NON-INTERFERENCE IN WAGE DISPOSAL 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
Article 1705. The laborers wages shall be paid in legal currency.
Article 1706. Withholding of the wages, except for a debt due, shall not be
made by the employer.
Article 1707. The laborers wages shall be a lien on the goods manufactured or
the work done.
Article 1708. The laborers wages shall not be subject to execution or
attachment, except for debts incurred for food, shelter, clothing and medical
attendance.
Article 1709. The employer shall neither seize nor retain any tool or other articles
belonging to the laborer.
Article 288. Other Similar Coercions (Compulsory Purchase of Merchandise
and Payment of Wages by Means of Tokens). The penalty of arresto mayor or
a fine ranging from 200 to 500 pesos, or both, shall be imposed upon any
person, agent or officer of any association or corporation who shall force or
compel, directly or indirectly, or shall knowingly permit any laborer or employee
employed by him or by such firm or corporation to be forced or compelled, to
purchase merchandise or commodities of any kind.
The same penalties shall be imposed upon any person who shall pay the
wages due a laborer or employee employed by him, by means of tokens or
objects other than the legal tender currency of the Philippine Islands, unless
expressly requested by the laborer or employee.
RA 6727 AND IMPLEMENTING RULES
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 work a day, or a proportion thereof for working less than eight
(8) hours.
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.
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.
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 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.
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.
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.
The Department of Labor and Employment shall conduct inspections as often as
possible within its manpower constraint of the payroll and other financial
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.
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.
RULES IMPLEMENTING RA 6727
"Retail Establishment" is one principally engaged in the sale of goods to end-
users for personal or household use.
"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.
"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.
"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.
"Statutory Minimum Wage" is the lowest wage rate fixed by law that an
employer can pay his workers.
"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 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.
"Capitalization" means paid-up capital, in the case of a corporation, and total
invested capital, in the case of a partnership or single proprietorship.
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
Sec. 15, Chapter 1 of this Rules;
d) Workers and employees receiving a basic wage of more than P100/ day.
Section 3. Amount of Minimum Wage Increase. daily statutory minimum wage
rates of covered workers and employees are increased as follows:
a) P25 NCR
b) P25 outside NCR, except the following:
a. P20 those in plantation agri enterprises with annual
gross sales of less than P5M in the fiscal year
b. P15 non-plantation agriculture, cottage/handicraft,
retail/service regularly employing not more than 10
workers, business enterprises with capitalization of not
more than P500k and employing not more than 20
workers
Suggested Formula:
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
 such facilities and opportunities that will enhance their welfare and enable them
Rate (EMR) 12
Where 390.90 days =
302 days Ordinary working days
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.
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 regional minimum wages to be established by the Boards 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 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.
RA 8188
Any person, corporation, trust, firm, partnership, association or entity which
refuses or fails to pay any of the prescribed increases or adjustments in the wage
rates made in accordance with this Act shall be punished by a fine not less than
Twenty-five thousand pesos (P25,000) nor more than One hundred thousand
pesos (P100,000) or imprisonment of not less than two (2) years nor more than
four (4) years, or both such fine and imprisonment at the discretion of the court:
Provided, That any person convicted under this Act shall not be entitled to the
benefits provided for under the Probation Law.
"The employer concerned shall be ordered to pay an amount equivalent to
double the unpaid benefits owing to the employees: Provided, That payment of
indemnity shall not absolve the employer from the criminal liability imposable
under this Act.
"If the violation is committed by a corporation, trust or firm, partnership,
association or any other entity, the penalty of imprisonment shall be imposed
upon the entity's responsible officers, including, but not limited to, the
president, vice-president, chief executive officer, general manager, managing
director or partner.
WOMEN
Constitution provisions:
Article II, Section 14. The State recognizes the role of women in nation-building,
and shall ensure the fundamental equality before the law of women and men.
Article XIII, Section 3. The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full employment and
equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including the
right to strike in accordance with law. They shall be entitled to security of tenure,
humane conditions of work, and a living wage. They shall also participate in
policy and decision-making processes affecting their rights and benefits as may
be provided by law.
The State shall promote the principle of shared responsibility between
workers and employers and the preferential use of voluntary modes in settling
disputes, including conciliation, and shall enforce their mutual compliance
therewith to foster industrial peace.
The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production and the
right of enterprises to reasonable returns to investments, and to expansion and
growth.
Section 14. The State shall protect working women by providing safe and
healthful working conditions, taking into account their maternal functions, and
to realize their full potential in the service of the nation.
RA 8282 Social Security Act
Maternity Leave Benefit. A female member who has paid at least three (3)
monthly contributions in the twelve-month period immediately preceding the
semester of her childbirth or miscarriage shall be paid a daily maternity benefit
equivalent to one hundred percent (100%) of her average daily salary credit for
sixty (60) days or seventy eight (78) days in case of caesarean delivery, subject to
the following conditions:
a. That the employee shall have notified her employer of her pregnancy and the
probable date of her childbirth, which notice shall be transmitted to the
SSS in accordance with the rules and regulations it may provide;
b. The full payment shall be advanced by the employer within thirty (30) days from
the filing of the maternity leave application;
c. That payment of daily maternity benefits shall be a bar to the recovery of
sickness benefits provided by this Act for the same period for which
daily maternity benefits have been received;
d. That the maternity benefits provided under this section shall be paid only for the
first four (4) deliveries or miscarriages;
e. That the SSS shall immediately reimburse the employer of one hundred percent
(100%) of the amount of maternity benefits advanced to the employee
by the employer upon receipt of satisfactory proof of such payment and
legality thereof; and
f. That if an employee member should give birth or suffer miscarriage without the
required contributions having been remitted for her by her employer to
the SSS, or without the latter having been previously notified by the
employer of the time of the pregnancy, the employer shall pay to the
SSS damages equivalent to the benefits which said employee member
would otherwise have been entitled to.
RA 10151 Night Workers
A new chapter is hereby inserted after Book Three, Title III of Presidential Decree
No. 442, to read as follows:
"Chapter V: "Employment of Night Workers
"Art. 154. Coverage. This chapter shall apply to all persons, who shall be
employed or permitted or suffered to work at night, except those employed in
agriculture, stock raising, fishing, maritime transport and inland navigation,
during a period of not less than seven (7) consecutive hours, including the
interval from midnight to five o'clock in the morning, to be determined by the
Secretary of Labor and Employment, after consulting the workers'
representatives/labor organizations and employers.
"Night worker' means any employed person whose work requires performance
of a substantial number of hours of night work which exceeds a specified limit.
This limit shall be fixed by the Secretary of Labor after consulting the workers'
representatives/labor organizations and employers."
"Art. 155. Health Assessment. At their request, workers shall have the right to
undergo a health assessment without charge and to receive advice on how to
reduce or avoid health problems associated with their work:
"(a) Before taking up an assignment as a night worker;
"(b) At regular intervals during such an assignment; and
"(c) If they experience health problems during such an assignment which are not
caused by factors other than the performance of night work.
"With the exception of a finding of unfitness for night work, the findings of such
assessments shall not be transmitted to others without the workers' consent and
shall not be used to their detriment."
"Art. 156. Mandatory Facilities. Suitable first-aid facilities shall be made
available for workers performing night work, including arrangements where
such workers, where necessary, can be taken immediately to a place for
appropriate treatment. The employers are likewise required to provide safe and
healthful working conditions and adequate or reasonable facilities such as
sleeping or resting quarters in the establishment and transportation from the
work premises to the nearest point of their residence subject to exceptions and
guidelines to be provided by the DOLE."
"Art. 157. Transfer. Night workers who are certified as unfit for night work,
due to health reasons, shall be transferred, whenever practicable, to a similar job
for which they are fit to work.
"If such transfer to a similar job is not practicable, these workers shall be granted
the same benefits as other workers who are unable to work, or to secure
employment during such period.
"A night worker certified as temporarily unfit for night work shall be given the
same protection against dismissal or notice of dismissal as other workers who
are prevented from working for reasons of health."
"Art. 158. Women Night Workers. Measures shall be taken to ensure that an
alternative to night work is available to women workers who would otherwise
be called upon to perform such work:
"(a) Before and after childbirth, for a period of at least sixteen (16) weeks, which
shall be divided between the time before and after childbirth;
"(b) For additional periods, in respect of which a medical certificate is produced
stating that said additional periods are necessary for the health of the mother or
child:
"(1) During pregnancy;
"(2) During a specified time beyond the period, after childbirth is fixed pursuant
to subparagraph (a) above, the length of which shall be determined by the
DOLE after consulting the labor organizations and employers.
"During the periods referred to in this article:
"(i) A woman worker shall not be dismissed or given notice of dismissal, except
for just or authorized causes provided for in this Code that are not connected
with pregnancy, childbirth and childcare responsibilities.
"(ii) A woman worker shall not lose the benefits regarding her status, seniority,
and access to promotion which may attach to her regular night work position.
"Pregnant women and nursing mothers may be allowed to work at night only if
a competent physician, other than the company physician, shall certify their
fitness to render night work, and specify, in the case of pregnant employees, the
period of the pregnancy that they can safely work.
"The measures referred to in this article may include transfer to day work where
this is possible, the provision of social security benefits or an extension of
maternity leave.
"The provisions of this article shall not have the effect of reducing the protection
and benefits connected with maternity leave under existing laws."
"Art. 159. Compensation. The compensation for night workers in the form of
working time, pay or similar benefits shall recognize the exceptional nature of
night work."
"Art. 160. Social Services. Appropriate social services shall be provided for
night workers and, where necessary, for workers performing night work."
"Art. 161. Night Work Schedules. Before introducing work schedules requiring
the services of night workers, the employer shall consult the workers'
representatives/labor organizations concerned on the details of such schedules
and the forms of organization of night work that are best adapted to the
establishment and its personnel, as well as on the occupational health measures
and social services which are required. In establishments employing night
workers, consultation shall take place regularly."
MINORS
RA 9231
Children below fifteen (15) years of age shall not be employed except:
1) When a child works directly under the sole responsibility of his/her
parents or legal guardian and where only members of his/her family
are employed: Provided, however, That his/her employment neither
endangers his/her life, safety, health, and morals, nor impairs his/her
normal development: Provided, further, That the parent or legal
guardian shall provide the said child with the prescribed primary
and/or secondary education; or
2) Where a child's employment or participation in public entertainment
or information through cinema, theater, radio, television or other
forms of media is essential: Provided, That the employment contract
is concluded by the child's parents or legal guardian, with the express
agreement of the child concerned, if possible, and the approval of
the Department of Labor and Employment: Provided, further, That
the following requirements in all instances are strictly complied with:
(a) The employer shall ensure the protection, health, safety,
morals and normal development of the child;
(b) The employer shall institute measures to prevent the
child's exploitation or discrimination taking into account
the system and level of remuneration, and the duration
and arrangement of working time; and
(c) The employer shall formulate and implement, subject to
the approval and supervision of competent authorities, a
continuing program for training and skills acquisition of
the child.
In the above-exceptional cases where any such child may be employed, the
employer shall first secure, before engaging such child, a work permit from the
Department of Labor and Employment which shall ensure observance of the
above requirements.
For purposes of this Article, the term "child" shall apply to all persons under
eighteen (18) years of age.
Hours of Work of a Working Child. - Under the exceptions provided in Section
12 of this Act, as amended:
(1) A child below fifteen (15) years of age may be allowed to work for
not more than twenty (20) hours a week: Provided, That the work
shall not be more than four (4) hours at any given day;
(2) A child fifteen (15) years of age but below eighteen (18) shall not be
allowed to work for more than eight (8) hours a day, and in no case
beyond forty (40) hours a week;
(3) No child below fifteen (15) years of age shall be allowed to work
between eight o'clock in the evening and six o'clock in the morning
of the following day and no child fifteen (15) years of age but below
eighteen (18) shall be allowed to work between ten o'clock in the
evening and six o'clock in the morning of the following day.
Ownership, Usage and Administration of the Working Child's Income. - The
wages, salaries, earnings and other income of the working child shall belong to
him/her in ownership and shall be set aside primarily for his/her support,
education or skills acquisition and secondarily to the collective needs of the
family: Provided, That not more than twenty percent (20%) of the child's
income may be used for the collective needs of the family.
The income of the working child and/or the property acquired through the work
of the child shall be administered by both parents. In the absence or incapacity
of either of the parents, the other parent shall administer the same. In case both
parents are absent or incapacitated, the order of preference on parental
authority as provided for under the Family Code shall apply.
The parent or legal guardian of a working child below eighteen (18) years of age
shall set up a trust fund for at least thirty percent (30%) of the earnings of the
child whose wages and salaries from work and other income amount to at least
two hundred thousand pesos (P200,000.00) annually, for which he/she shall
render a semi-annual accounting of the fund to the Department of Labor and
Employment, in compliance with the provisions of this Act. The child shall have
full control over the trust fund upon reaching the age of majority.
Prohibition on the Employment of Children in Certain Advertisements. - No child
shall be employed as a model in any advertisement directly or indirectly
promoting alcoholic beverages, intoxicating drinks, tobacco and its byproducts,
gambling or any form of violence or pornography.
HOUSEHELPERS
RA 7655
"Domestic or household service" shall mean service in the employers home
which is usually necessary or desirable for the maintenance and enjoyment
thereof and includes ministering to the personal comfort and convenience of the
members of the employers household, including services of family drivers.
The original contract of domestic service shall not last for more than two (2)
years but it may be renewed for such periods as may be agreed upon by the
parties.
If the period of household service is fixed, neither the employer nor the
househelper may terminate the contract before the expiration of the term,
except for a just cause. If the househelper is unjustly dismissed, he or she shall
be paid the compensation already earned plus that for fifteen (15) days by way
of indemnity.
If the househelper leaves without justifiable reason, he or she shall forfeit any
unpaid salary due him or her not exceeding fifteen (15) days.
If the duration of the household service is not determined either in stipulation or
by the nature of the service, the employer or the househelper may give notice to
put an end to the relationship five (5) days before the intended termination of
the service.
Upon the severance of the household service relation, the employer shall give
the househelper a written statement of the nature and duration of the service
and his or her efficiency and conduct as househelper.
Civil Code provisions:
The head of the family shall furnish, free of charge, to the house helper, suitable
and sanitary quarters as well as adequate food and medical attendance.
No contract for household service shall last for more than two years. However,
such contract may be renewed from year to year.
House helpers shall not be required to work more than ten hours a day. Every
house helper shall be allowed four days vacation each month, with pay.
If the duration of the household service is not determined either by stipulation or
by the nature of the service, the head of the family or the house helper may give
notice to put an end to the service relation, according to the following rules:
1. If the compensation is paid by the day, notice may be given on
any day that the service shall end at the close of the following
day;
2. If the compensation is paid by the week, notice may be given,
at the latest, on the first business day of the week, that the
service shall be terminated at the end of the seventh day from
the beginning of the week;
 3. If the compensation is paid by the month, notice may be given,
at the latest, on the fifth day of the month, that the service shall
cease at the end of the month.
Upon the extinguishment of the service relation, the house helper may demand
from the head of the family a written statement on the nature and duration of
the service and the efficiency and conduct of the house helper.
G.R. No. 131247 January 25, 1999
PRUBANKERS ASSOCIATION, petitioner, vs. PRUDENTIAL BANK & TRUST
COMPANY, respondent.
PANGANIBAN, J.:
Wage distortion presupposes an increase in the compensation of the lower ranks in
an office hierarchy wirhout a corresponding raise for higher-tiered employees in the
same region of the country, resulting in the elimination or the severe diminution of
the distinction between the two groups. Such distortion does not arise when a wage
order gives employees in one branch of a bank higher compensation than that given
to their counterparts in other regions occupying the same pay scale, who are not
covered by said wage order. In short, the implementation of wage orders in one
region but not in others does not in itself necessarily result in wage distortion.
The Facts
The facts of the case are summarized by the Court of Appeals thus:
On November 18, 1993, the Regional Tripartite Wages and Productivity Board
of Region V issued Wage Order No. RB 05-03 which provided for a Cost of
Living Allowance (COLA) to workers in the private sector who ha[d] rendered
service for at least three (3) months before its effectivity, and for the same
period [t]hereafter, in the following categories: SEVENTEEN PESOS AND
FIFTY CENTAVOS (P17.50) in the cities of Naga and Legaspi; FIFTEEN
PESOS AND FIFTY CENTAVOS (P15.50) in the municipalities of Tabaco,
Daraga, Pili and the city of Iriga; and TEN PESOS (P10.00) for all other areas
in the Bicol Region.
Subsequently on November 23, 1993, the Regional Tripartite Wages and
Productivity Board of Region VII issued Wage Order No. RB VII-03, which
directed the integration of the COLA mandated pursuant to Wage Order No.
RO VII-02-A into the basic pay of all workers. It also established an increase in
the minimum wage rates for all workers and and employees in the private
sector as follows: by Ten Pesos (P10.00) in the cities of Cebu, Mandaue and
Lapulapu; Five Pesos (P5.00) in the municipalities of Compostela, Liloan,
Consolacion, Cordova, Talisay, Minglanilla, Naga and the cities of Davao,
Toledo, Dumaguete, Bais, Canlaon and Tagbilaran.
The petitioner then granted a COLA of P17.50 to its employees at its Naga
Branch, the only branch covered by Wage Order No. RB 5-03, and integrated
the P150.00 per month COLA into the basic pay of its rank-and-file employees
at its Cebu, Mabolo and P. del Rosario branches, the branches covered by
Wage Order No. RB VII-03.
On June 7, 1994, respondent Prubankers Association wrote the petitioner
requesting that the Labor Management Committee be immediately convened
to discuss and resolve the alleged wage distortion created in the salary
structure upon the implementation of the said wage orders. Respondent
Association then demanded in the Labor Management Committee meetings
that the petitioner extend the application of the wage orders to its employees
outside Regions V and VII, claiming that the regional implementation of the
said orders created a wage distortion in the wage rates of petitioner's
employees nationwide. As the grievance could not be settled in the said
meetings, the parties agreed to submit the matter to voluntary arbitration. The
Arbitration Committee formed for that purpose was composed of the following:
public respondent Froilan M. Bacungan as Chairman, with Attys. Domingo T.
Anonuevo and Emerico O. de Guzman as members. The issue presented
before the Committee was whether or not the bank's separate and regional
implementation of Wage Order No. 5-03 at its Naga Branch and Wage Order
No. VII-03 at its Cebu, Mabolo and P. del Rosario branches, created a wage
distortion in the bank nationwide.
The Arbitration Committee on June 18, 1996 rendered questioned decision. 4
Ruling of the Court of Appeals
In ruling that there was no wage distortion, the Court of Appeals held that the
variance in the salary rates of employees in different regions of the country was
justified by RA 6727. It noted that "the underlying considerations in issuing the wage
orders are diverse, based on the distinctive situations and needs existing in each
region. Hence, there is no basis to apply the salary increases imposed by Wage
Order No. VII-03 to employees outside of Region VII." Furthermore, the Court of
Appeals ruled that "the distinctions between each employee group in the region are
maintained, as all employees were granted an increase in minimum wage rate. 5
The Issues
In its Memorandum, petitioner raises the following issues: 6
I
Whether or not the Court of Appeals departed from the usual
course of judicial procedure when it disregarded the factual
findings of the Voluntary Arbitration Committee as to the
existence of wage distortion.
II
Whether or not the Court of Appeals committed grave error
in law when it ruled that wage distortion exists only within a
region and not nationwide.
III
Whether or not the Court of Appeals erred in implying that
the term "establishment" as used in Article 125 of the Labor
Code refers to the regional branches of the bank and not to
the bank as a whole.
The main issue is whether or not a wage distortion resulted from respondent's
implementation of the aforecited Wage Orders. As a preliminary matter, we shall
also take up the question of forum-shopping.
The Court's Ruling
7
The petition is devoid of merit.
Preliminary Issue: Forum-Shopping
Respondent asks for the dismissal of the petition because petitioner allegedly
engaged in forum-shopping. It maintains that petitioner failed to comply with Section
2 of Rule 42 of the Rules of Court, which requires that parties must certify under
oath that they have not commenced any other action involving the same issues in
the Supreme Court, the Court of Appeals, or different divisions thereof, or any other
tribunal or agency; if there is such other action or proceeding, they must state the
status of the same; and if they should thereafter learn that a similar action or
proceeding has been filed or is pending before the said courts, they should promptly
inform the aforesaid courts or any other tribunal or agency within five days
therefrom. Specifically, petitioner accuses respondent of failing to inform this Court
of the pendency of NCMB-NCR-RVA-O4-012-97 entitled "In Re: Voluntary
Arbitration between Prudential Bank and Prubankers Association" (hereafter
referred to as "voluntary arbitration case"), an action involving issues allegedly
similar to those raised in the present controversy.
In its Reply, petitioner effectively admits that the voluntary arbitration case was
already pending when it filed the present petition. However, it claims no violation of
the rule against forum-shopping, because there is no identity of causes of action
and issues between the two cases.
We sustain the respondent. The rule on forum-shopping was first included in
Section 17 of the Interim Rules and Guidelines issued by this Court on January 11,
1983, which imposed a sanction in this wise: "A violation of the rule shall constitute
contempt of court and shall be a cause for the summary dismissal of both petitions,
without prejudice to the taking of appropriate action against the counsel or party
concerned." Thereafter, the Court restated the rule in Revised Circular No. 28-91
and Administrative Circular No. 04-94. Ultimately, the rule was embodied in the 1997
amendments to the Rules of Court.
As explained by this Court in First Philippine International Bank v. Court of
Appeals, 8 forum-shopping exists where the elements of litis pendentia are present,
and where a final judgment in one case will amount to res judicata in the other.
Thus, there is forum-shopping when, between an action pending before this Court
and another one, there exist: "a) identity of parties, or at least such parties as
represent the same interests in both actions, b) identity of rights asserted and relief
prayed for, the relief being founded on the same facts, and c) the identity of the two
preceding particulars is such that any judgement rendered in the other action, will,
regardless of which party is successful amount to res judicata in the action under
consideration; said requisites also constitutive of the requisites for auter action
pendant or lis pendens." 9 Another case elucidates the consequence of forum-
shopping: "[W]here a litigant sues the same party against whom another action or
actions for the alleged violation of the same right and the enforcement of the same
relief is/are still pending, the defense oflitis pendentia in one case is a bar to the
others; and, a final judgment in one would constitute res judicata and thus would
cause the dismissal of the rest." 10
The voluntary arbitration case involved the issue of whether the adoption by the
Bank of regionalized hiring rates was valid and binding. On the other hand, the
issue now on hand revolves around the existence of a wage distortion arising from
the Bank's separate and regional implementation of the two Wage Orders in the
affected branches. A closer look would show that, indeed, the requisites of forum-
shopping are present.
First, there is identity of parties. Both cases are between the Bank and the
Association acting on behalf of all its members. Second, although the respective
issues and reliefs prayed for in the two cases are stated differently, both actions boil
down to one single issue: the validity of the Bank's regionalization of its wage
structure based on RA 6727. Even if the voluntary arbitration case calls for striking,
down the Bank's regionalized hiring scheme while the instant petition calls for the
correction of the alleged wage distortion caused by the regional implementation of
Wage Order No. VII-03, the ultimate relief prayed for in both cases is
the maintenance of the Bank's national wage structure. Hence, the final disposition
of one would constitute res judicata in the other. Thus, forum-shopping is deemed to
exist and, on this basis, the summary dismissal of both actions is indeed warranted.
Nonetheless, we deem it appropriate to pass upon the main issue on its merit in
view of its importance.
Main Issue: Wage Distortion
The statutory definition of wage distortion is found in Article 124 of the Labor Code,
as amended by Republic Act No. 6727, which reads:
Art. 124. 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 of 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.
Elaborating on this statutory definition, this Court ruled: "Wage distortion
presupposes a classification of positions and ranking of these positions at various
levels. One visualizes a hierarchy of positions with corresponding ranks basically in
terms of wages and other emoluments. Where a significant change occurs at the
lowest level of positions in terms of basic wage without a corresponding change in
the other level in the hierarchy of positions, negating as a result thereof the
distinction between one level of position from the next higher level, and resulting in
a parity between the lowest level and the next higher level or rank, between new
entrants and old hires, there exists a wage distortion. . . . . The concept of a wage
distortion assumes an existing grouping or classification of employees which
establishes distinctions among such employees on some relevant or legitimate
basis. This classification is reflected in a differing wage rate for each of the existing
classes of employees" 11
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
4. The existence of the distortion in the same region of the country
In the present case, it is clear that no wage distortion resulted when respondent
implemented the subject Wage Orders in the covered branches. In the said
branches, there was an increase in the salary rates of all pay classes. Furthermore,
the hierarchy of positions based on skills, lengh of service and other logical bases of
differentiation was preserved. In other words, the quantitative difference in
compensation between different pay classes remained the same in all branches in
the affected region. Put differently, the distinction between Pay Class 1 and Pay
Class 2, for example, was not eliminated as a result of the implementation of the
two Wage Orders in the said region. Hence, it cannot be said that there was a wage
distortion.
Petitioner argues that a wage distortion exists, because the implementation of the
two Wage Orders has resulted in the discrepancy in the compensation of employees
of similar pay classification in different regions. Hence, petitioner maintains that, as
a result of the two Wage Orders, the employees in the affected regions have higher
compensation than their counterparts of the same level in other regions. Several
tables are presented by petitioner to illustrate that the employees in the regions
covered by the Wage Orders are receiving more than their counterparts in the same
pay scale in other regions.
The Court is not persuaded. A wage parity between employees in different rungs, is
not at issue here, but a wage disparity between employees in the same rung but
located in different regions of the country.
Contrary to petitioner's postulation, a disparity in wages between employees holding
similar positions but in different regions does not constitute wage distortion as
contemplated by law. As previously enunciated, 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. Put differently, a wage distortion
arises when a wage order engenders wage parity between employees
in different rungs of the organizational ladder of the same establishment. It bears
emphasis that wage distortion involves a parity in the salary rates of different pay
classes which, as a result, eliminates the distinction between the different ranks in
the same region.
Different Regional Wages Mandated by RA 6727
Petitioner's claim of wage distortion must also be denied for one other reason. The
difference in wages between employees in the same pay scale in different regions is
not the mischief sought to be banished by the law. In fact, Republic Act No. 6727
(the Wage Rationalization Act), recognizes "existing regional disparities in the cost
of living." Section 2 of said law provides:
Sec 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.
RA 6727 also amended Article 124 of the Labor Code, thus:
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 frame work 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-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
II. The equitable distribution of income and wealth along the
imperatives of social and economic development.
From the above-quoted rationale of the law, as well as the criteria enumerated, a
disparity in wages between employees with similar positions in different regions is
necessarily expected. In insisting that the employees of the same pay class in
different regions should receive the same compensation, petitioner has apparently
misunderstood both the meaning of wage distortion and the intent of the law to
regionalize wage rates.
It must be understood that varying in each region of the country are controlling
factors such as the cost of living; supply and demand of basic goods, services and
necessities; and the purchasing power of the peso. Other considerations
underscore the necessity of the law. Wages in some areas may be increased in
order to prevent migration to the National Capital Region and, hence, to decongest
the metropolis. Therefore, what the petitioner herein bewails is precisely what the
law provides in order to achieve its purpose.
Petitioner claims that it "does not insist that the Regional Wage Boards created
pursuant to RA 6727 do not have the authority to issue wage orders based on the
distinctive situations and needs existing in each region. So also, . . . it does not
insist that the [B]ank should not implement regional wage orders. Neither does it
seek to penalize the Bank for following Wage Order VII-03. . . . What it simply
argues is that it is wrong for the Bank to peremptorily abandon a national wage
structure and replace the same with a regionalized structure in violation of the
principle of equal pay for equal work. And, it is wrong to say that its act of
abandoning its national wage structure is mandated by law."
As already discussed above, we cannot sustain this argument. Petitioner contradicts
itself in not objecting, on the one hand, to the right of the regional wage boards to
impose a regionalized wage scheme; while insisting, on the other hand, on a
national wage structure for the whole Bank. To reiterate, a uniform national wage
structure is antithetical to the purpose of RA 6727.
The objective of the law also explains the wage disparity in the example cited by
petitioner: Armae Librero, though only in Pay Class 4 in Mabolo, was, as a result of
the Wage Order, receiving more than Bella Cristobal, who was already in Pay Class
5 in Subic. 12 RA 6727 recognizes that there are different needs for the different
situations in different regions of the country. The fact that a person is receiving more
in one region does not necessarily mean that he or she is better off than a person
receiving less in another region. We must consider, among others, such factors as
cost of living, fulfillment of national economic goals, and standard of living. In any
event, this Court, in its decisions, merely enforces the law. It has no power to pass
upon its wisdom or propriety.
Equal Pay for Equal Work
Petitioner also avers that the implementation of the Wage Order in only one region
violates the equal-pay-for-equal-work principle. This is not correct. At the risk of
being repetitive, we stress that RA 6727 mandates that wages in every region must
be set by the particular wage board of that region, based on the prevailing situation
therein. Necessarily, the wages in different regions will not be uniform. Thus, under
RA 6727, the minimum wage in Region 1 may be different from that in Region 13,
because the socioeconomic conditions in the two regions are different.
Meaning of "Establishment"
Petitioner further contends that the Court of Appeals erred in interpreting the
meaning of "establishment" in relation to wage distortion. It quotes the RA 6727
Implementing Rules, specifically Section 13 thereof which speaks of "workers
working in branches or agencies of establishments in or outside the National Capital
Region." Petitioner infers from this that the regional offices of the Bank do not
themselves constitute, but are simply branches of, the establishment which is the
whole bank. In effect, petitioner argues that wage distortion covers the pay scales
even of employees in different regions, and not only those of employees in the same
region or branch. We disagree.
Sec. 13 provides that 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 sanctioned" The last part of the sentence was
omitted by petitioner in its argument. Given the entire phrase, it is clear that the
statutory provision does not support petitioner's view that "establishment" includes
all branches and offices in different regions.
Further negating petitioner's theory is NWPC Guideline No. 1 (S. 1992) entitled
"Revised Guidelines on Exemption From Compliance With the Prescribed
Wage/Cost of Living Allowance Increases Granted by the Regional Tripartite Wages
and Productivity Board," which states that "establishment" "refers to an economic
unit which engages in one or predominantly one kind of economic activity with a
single fixed location."
Management Practice
Petitioner also insists that the Bank has adopted a uniform wage policy, which has
attained the status of an established management practice; thus, it is estopped from
implementing a wage order for a specific region only. We are not persuaded. Said
nationwide uniform wage policy of the Bank had been adopted prior to the
enactment of RA 6727. After the passage of said law, the Bank was mandated to
regionalize its wage structure. Although the Bank implemented Wage Order Nos.
NCR-01 and NCR-02 nationwide instead of regionally even after the effectivity of RA
6727, the Bank at the time was still uncertain about how to follow the new law. In
any event, that single instance cannot be constitutive of "management practice."
WHEREFORE, the petition is DENIED and the assailed Decision is AFFIRMED.
Costs against petitioner.1wphi1.nt
SO ORDERED.