monetary claims and benefits, including legal interest, provided the following requisites are present: 1. the claim is presented by an employee, or a person employed in the domestic or household service; 2. the claim arises from employer-employee relations; 3. the claimant does not seek reinstatement; and 4. the aggregate money claim of each claimant does not exceed P5,000.00. - Employer-employee relationship may not exist - Take note of the Remedies and Appeal (par. 2) BAR QUESTIONS: 1. True or False. The visitorial and enforcement power of the DOLE Regional Director to order and enforce compliance with labor standard laws can be exercised even when the individual claim exceeds P5,000.00. 2009 Ans.: True. Visitorial and enforcement power has no jurisdictional limit. 2. The Secretary of Labor and Employment or his duly authorized representative, including labor regulations officers, shall have access to employer's records and premises during work hours. Why is this statement an inaccurate statement of the law? 15

a. Because the power to inspect applies only to employer records, not to the premises. b. Because only the Secretary of Labor and Employment has the power to inspect, and such power cannot be delegated. c. Because the law allows inspection anytime of the day or night, not only during work hours. d. Because the power to inspect is already delegated to the DOLE regional directors, not to labor regulations officers. 3. Kevin, an employee of House of Sports, filed a complaint with the DOLE requesting the investigation and inspection of the said establishment for labor law violations such as underpayment of wages, non-payment of 13th month pay, non-payment of rest day pay, overtime pay, holiday pay, and service incentive leave pay. House of Sports alleges that DOLE has no jurisdiction over the employees' claims where the aggregate amount of the claims of each employee exceeds P5,000.00, whether or not accompanied with a claim for reinstatement. Is the argument of House of Sports tenable? a. Yes, Article 129 of the Labor Code shall apply, and thus, the Labor Arbiter has jurisdiction; b. No, Article 128 (b) of the Labor Code shall apply, and thus, the DOLE Regional Director has jurisdiction; c. Yes, if the claim exceeds P5,000.00, the DOLE Secretary loses jurisdiction; d. No, a voluntarily arbitrator has jurisdiction because the matter involved is a grievable issue. 4. The Regional Director or his representative may be divested of his enforcement and visitorial powers under the exception clause of Article 128 of the Labor Code and, resultantly, jurisdiction may be vested on the labor arbiter when three (3) elements are present. Which of the following is not one of the three (3) elements? a. Employer contests the findings of the labor regulations officers and raises issues thereon; b. In order to resolve any issues raised, there is a need to examine evidentiary matters; c. The issues raised should have been verifiable during the inspection; d. The evidentiary matters are not verifiable in the normal course of inspection .

16