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FUNDAMENTAL PRINCIPLES
AND POLICIES
I. FUNDAMENTAL PRINCIPLES
AND POLICIES
A.
CONSTITUTIONAL PROVISIONS
I. ARTICLE II OF THE CONSTITUTION
3. DISCUSSION OF SELECTED
SIGNIFICANT PROVISIONS OF
ARTICLE II.
Since most of the provisions under this topic
are self-explanatory, only certain
provisions
a
will be discussed herein by reason of their
constitutional significance and relevance to
labor cases and situations.
b. Section 18 (Protection-to-Labor
Clause).
Among the provisions afore-quoted it is
Section 18 which is often cited in labor cases.
Along with Section 3 of Article XIII, infra, it is
often referred to as the protection-to-labor
clause in the Constitution. It is invoked in
resolving doubts or ambiguities in the
interpretation of the law, employment contracts,
collective bargaining agreements and
appreciation of evidence. The constitutional
tenet embodied in this provision id the basis for
the following provision in the law:
(1) Article 1702 of the Civil Code which provides that all
labor legislation and labor contracts should be constructed
in favor of the safety and decent living for the laborer;
and
(2) Article 4 of the Labor Code which states that all
doubts should be resolved in favor of labor.
Thus, when conflicting interests of labor and capital are
to be weighed on the scales of social justice, the heavier
influence of the latter should be counter-balanced by
sympathy and compassion the law must accord the
unprivileged worker. In interpreting the protection to labor
and social justice provisions of the Constitution and the
labor laws or rules and regulations implementing the
constitutional mandates, the liberal approach which favors
the exercise of labor rights should always be adopted.
ARTICLE III
BILL OF RIGHTS
Section 1. No person shall be deprived of
life, liberty, or property without due process of
law, nor shall any person be denied the equal
protection of the laws.
(2) declares
c. Section 10 (Non-impairment of
Obligation of Contracts)
A law authorizing interference, when
appropriate, in the contractual relations between
or among parties is deemed read into the
contract and its implementation cannot
successfully be resisted by force of the nonimpairment guarantee. There is, in that
instance, no impingement of the nonimpairment clause.
LABOR
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 selforganization, 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.
WOMEN
Section 14. The State shall protect
working women by providing safe and
healthful working conditions, taking into
account their maternal functions, and
such facilities and opportunities that will
enhance their welfare and enable them to
realize their full potential in the service of
the nation.
On Article 3
Article 3 of the Labor Code states:
On Article 166
Article 166 of the Labor Code states:
Article 166. Policy. The State shall
promote and develop a tax-exempt
employees compensation program
whereby employees and their dependants,
in the event of work-connected disability of
death, may promptly secure adequate
income benefit and medical related
benefits.
5.
4. On Article 211.
The provision of Article 211 of the Labor Code states:
Article 211. Declaration of Policy. A. It is the policy
of the State:
a)
b)
c)
d)
e)
f)
g)
A. State Policy
Article 211 is the first article of the Book V of the Labor Code
on Labor Relations. Both Article 211 and Article 3 are the
letters that giveth life to the protection-to-labor policies in all
the modern constitutions in the Philippine.
Noteworthy is the primordial policy of the State to promote
collective bargaining, the settlement of labor disputes
through conciliation, mediation and arbitration, free trade
unionism, establishment of strong and united labor
movement, education of workers on their rights and
obligations and participation of workers in decision and
policy-making processes affecting their rights, duties and
welfare, to ensure a stable but dynamic and just industrial
peace.
B. Labor Relations
The term labor relations refers to that part
of labor law which regulates the relations
between employers and workers. Examples
are the provisions of the Book V of the labor
Code which deal with labor organizations,
collective bargaining, grievance machinery,
voluntary arbitration, conciliation and
mediation, unfair labor practices, strikes,
picketing and lockout and those found in
Book VI on termination of employment.
On Article 212
Article 212 of the Labor Code simply
enumerates and defines the various
important terms and phrases used in the
Code.
On Article 255
On Article 277.
Article 277 of the Labor Code states:
Article 277. Miscellaneous Provisions-
RECRUITMENT AND
PLACEMENT
A. RECRUITMENT OF LOCAL AND MIGRANT
WORKERS
Introduction.
The
1.
2.
2.
3.
4.
5.
6.
7.
11.Employment
2. APPLICATION/RENEWAL OF LICENSE OF
PRIVATE RECRUITMENT AND PLACEMENT
AGENCY FOR LOCAL EMPLOYMENT
Qualifications.
An applicant for a license to operate a
private recruitment and placement
agency must possess the following:
1. Must be a Filipino citizen, if single
proprietorship. In case of a partnership
or a corporation, at least 75% of the
authorized capital stock must be owned
and controlled by Filipino citizens;
a)
b)
c)
d)
f)
g)
b)
)
)
)
)
b.
b.
c.
d.
Transportation. Transportation
expenses of the worker from the place
of origin to the place of work shall be
charged against the employer, and shall
in no case be deducted from the
workers salary.
Issuance of official receipt. All
payments made or fees collected by a
licensed Agency shall be covered by an
official receipt indicating the amount
paid and the purpose of such payment.
6. SUSPENSION, REVOCATION/CANCELLATION
OF LICENSE
Grounds for suspension of a license.
Any of the following shall constitute a ground for suspension
of a license:
1. Violation of any of the provisions of the Rules;
2. Violation of Department Order No. 21, Series of 1994,
regarding publication of job vacancies;
3. Non-issuance of official receipt for every fee collected;
4. Non-submission of monthly report as provided in the Rules;
5. Charging or accepting directly or indirectly, any amount in
excess of what is prescribed by the rules.
6. Disregard of lawful orders and notices issued by the DOLE
Secretary of his duly authorized representative, or
7. Non-observance of the procedures or recruitment as stated
in the Rules.
a.
5.
6.
7.
8.
b.
RECRUITMENT AND
PLACEMENT
B. RECRUITMENT AND PLACEMENT FOR
OVERSEAS EMPLOYMENT
1.
)
)
2.
)
a.
b.
Regular/Documented Filipino
Migrant Workers refer to the
following:
Those who possess valid passports and
appropriate visas or permits to stay and
work in the receiving country; and
Those whose contracts of employment
have been processed by the POEA, or
subsequently verified and registered onsite by the Philippine Overseas Labor
Office (POLO), if required by law or
regulation.
3.
PRIVATE (FEE-CHARGING)
EMPLOYMENT AGENCY (PEA).
A private Fee-charging Employment
Agency or Private
Recruitment/Employment Agency
refers to any person, partnership or
corporation duly licensed by the DOLE
Secretary to engage in the recruitment
and placement of workers for overseas
employment for a fee which is charged,
directly or indirectly, from the workers or
employers or both or from the workers
who renewed their employment contracts
with the same principal.
4.
5.
6.
a)
b)
c)
d)
e)
f)
g)
7.
)
8.
1.
2.
RECRUITMENT AND
PLACEMENT
B-II LICENSING AND REGULATION FOR
OVERSEAS RECRUITMENT AND PLACEMENT
1. QUALIFICATIONS.
Only those who possess the following
qualifications may be permitted to engage
in the business of recruitment and
placement of overseas Filipino workers:
Filipino
citizens, partnerships or
corporations at least 75% of the
authorized capital stock of which is owned
and controlled by Filipino citizens;
2. DISQUALIFICATIONS
The following are not qualified to engage in the
business of recruitment and placement of Filipino
workers overseas:
a. Travel agencies and sale agencies of airline
companies;
b. Officers or members of the Board of any
corporation or members in a partnership engaged
in the business of a travel agency.
c. Corporations and partners, when any of its
officers, members of the board or partners, is
also an officer, member of the board or partner of
a corporation or partnership engaged in the
business of a travel agency;
d.
1.
2.
3.
4.
e.
f.
4. NON-TRANSFERABILITY OF LICENSE.
No license shall be transferred, conveyed or assigned
to any person, partnership or corporation. It shall not
be used directly or indirectly by any person,
partnership or corporation other than the one in
whose favor it was issued.
In case of death of the sole proprietor and to prevent
disruption of operation to the prejudice of the interest
of legitimate heirs, the license may be extended upon
request of the heirs, to continue only for the purpose
of winding up the business operations.
5. CHANGE OF OWNERSHIP/RELATIONSHIP OF
SINGLE PROPRIETORSHIP OR PARTNERSHIP
Transfer or change of ownership of a single
proprietorship licensed to engage in overseas
employment shall cause the automatic
revocation of the license.
A change in the relationship of the partners in a
partnership duly licensed to engage in overseas
employment which materially interrupts the
course of the business or results in the actual
dissolution of the partnership shall likewise
cause the automatic revocation of the license .
6. ESTABLISHMENT OF
ADDITIONAL/EXTENSION OFFICES.
Additional/extension offices may be
established subject to the prior approval of
the POEA>.
8. RENEWAL OF LICENSE.
c)
d)
e)
9. NON-EXPIRATION OF LICENSE.
Where the license holder has made timely
and sufficient application for renewal, the
existing license shall not expire until the
application shall have been finally
determined by the POEA. For this purpose,
an application shall be considered sufficient
if the applicant has substantially complied
with the requirements for renewal.
1. ILLEGAL RECRUITMENT
SECTION 6. Definition -
1. ILLEGAL RECRUITMENT
b. ESSENTIAL ELEMENTS OF
ILLEGAL RECRUITMENT
1. ILLEGAL RECRUITMENT
c. SIMPLE ILLEGAL
RECRUITMENT
1. ILLEGAL RECRUITMENT
1. TWO ELEMENTS.
1. ILLEGAL RECRUITMENT
1. ILLEGAL RECRUITMENT
g. LIABILITIES
i.
1. ILLEGAL RECRUITMENT
RELEVANT CASES
Jurisprudence has already affirmed the validity of said
provision on joint and solidary liability.
The 2004 case of Phil. Employ Services and
Resources, Inc. v. Paramio ruled that under the law,
the agency which deployed the employees whose
employment contracts were adjudged illegally terminated,
is jointly and solidarily liable with the principal for the
money claims awarded to the aforesaid employees which
consist of the payment of the salaries due to the OFWs
corresponding to the unexpired portion of their contract
as well as the reimbursement of their placement fees.
2.
3.
A manager of a
recruitment/manning agency is not a
mere employee. As such, he receives
job applications, interviews
applicants and informs them of the
agencys requirement of payment of
performance or cash bond prior to
the applicants deployment. As the
crewing manager, he was at the
forefront of the companys
recruitment activities.
CONSEQUENCES OF PRE-TERMINATION OF
OFWS CONTRACTS1.
2.
Case: ATCI Overseas Corporation vs. EchinThe employer contends that Philippine labor
laws on probationary employment are not
applicable, since it was expressly provided in
the contract, that the terms of her
engagement must be governed by the Kawaiti
Civil Service laws, rules and regulations. The
Kuwaiti law probationary period is one (1)
year. After 8 months of service, she was
terminated, gave her a copy of termination
letter stating that she did not pass the
probation terms, without however specifying
the ground therefor. What was submitted was
only the termination letter and the translation
thereof.
ONUS PROBANDI
Burden of proof devolves on both
recruitment agency and its foreign
principal.
In this termination cases, where the
employer-employee relationship has been
established, the onus probandi (burden of
proof) that the dismissal od an employee is for
a just cause, lies with the employer. Failure to
do so would necessarily mean that the dismissal
is not justifies.
a.
In
Costs
Unauthorized
ON DISABILITY CLAIMS.
a)
Disability, not similar to illness or
sickness.
Disability is generally defined as the
loss or impairment of a physical or mental
function resulting from injury or sickness.
Clearly, Disability is not synonymous with
sickness or illness, the former being a
potential effect of the latter.
2.
2.
3.
6.
7.
g.
ON DEATH BENEFITS.
a. Basis of the computation for death benefits of
OFWs.
The latest POEA-Standard Employment Contract
(POEA-SEC) issued in 2010 prescribes the following
compensation and benefits for death:
1. In case of work-related death of the seafarer,
during the term of his contract, the employer shall
pay his beneficiaries the Philippine currency
equivalent to the amount of US$50,000 and an
additional amount of US$7,000 to each child under
the age of 21 but not exceeding 4 children, at the
exchange rate prevailing during the time of
payment.
3.
2.
3.
4.
a)
b)
c.
c.
)
If
DIRECT HIRING
Definition.
Direct Hiring refers to the process of directly
hiring workers by employers for overseas employment
as authorized by the DOLE Secretary and processed by
the POEA, including:
1. Those hired by international organizations;
2. Those hired by members of the diplomatic corps;
3. Name hires or workers who are able to secure
overseas employment opportunity with an employer
without the assistance or participation of any
agency.
REGULATION AND
ENFORCEMENT
1. SUSPENSION OR CANCELLATION OF LICENSE OR
AUTHORITY (Article 35, Labor Code)
Even
3)
.-
Local Employment
The POEA has no
jurisdiction where the cause of action rests
upon the local employment contract and not
the overseas contract . The jurisdiction
thereover lies with the labor Arbiters of the
NLRC.
C.
D.
Closure order.
If
G.
Imposition of fines
i.
B.
J.
A.
C.
B.
C.
Preventive suspension.
Program
2. REGULATORY POWER.
A.
B.
C.
VISITORIAL POWER.
may,
B.
and
C.
The
4.
Non-compliance
3.
COVERAGE
1.
4.
5.
6.
7.
5.
FORM OF REMITTANCE.
6.
PROCEDURE OF REMITTANCE.
(b)
(c)
Or
(d)
succeeding
7.
under
rules.
10.
requirement
11.
provisions
renewal
that
12.
provided
b. On the OFW.
mandatory
c. On foreign employers.
D.
13.
CONFLICT IN MANDATORY
REMITTANCE REQUIREMENT AND HOST
COUNTRYS REGULATIONS ON THE
MATTER.
14
15.
Temporary,
17.
(1) Grant
(2)
entities
or persons;
(3)
(4)
The
(5)
CHAPTER THREE
LABOR STANDARDS
A.
HOURS OF WORK
82, Labor Code
1.
COVERAGE/EXCLUSIONS
(Article
.
838485868788-
2. COVERAGE
Employees in all establishment, whether operated for
profit or not, are covered by the law on labor
standards.
3. EXCLUSIONS.
The following are excluded from the coverage of the
law on labor standards:
a. Government employees;
b. Managerial employees;
c. Other officers or members of a
managerial staff;
d. Domestic servants and persons in the personal
service of another;
e. Workers paid by results;
f. Non-agricultural field personnel; and
g. Members of the family of the employer.
2.
) NORMAL HOURS OF WORK
1. NORMAL HOURS OF WORK PER DAY.
The total number of working hours shall not
exceed eight (8) hours daily. This eight (8) hour period
is called the normal hours of work. Any work in
excess of eight (8) hours is considered
overtime work.
2. EXCEPTIONS:
a. Reduction of 8-hour working day by employer.
The employer, in the lawful exercise of its prerogative, is not
prohibited from reducing the eight hour normal working time per
day provided that no
corresponding reduction is made on the
employees wage or salary equivalent to an
eight-hour work day. In instances where the
number of hours required by the nature of work
is less than eight hours, such number of hours
should be regarded as the employees full
working day.
b. Broken hours.
The normal eight (8) working hours mandated by law
do not always mean continuous and uninterrupted eight
(8) hours of work. As may be required by peculiar
circumstances of employment, it may mean broken
hours of say, four hours
in the morning and four hours in the evening
or a variation thereof, provided that the total
eight (8) hours is accomplished within one
The Labor Code provides that the normal work hours per
day shall be eight (8) hours. Work may be performed
beyond eight hours a day provided the employee is paid
for the overtime work. On the other hand, the normal
number of workdays per week shall be six (6) days, or a
total of forty-eight (48) hours based on the normal
workday of eight (8) hours.
Compressed Workweek or CWW refers to a
situation where the normal workweek is reduced to
less than six (6) days but the normal number
of work-hours of 48 hours per week remains.
where the work schedule is not continuous but the workhours within the day or week remain.
5. Flexi-holidays schedule refers to one where the
employees agree to avail of the holidays at some other
days provided there is no diminution of existing benefits
as a result of such arrangement.
Under these flexible work arrangement ,
the employers and the employees are
encouraged to explore alternative schemes
3.
MEAL BREAK
(Article 85, Labor Code)
1. GENERAL RULE ON MEAL PERIOD.
As a general rule, every employer is required to
give his employees, regardless of sex, not less than
One (1) hour (or 60 minutes) time-off for
Regular meals.
4.
WAITING TIME
(Article 84, Labor Code)
1. COMPENSABLE HOURS WORKED.
The following shall be considered as compensable
hours worked:
a. All time during which an employee
is required to be on duty or to be at the
duty at least eight hours per day, seven days per week to
pump wells and repair machinery when needed;
Restaurants employees who were required by their
employer to report to work at a certain time even though
they could not punch in until enough customers were
present to make work available;
Truck washers who are idle while waiting for the
arrival of the next truck;
Truck drivers carrying the mail who had
C. Off Duty
Based on U.S. jurisprudence, periods during which an
employee is completely relieved from duty and which are
long enough to enable him to use the time effectively for
his own purposes are not hours worked. Whether the
time off is truly sufficient to enable employees to
effectively use the time for their own purposes is a
factual issue dependent upon the circumstances.
Circumstances considered by the courts
include the duration of the time off and any
4. IDLE TIME.
A close variance of waiting time is idle time during
which an otherwise off-duty employee remains available
to be called to work may or may not be compensate,
depending upon the situation. As a general rule, the issue
of compensability depends on whether the time is spent
primarily for the employers benefit as opposed to the
employees. The answer usually turns upon the
extent to which employee is able to and does
use the time effectively for personal purposes.
at
5.
OVERTIME WORK, OVERTIME PAY
(Article 87, Labor Code)
1.
OVERTIME WORK.
a. Some principles on overtime work.
1.Work rendered after normal eight
(8) hours of work is called
overtime work.
d. 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; or
i.
ii.
Where the start or end of the night work does not fall
within 12 midnight to 5 oclock in the morning; or
iii.
policy or CBA.
(c) Extension of maternity leave.- Where transfer
to day work is not possible, a woman employee may be
allowed to extend, as recommended by a competent
physician, her maternity leave without pay or using
earned leave credits of the worker, if any.
h. Non-diminution of maternity leave
benefits under existing laws.
j. Compensation.
The compensation for night workers in the form of
working time, pay or similar benefits shall recognize the
exceptional nature of work.
Consequently, such compensation shall include, but
not be limited to, working time, pay and benefits under
the Labor Code, as amended and under existing
laws, such as service incentive leave, rest
day, night differential pay, 13th month
2. SECURITY OF TENURE.
The same protection afforded to full-time
workers with respect to security of tenure should also be
extended to part-time workers. Thus, protection
provided under the Labor Code and its implementing
rules and regulations should likewise be applied to said
type of workers. If for example, a part-time employee
becomes regular, he cannot be dismissed
summarily without just or authorized cause
and without complying with the twin
Supreme Court ruled that although the respondentemployees were initially hired as part-time employees for
one (1) year, thereafter the over-all circumstances with
respect to the duties assigned to them, number of hours
they were permitted to work including overtime, and the
extension of their employment beyond two (2) years can
only lead to the conclusion that they should be declared
full-time regular employees. Evidently, there was a
continued and repeated necessity for their services
which puts to naught the contention that
respondents, beyond the one-year period,
8.
CONTRACT FOR PIECE WORK
(SEE CIVIL CODE)
1. SYLLABUS REQUIREMENT.
The syllabus specifically refers to the provisions of the
Civil Code on Contract for Piece Work. The Civil
Code has a complete Section 3, Chapter 3
(Work and Labor), Title VIII (LEASE) devoted
to Contract for Piece of Work covering
Articles 1713 to 1731.
b. Pertinent provisions:
The following are the relevant Civil Code provisions:
Art.1714. If the contractor agrees to produce the
work from material furnished by him, he shall deliver the
thing produced to the employer and transfer dominion over
the thing. This contract shall be governed by the following
articles as well as by the pertinent
provisions on warranty of title and against
hidden defects and the payment of price in a
contract of sale.
B.
WAGES
1.
WAGE VS. SALARY
1.
BASIC DISTINCTION
2. A.
MINIMUM WAGE DEFINED
1. BASIC WAGE.
The term basic wage means all the
remuneration or earnings paid by an employee 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
2. ATTRIBUTES OF WAGE.
Wage paid to any employee has the following
attributes:
1. It is the remuneration or earnings, however,
designated, for work done or to be done or for
services rendered or to be rendered;
2. It is capable of being expressed in
terms of money, whether fixed or
6. WAGE RATES.
The term wage rates includes cost-of-living allowances
as fixed by the RTWPB, but excludes other wage related
benefits such as overtime pay, bonuses, night shift differential
pay, holiday pay, premium pay, 13th month pay, premium pay,
leave benefits, among others.
7. RATIONALE.
2.B.
MINIMUM WAGE SETTING
1. WAGE ORDER.
a. Wage order, defined.
The term Wage Order refers to the order promulgated
by the RTWPB pursuant to its
wage fixing authority.
therein;
4) Needs of workers and their families;
5) Improvements in standards of living.
(2) Capacity to pay
1) Fair return on capital invested and capacity to
pay of employers;
2) Productivity.
increase.
The Salary-Cap or Salary-Ceiling method is the
preferred mode.
b. Distinction between the 2 methods.
The distinction between the two (2) methods is best
shown by way of an illustration. Under the Floor Wage
Method, it could be sufficient if the Wage Order
simply set P15.00 as the amount to be added
to the prevailing statutory minimum wage
3.
MINIMUM WAGE OF WORKERS PAID BY RESULTS
(a)
WORKERS PAID BY RESULTS
1. MINIMUM WAGE RATES OF WORKERS PAID BY
RESULTS.
According to Article 124 of the Labor Code
because they are paid not on the basis of the time spent
on their work but according to the quantity, quality or
kind of job and the consequent results thereof.
Because of the unique manner by which the work
is compensated as distinguished from the compensation
calculated on the basis of time, it is subject to more
regulations in order to ensure the payment of fair and
reasonable wage rates, basically through two (2)
modes:
a. Time and motion study; or
b. Unsupervised workers.
As the term clearly connotes, supervised workers are
those who manner of work is under the control of the
employer; while unsupervised workers are those who
work is controlled more in the results than in the
manner or method of performing it.
The law does not make any categorical
differentiation among the workers paid by
results. Thus, the workers may be on
pakyao (sometimes spelled pakyaw), takay or piecerate or output basis. All of them are similar in character in
that they are all paid on the basis of the results of their
work. When the law does not distinguish, we should not
distinguish.
5. TIME AND MOTION STUDIES.
On petition of any interested party or upon
its own initiative, the DOLE shall use all
available measures, including the use of time
and motion studies and individual /collective
(b)
APPRENTICES
(c)
LEARNERS
1. WAGE RATE.
The wage rate of a learner or an apprentice is
set at seventy-five percent (75%) of the statutory
minimum wage.
2. EFFECT OF WAGE ORDERS.
The Labor Code, in its Article 124,
categorically mentions the effect of legallymandated wage increases ordered by
Wage Orders on
agreements, to wit:
the
learnership
and
apprenticeship
4.
COMMISSIONS
1. MEANING AND NATURE OF COMMISSION.
Commission is the recompense, compensation
or reward of an employee, agent, salesman, executor,
trustee, receiver, factor, broker or bailee, when the
same is calculated as a percentage on
the amount of his transactions or on the
profit of the principal.
3.
NO
LAW
COMMISSION.
REQUIRING
THE
PAYMENT
OF
5.
INCLUSION
OF
COMMISSION
IN
THE
COMPUTATION OF SEPARATION PAY: EXCEPTION.
For purposes of determining the appropriate amount
of separation pay of salesman who were terminated due
to retrenchment, commissions earned from actual
transactions and received by them should be included in
the monthly salary. This holds true even if the
commissions were merely in the form of
incentives or encouragement so that the
salesman would be inspired to put a little
more industry on the jobs particularly
OF
COMMISSION
IN
OF
THE
13TH
MONTH
THE
PAY;
5.
DEDUCTIONS FROM WAGES
1. GENERAL RULE.
The general rule is that an employer, by himself or
through his representative, is prohibited from
making any deductions from the wages of his
employees. The employer is not allowed to
make unnecessary deductions without the
knowledge or authorization of the
employees.
2. PERMISSABLE DEDUCTIONS FROM WAGES UNDER
THE LABOR CODE AND OTHER LAWS.
a. Deductions allowed under Article 113.
Article 113 of the Labor Code allows only three (3)
kinds of deductions,
namely:
Based on the ponencia and concurring opinion aforecited in the Arco Metal case, it may be safely concluded
that the proper legal bases for the invocation of the
principle that any benefit or supplement being enjoyed
by employees cannot be reduced, discontinued by the
employer are the following:
(1) Express terms of an employment agreement;
(2) Company practice which refers to
the implied terms of an employment
of the following:
(1) An express policy;
(2) A written contract; or
(3) A company practice.
2. ELIMINATION OR DIMINUTION
CONSTITUTE DEMOTION OR
CONSTRUCTIVE DISMISSAL.
a. When it constitute demotion.
The illegal and unjustified elimination
OF
BENEFITS
MAY
required by law.
e. Davao Integrated Port Stevedoring Services v.
Abarquez. The employer, for three (3) years and nine
(9) months, approved the commutation to cash of the
unenjoyed portion of the sick leave with pay benefit of its
intermittent workers. It was held that this act of the
employer has already ripened into a company practice
which can no longer be withdrawn.
f.
after the signing of each CBA with its rank and file
employees, retroactive to January 1st of the same year
as the grant of improved benefits and without the
condition that the officers should remain employees as of
a certain date is a company practice. This undeniably
indicates a unilateral and voluntary act on Metrobanks
part, to give said benefits to its officers, knowing that
such act was not required by law or the company
retirement plan.