Week 5 - Wages

Question 1

LC. Book III. Title II Wages. Art. 97. (a). Definitions. – As used in this Title:

(a). “Person” means an i_____, p_____, a_____, c_____, b_____, l_____, or any o_____.

Answer 1

LC. Book III. Title II Wages. Art. 97. (a). Definitions. – As used in this Title:

(a). “Person” means an individual, partnership, association, corporation, business trust, legal representatives, or any organized group of persons.

Question 2

LC. Book III. Title II Wages. Art. 97. (b). Definitions – As used in this Title:

(xxx xxx)

(b). “Employer” includes […] in relation […] and shall include the […], as well as […].

Answer 2

LC. Book III. Title II Wages. Art. 97. (b). Definitions – As used in this Title:

(xxx xxx)

(b). “Employer” includes any person acting directly or indirectly in the interest of an employer in relation to an employee and shall include the government and all its branches, subdivisions and instrumentalities, all government-owned or controlled corporations and institutions, as well as non-profit private institutions, or organizations.

Question 3

LC. Book III. Title II Wages. Art. 97. Definitions. – As used in this Title:

(c). “Employee” includes […].

Answer 3

LC. Book III. Title II Wages. Art. 97. Definitions. – As used in this Title:

(c). “Employee” includes any individual employed by an employer.

Question 4

LC. Book III. Title II Wages. Art. 97. (d). Definitions – As used in this Title:

(xxx xxx)

(d). “Agriculture” includes […] and, among other things, includes […], the raising of […], and any […], but does not include the […].

Answer 4

LC. Book III. Title II Wages. Art. 97. (d). Definitions – As used in this Title:

(xxx xxx)

(d). “Agriculture” includes farming in all its branches and, among other things, includes cultivation and tillage of soil, dairying, the production, cultivation, growing and harvesting of any agricultural and horticultural commodities, the raising of livestock or poultry, and any practices performed by a farmer on a farm as an incident to or in conjunction with such farming operations, but does not include the manufacturing or processing of sugar, coconuts, abaca, tobacco, pineapples or other farm products.

Question 5

LC. Book III. Title II Wages. Art. 97. (e). Definitions – As used in this Title:

(xxx xxx)

(e). “Employ” includes to […].

Answer 5

LC. Book III. Title II Wages. Art. 97. (e). Definitions – As used in this Title:

(xxx xxx)

(e). “Employ” includes to suffer or permit to work.

Question 6

LC. Book III. Title II Wages. Art. 97. (f). Definitions – As used in this Title:

(xxx xxx)

(f). “Wage” paid to any employee shall mean […], or other method of calculating the same, which is […] and includes the fair and reasonable value, as determined by the Secretary of Labor and Employment, of board, lodging, or other facilities customarily furnished by the employer to the employee. “Fair and reasonable value” […].

Answer 6

LC. Book III. Title II Wages. Art. 97. (f). Definitions – As used in this Title:

(xxx xxx)

(f). “Wage” paid to any employee shall mean the remuneration of earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor and Employment, of board, lodging, or other facilities customarily furnished by the employer to the employee. “Fair and reasonable value” shall not include any profit of the employer, or to any person affiliated with the employer.

Question 7

Who prescribes the regional minimum wage rates?

Answer 7

Regional Tripartite Wages and Productivity Boards.

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

Question 8

Art. 100. Prohibition Against Elimination or Diminution of Benefits. –

Answer 8

Art. 100. Prohibition Against Elimination or Diminution of Benefits. – N I T B S B C T E O I A W D S, O O E B B E A T T O P O T C.

Question 9

Art. 101. Payment by Results. – (a). The Secretary of Labor and Employment shall regulate the payment of […], including […], […], and other […], in order to ensure the payment of fair and reasonable wages rates, preferably through time and motion studies or in consultation with representatives of workers’ and employers’ organizations.

Answer 9

Art. 101. Payment by Results. – (a). The Secretary of Labor and Employment shall regulate the payment of wages by results, including pakyao, piecework, and other non-time work, in order to ensure the payment of fair and reasonable wages rates, preferably through time and motion studies or in consultation with representatives of workers’ and employers’ organizations.

Question 10

What is the definition of “wages”?

Answer 10

Wages are defined as “remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for service rendered tor to be rendered.” [Labor Code. Art. 97 (f); Chavez v NLRC GR No. 146530].

Question 11

Does the payment of “wages” or “remuneration” for work done or to be done, ipso facto create an employer-employee relationship between the parties?

Answer 11

No. In Chavez v. NLRC, the Court held:

“That the petitioner was paid on a per trip basis is not significant. This is merely a method of computing compensation and not a basis for determining the existence or absence of employer-employee relationship. One may be paid on the basis of results or time expended on the work, and may or may not acquire an employment status, depending on whether the elements of an employer-employee relationship are present or not.” [Chavez v. NLRC GR No. 146530].

Question 12

Does the receipt of an allowance on a monthly basis ipso facto characterize the allowance as regular and forming part of salary?

Answer 12

No. In the case of Millares v. NLRC, the Court stated that:

“’Customary’ is founded on long-established and constant practice connoting regularity. The receipt of an aloowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary because the nature of the grant is a factor worth considering.” [Millares v. NLRC GR No. 122827]

Question 13

When is an allowance deemed as a facility that is part of wages?

Answer 13

“In determining whether a privilege is a facility, the criterion is not so much its kind but its purpose.” If the purpose is for the benefit of the employee, it is part of the wage structure. However, if the benefit is for the employer, then it is not. [Millares v. NLRC GR No. 122827]

Question 14

Are salary increases part of the wage structure, and therefore demandable when it comes to backwages?

Answer 14

No. Salary increases are not allowances or benefits, and cannot be confused with either. The term “allowances” is sometimes used synonymously with “emoluments,” as indirect or contingent remuneration, which may or may not be earned, but which is sometimes in the nature of compensation, and sometimes in the nature of reimbursement. Allowances and benefits are granted to the employee apart or separate from, and in addition to the wage or salary. In contrast, salary increases are amounts which are added to the employee’s salary as an increment thereto for varied reasons deemed appropriate by the employer. Salary increases are not separate grants by themselves, but once granted, they are deemed part of the employee’s salary. […] [I]f the intent were to include salary increases as basis in the computation of backwages, the same should have been explicitly stated in the same manner that the law used clear and unambiguous terms in expressly providing for the inclusion of allowances and other benefits. [Equitable Banking Corp. v Sadac GR No. 164772]

Question 15

What is the difference between backwages and separation pay?

Answer 15

“Separation pay is granted where reinstatement is no longer advisable because of strained relations between the employee and the employer. Backwages represent compensation that should have been earned but were not collected because of the unjust dismissal. The bases for computing the two are different, the first being usually the length of the employee’s service and the second the actual period when he was unlawfully prevented from working.” [Equitable Banking Corp. v Sadac GR No. 164772].

Question 16

What is the distinction between “salary” and “wages”?

Answer 16

None. The Court held that “In labor law, […] the distinction [between salary and wages] appears to be merely semantics.” Salary and wages are synonymous. [Equitable Banking Corp. v Sadac GR No. 164772]

Question 17

Are commissions part of wages?

Answer 17

Yes. In Toyota Pasig, Inc. v. Vilma S. de Peralta, the Court held that Art. 97 of the Labor Code, defining wages, which states that “’Wage’ paid to any employee shall mean the remuneration of earnings, however, designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece or commission basis,” expressly includes commissions as part of wages. The Court also cited Iran v. NLRC to discuss the wisdom behind the inclusion of commissions as wages. In Iran the Court said “While commissions are, indeed incentives or forms of encouragement to inspire employees to put a little more industry on the jobs particularly assigned to them, still these commissions are direct remunerations for services rendered.” [Toyota Pasig, Inc. v. Vilma S. de Peralta GR No. 213488].

Question 18

Are employers allowed to pay wages in forms such as promissory notes?

Answer 18

No. Under Art. 102 Forms of Payment of the Labor Code, it sates: “No employer shall pay the wages of an employee by means of promissory notes, vouchers, coupons, tokens, tickets, chits, or any object other than legal tender, even when expressly requested by the employee.”

Question 19

When are wages by check or money order allowed?

Answer 19

Payment of wages by check or money order shall be allowed when such manner of payment is customary on the date of effective of [the Labor Code], or is necessary because of special circumstances as specified in appropriate regulations to be issued by the Secretary of Labor and Employment or as stipulated in a collective bargaining agreement. [Labor Code. Art. 102. par. 2].

Question 20

When shall wages be paid?

Answer 20

Under Art. 103 Time of Payment, “Wages shall be paid at least once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days.”

Question 21

What will happen if the employer cannot make payment within the time of once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days due to circumstances outside the employer’s control?

Answer 21

Under Art. 103 Time of Payment of the Labor Code, “If on account of force majeure or circumstances beyond the employer’s control, payment of wages on or within the time herein provided cannot be made, the employer shall pay the wages immediately after such force majeure or circumstances have ceased.”

Question 22

The payment of wages of employees engaged to perform a task which cannot be completed in two (2) weeks shall be subject to the following conditions, […]:

(1) […];
(2) […]. [Labor Code. Art. ___].

Answer 22

The payment of wages of employees engaged to perform a task which cannot be completed in two (2) weeks shall be subject to the following conditions, in the absence of a collective bargaining agreement or arbitration award:

(1) That payments are made at intervals not exceeding sixteen (16) days, in proportion to the amount of work completed;
(2) That final settlement is made upon completion of the work. [Labor Code. Art. 103].

Question 23

Art. 104. Place of Payment. – Payment of wages shall be made […], except as otherwise provided by […].

Answer 23

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

Question 24

What is the general rule as regards Direct Payment of Wages to employees? What are the exceptions?

Answer 24

The general rule is that wages shall be paid directly to the workers to whom they are due. The exceptions are: (1) force majeur; or (2) death of the worker. [Labor Code. Art. 105].

Question 25

LC. Art. 105. Direct Payment of Wages. – Wages shall be paid directly to the workers to whom they are due, except:

(a) In cases of force majeure rendering such payment […] to be determined by the Secretary of Labor and Employment in appropriate regulations, in which case, […] under […];

Answer 25

LC. Art. 105. Direct Payment of Wages. – Wages shall be paid directly to the workers to whom they are due, except:

(a) In cases of force majeure rendering such payment impossible or under other special circumstances to be determined by the Secretary of Labor and Employment in appropriate regulations, in which case, the worker may be paid through another person under written authority given by the worker for the purpose;

Question 26

LC. Art. 105. (b). Direct Payment of Wages. – Wages shall be paid directly to the workers to whom they are due, except:

(xxx xxx)

(b) Where the worker has died, in which case, the employer may […]. The claimants, if they are all of age, shall […], to the exclusion of all other persons. If any of the heirs is a minor, the affidavit shall be […]. The affidavit shall be presented to the employer who shall make payment through the Secretary of Labor and Employment or his representative. The representative of the Secretary of Labor and Employment shall act as referee in dividing the amount paid among the heirs. The payment of wages under this Article shall absolve the employer of any further liability with respect to the amount paid.

Answer 26

LC. Art. 105. (b). Direct Payment of Wages. – Wages shall be paid directly to the workers to whom they are due, except:

(xxx xxx)

(b) Where the worker has died, in which case, the employer may pay the wages of the deceased worker to the heirs of the latter without the necessity of intestate proceedings. The claimants, if they are all of age, shall execute an affidavit attesting to their relationship to the deceased and the fact that they are his heirs, to the exclusion of all other persons. If any of the heirs is a minor, the affidavit shall be executed on his behalf by his natural guardian or next-of-kin. The affidavit shall be presented to the employer who shall make payment through the Secretary of Labor and Employment or his representative. The representative of the Secretary of Labor and Employment shall act as referee in dividing the amount paid among the heirs. The payment of wages under this Article shall absolve the employer of any further liability with respect to the amount paid.

Question 27

LC. Art. 110. Worker Preference in Case of Bankruptcy. – In the event of bankruptcy or liquidation of an employer’s business, his workers shall enjoy […]. Such unpaid wages and monetary claims shall be paid in full before […].

Answer 27

LC. Art. 110. Worker Preference in Case of Bankruptcy. – In the event of bankruptcy or liquidation of an employer’s business, his workers shall enjoy first preference as regards 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.

Question 28

LC. Art. 111. Attorney’s Fees. – (a) In cases of unlawful withholding wages, the culpable party may be assessed attorney’s fees equivalent to […].

(b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of wages, attorney’s fees which […].

Answer 28

LC. Art. 111. Attorney’s Fees. – (a) In cases of unlawful withholding wages, the culpable party may be assessed attorney’s 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, attorney’s fees which exceed ten percent of the amount of wages recovered.

Question 29

SEC. 7. Upon written permission of the […], all private establishments, companies, businesses, and other entities with […] and located within […] shall pay the wages and other benefits of their employees through any of […] fixed by Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines. [R.A. 6727]

Answer 29

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

Question 30

What is the concept of Fair Day Pay?

Answer 30

“Fair Day Pay” or “fair day’s wage for a fair day’s labor” means that “if there is no work performed by the employee there can be no wage or pay unless, of course, the laborer was able, willing and ready to work but was illegally prevented from working.” [Aklan Electronic Cooperative Inc. v. NLRC GR No. 121439].

Question 31

Are employers allowed to interfere with how employees dispose of their wages?

Answer 31

No. Under Art. 112 of the LC, 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.”

Question 32

When are wage deductions allowed?

Answer 32

Wage deductions are allowed if:

(a) worker is insured by the employer and deduction is premium payment; provided there is consent;
(b) union dues where the right to check-off is recognized by the employer and authorized by the affected worker;
(c) when the law authorizes or the Secretary of Labor authorizes via regulation.

[Art. 113 Wage Deductions].

Question 33

Can employers require workers to make deposit for deductions in case of damages or loss?

Answer 33

No. Under Art. 114 Deposits for Loss or Damage, “No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations or business where the practice of making deductions or requiring deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor and Employment in appropriate rules and regulations.”

Question 34

What is the definition of wage distortion?

Answer 34

Wage distortion - 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. [RA 6727]

Wage distortion means the disappearance or virtual disappearance of pay differentials between lower and higher positions in an enterprise because of compliance with a wage order. [P.I. Manufacturing v. P.I. Manufacturing, etc. GR No. 167217]

Question 35

What are the four (4) elements of wage distortion?

Answer 35

The four (4) elements of wage distortion are:

(1) An existing hierarchy of positions with corresponding salary rates;
(2) A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one;
(3) The elimination of the distinction between the two levels; and
(4) The existence of the distortion in the same region of the country. [Bankard Employees Union etc. v. NLRC GR No. 140689].

Question 36

Does the factual existence of wage distortion result in the obligation to rectify it?

Answer 36

It depends. If there is no law providing for the obligation to rectify it, then there is no obligation. In Bankard, the Court held that “The mere factual existence of wage distortion does not, however, ipso facto result to an obligation to rectify it, absent a law or other source of obligation which requires its rectification.” [Bankard Employees Union etc. v. NLRC GR No. 140689].

Question 37

Art. 110. Worker Preference in Case of Bankruptcy. – In the event of bankruptcy or liquidation of an employer’s business, […]. Such unpaid wages and monetary claims shall be paid in full before claims of the government and other creditors may be paid.

Answer 37

Art. 110. Worker Preference in Case of Bankruptcy. – In the event of bankruptcy or liquidation of an employer’s business, his workers shall enjoy first preference as regards their wages and other monetary claims, any provisions of law to the contrary not withstanding. Such unpaid wages and monetary claims shall be paid in full before claims of the government and other creditors may be paid.

Question 38

NCC. Art. 1707. The laborer’s wages shall be a […] or the work done.

Answer 38

NCC. Art. 1707. The laborer’s wages shall be a lien on the goods manufactured or the work done.

Question 39

NCC. Art. 2241. With reference to […], the following claims or liens shall be preferred:

(xxx xxx)

(6) Claims for […], on the […].

(xxx xxx)

In the foregoing cases, if the movables to which the lien or preference attaches have been wrongfully taken, […].

Answer 39

NCC. Art. 2241. With reference to specific movable property of the debtor, the following claims or liens shall be preferred:

(xxx xxx)

(6) Claims for laborers’ wages, on the goods manufactured or the work done.

(xxx xxx)

In the foregoing cases, if the movables to which the lien or preference attaches have been wrongfully taken, the creditor may demand them from any possessor, within thirty days from the unlawful seizure.

Question 40

Art. 2242. With reference to […], the following claims, mortgages and liens shall be preferred, and shall constitute as encumbrance on the immovable or real right:

(xxx xxx)

(3) Claims of […], as well as of […] or other works;

(xxx xxx).

Answer 40

Art. 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 as encumbrance on the immovable or real right:

(xxx xxx)

(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;

(xxx xxx).

Question 41

NCC. Art. 2244. With reference to […], the following claims or credits shall be preferred in the order named:

(xxx xxx)

(2) […] for one year preceding the commencement of the proceedings in insolvency;

(xxx xxx)

(4) […] or their dependents under laws providing for […];

(xxx xxx).

Answer 41

NCC. Art. 2244. With reference to other property, real and personal of the debtor, the following claims or credits shall be preferred in the order named:

(xxx xxx)

(2) Credits for services rendered the insolvent by employees, laborers, or household helpers for one year preceding the commencement of the proceedings in insolvency;

(xxx xxx)

(4) Compensation due the laborers or their dependents under laws providing for indemnity for damages in cases of labor accident, or illness resulting from the nature of the employment;

(xxx xxx).

Question 42

What is the 13th month pay law?

Answer 42

P.D. 851. REQUIRING ALL EMPLOYERS TO PAY THEIR EMPLOYEES A 13th-MONTH PAY

Question 43

P.D. 851. Section 1. Payment of 13-month Pay All employers covered by Presidential Decree No. 851, hereinafter referred to as the “Decree”, shall pay to all their employees receiving a […] a thirteenth-month pay not later than […].

Answer 43

P.D. 851. Section 1. Payment of 13-month Pay All employers covered by Presidential Decree No. 851, hereinafter referred to as the “Decree”, shall pay to all their employees receiving a basic salary of not more than P1,000 a month a thirteenth-month pay not later than December 24 of every year.

Note: this has been amended to accommodate even those who earned more than Php 1,000 a month.

Question 44

P.D. 851. Section 2. Definition of certain terms As used in this issuance.

(a) “Thirteenth-moth pay” shall mean […];
(b) “Basic salary” shall […] but may not include […] granted pursuant to Presidential Decree No. 525 or Letter of Instructions No. 174, […] at the time of the promulgation of the Decree on December 16, 1975.

Answer 44

P.D. 851. Section 2. Definition of certain terms As used in this issuance.

(a) “Thirteenth-moth pay” shall mean one twelfth (1/12) of the basic salary of an employee within a calendar year;
(b) “Basic salary” shall include all remunerations or earnings paid by an employer to an employee for services rendered but may not include cost-of-living allowances granted pursuant to Presidential Decree No. 525 or Letter of Instructions No. 174, profit-sharing payments, and all allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975.

Question 45

P.D. 851. Section 3. Employers covered The Decree shall apply to all employers except to:

(a) […], such as (1) those which are currently incurring substantial losses or (2) in the case of non-profit institutions and organizations, where their income, […], subject to the provision of Section 7 of this issuance;
(b) […], except those corporations operating essentially as private subsidiaries of the Government;
(c) […] or more in a calendar year of its equivalent at the time of this issuance;
(d) […] in relation to such workers; and
(e) Employers of those who are paid on […], except where the workers are paid on […] in which case the employer shall be covered by this issuance insofar as such workers are concerned.

As used herein, workers paid on piece-rate basis shall refer to those who are paid […], without regard to the time spent in producing the same.

The term “its equivalent” as used in paragraph c) hereof shall include […] and other cash bonuses amounting to not less than 1/12th of the basic salary but shall not include […] regularly enjoyed by the employee, as well as non-monetary benefits. Where an employer pays less than 1/12th of the employees basic salary, […].

Answer 45

P.D. 851. Section 3. Employers covered The Decree shall apply to all employers except to:

(a) Distressed employers, such as (1) those which are currently incurring substantial losses or (2) in the case of non-profit institutions and organizations, where their income, whether from donations, contributions, grants and other earnings from any source, has consistently declined by more than forty (40%) percent of their normal income for the last two (2) years, subject to the provision of Section 7 of this issuance;
(b) The Government and any of its political subdivisions, including government-owned and controlled corporations, except those corporations operating essentially as private subsidiaries of the Government;
(c) Employers already paying their employees 13-month pay or more in a calendar year of its equivalent at the time of this issuance;
(d) Employers of household helpers and persons in the personal service of another in relation to such workers; and
(e) Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall be covered by this issuance insofar as such workers are concerned.

As used herein, workers paid on piece-rate basis shall refer to those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without regard to the time spent in producing the same.

The term “its equivalent” as used in paragraph c) hereof shall include Christmas bonus, mid-year bonus, profit-sharing payments and other cash bonuses amounting to not less than 1/12th of the basic salary but shall not include cash and stock dividends, cost of living allowances and all other allowances regularly enjoyed by the employee, as well as non-monetary benefits. Where an employer pays less than 1/12th of the employees basic salary, the employer shall pay the difference.

Question 46

P.D. 851. Section 5. Option of covered employers A covered employer may pay one-half of the 13th-month pay required by the Decree before […] of every year.

In any establishment where a union has been recognized or certified as the collective bargaining agent of the employees therein, the periodicity or frequency of payment of the 13th month pay may be the subject of agreement.

Nothing herein shall prevent employers from giving the benefits provided in the Decree to their employees who are receiving more than One Thousand (P1,000) Pesos a month or benefits higher than those provided by the Decree.

Answer 46

P.D. 851. Section 5. Option of covered employers A covered employer may pay one-half of the 13th-month pay required by the Decree before the opening of the regular school year and the other half on or before the 24th day of December of every year.

In any establishment where a union has been recognized or certified as the collective bargaining agent of the employees therein, the periodicity or frequency of payment of the 13th month pay may be the subject of agreement.

Nothing herein shall prevent employers from giving the benefits provided in the Decree to their employees who are receiving more than One Thousand (P1,000) Pesos a month or benefits higher than those provided by the Decree.

Question 47

P.D. 851. Section 6. Special feature of benefit The benefits granted under this issuance shall not be credited as part of the regular wage of the employees for purposes of determining […].

Answer 47

P.D. 851. Section 6. Special feature of benefit The benefits granted under this issuance shall not be credited as part of the regular wage of the employees for purposes of determining overtime and premium pay, fringe benefits, as well as premium contributions to the State Insurance Fund, social security, medicare and private welfare and retirement plans.

Question 48

Are seafarers covered by the 13th month pay benefit under PD 851?

Answer 48

No, seafarers are not covered by the 13th month pay benefit. This is because seafarers are not regular employees; they are contractual employees. In Millares v. NLRC, the Court held that “[seafarers’] employment is governed by the contracts they sign everytime they are rehired and their employment is terminated when the contract expires.” Since seafarers are not regular employees, the also do not fall under PD 851, or the law that provides for the 13th month pay benefit. PD 851 contemplates the situation of land-based workers, and not of seaferers who generally earn more than domestic land-based workers. [Petroleum Shipping Ltd. v. NLRC GR No. 148130].

Question 49

Are bus drivers and conductors who receive a commission in addition to a fixed or guaranteed wage or salary entitled to the 13th-month pay benefit?

Answer 49

Yes. In King of Kings Transport Inc v. Mamac, the Court held “[B]us drivers and conductors who are paid a fixed or guaranteed minimum wage in case their commission be less than the statutory minimum, and commissions only in case where they are over and above the statutory minimum, are entitled to a 13th-month pay equivalent to one-twelfth of their total earnings during the calendar year.” [King of Kings Transport Inc. v. Mamac GR No. 166208].

Question 50

Are personal drivers entitled to 13th month pay? If no, can they still receive 13th month pay?

Answer 50

No. Drivers are not entitled to 13th month pay. In Ultra Villa Food Haus v. Geniston, the Court stated that “The Revised Guidelines on the Implementation of the 13th Month Pay Law also excludes employers of household helpers from the coverage of Presidential Decree No. 851.” Therefore, personal drivers are not entitled to 13th-month pay.

However, they can still receive 13th-month pay. In Ultra Villa Food Haus, the Court still awarded 13th-month pay in view of the employer’s practice of according the employee 13th-month pay. The employer in the case admitted that she gave private respondent 13th month pay every December. [Ultra Villa Food Haus v. Geniston GR No.120473].

Question 51

Are sales commissions included in the 13th month pay?

Answer 51

It depends if they form part of the integral portion of the basic salary structure. In Phil. Duplicators Inc. v. NLRC, it was held that “sales commissions which are effectively an integral portion of the basic salary structure of an employee, shall be included in determining [the] 13th month pay.” [Phil Duplicators Inc. v. NLRC GR No.110068].

Question 52

Are employers required to pay bonus beyond the 13th month pay?

Answer 52

No. In Kamaya Port Hotel v. NLRC, the Court held that “An employer may not be obliged to assume a ‘double burden’ of paying the 13th month pay in addition to bonuses or other benefits aside from the employee’s basic salaries or wages. Restated differently, [the Court ruled] that an employer may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the employee’s basic salaries or wages in addition to the required 13th month pay.” [Kamaya Port Hotel v NLRC GR No. 75289].

Question 53

LC. Art 96 as amended by RA 11360. Service Charges. – All service charges collected by hotels, restaurants and similar establishments shall be […].

In the event that the minimum wage is increased by law or wage order, […].

Answer 53

LC. Art 96 as amended by RA 11360. Service Charges. – All service charges collected by hotels, restaurants and similar establishments shall be distributed completely and equally among the covered workers except managerial employees.

In the event that the minimum wage is increased by law or wage order, service charges paid to the covered employees shall not be considered in determining the employer’s compliance with the increased minimum wage.

Question 54

LC. Art. 302. par. 1. Retirement. – Any employee may be retired upon […] established in the collective bargaining agreement or other applicable employment contract.

Answer 54

LC. Art. 302. par. 1. Retirement. – Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.

Question 55

LC. Art. 302. par. 3. Retirement – (xxx xxx) “In the absence of […] of employees in the establishment, an employee upon reaching the […], who has served at least […], may retire and shall be entitled to retirement pay equivalent to at least […], a fraction of at least six (6) months-being considered […].

Answer 55

LC. Art. 302. par. 3. Retirement – (xxx xxx) “In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (½) month salary for every year of service, a fraction of at least six (6) months-being considered as one (1) whole year.

Question 56

Who are eligible for retirement under Art. 302 of the Labor Code?

Answer 56

The following employees are eligible for retirement:

• Has reached the age of sixty (60) years but not beyond sixty-five (65) years;
• Has served at least five (5) years in the establishment;
• There is no retirement plan or agreement providing for retirement benefits of employees in the establishment. (If there is, then the eligibility for retirement will be subject to the retirement plan and the agreement – however, compulsory age of retirement is still 65).

Question 57

How much is an eligible employee entitled to during retirement?

Answer 57

According to Art. 302 of the LC, the retiring employee shall be entitled to retirement pay equivalent to at least one-half (½) month for every year of service where a fraction of at least six (6) months-being considered as one (1) whole year.

Question 58

What does ‘one-half (½) month salary’ mean?

Answer 58

According to Art. 302 of the LC, ‘one-half (½) month salary’ shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.

Question 59

At what age are underground and surface mining employees eligible for retirement?

Answer 59

Art. 302 LC. An underground or surface mining employee is eligible retirement upon:

• reaching the age of fifty (50) years or more, but not beyond sixty (60) years (60 being declared the compulsory retirement age for both underground and surface mine workers);
• having served at least five (5) years as underground or surface mine worker.

Question 60

Who are surface mine workers for the purposes of interpreting Art. 302 of the Labor Code provision on retirement?

Answer 60

Surface mine workers shall only include mill plant workers, electrical, mechanical and tailings pond personnel.

Question 61

Who are exempt from the application of Art. 302 Retirement of the Labor Code?

Answer 61

Retail, service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of Art. 302 LC.

Question 62

What are the kinds of retirement schemes?

Answer 62

There are three kinds of retirement schemes. The first type is compulsory and contributory in character. The second type is one set up by agreements between the employer and the employees in collective bargaining agreements or other agreements between them. The third type is one that is voluntarily given by the employer, expressly as in an announced company policy or impliedly as in a failure to contest the employee’s claim for retirement benefits. [Gerlach v. Reuters Ltd. Phils. GR No. 148542].

Question 63

How are retirement laws construed?

Answer 63

“[I]t is axiomatic that retirement laws are liberally construed in favor of the persons intended to be benefited, however, such interpretation cannot be made in this case light of the clear lack of consensual and statutory basis of the grant of retirement benefits to petitioner.” [Lopez v. National Steel Corp. GR No. 149674; Salomon v Ass’n. of INternational Shipping Lines GR No. 156317].

Lopez: Because there was no consensual or statutory basis to grant the petitioner’s demand that she be paid her retirement benefits along with her retrenchment pay, the Court held that she cannot be entitled to retirement benefits.

Salomon: The Court cannot grant the retirement benefits because the CBA prescribes that the employees are entitled only to either the separation pay, if they are terminated for cause, or optional retirement benefits, if they rendered at least 15 years of continuous service. Here, petitioners were separated from the service for cause.

Question 64

What does “one-half month salary” include of?

Answer 64

For purpose of computing retirement pay, “one-half month salary” shall include all of the following:

1. 15 days salary based on the latest salary rate;
2. cash equivalent of 5 days of service incentive leave (or vacation leave);
3. 1/12 of the 13th month pay;
   
   1. other benefits as may be agreed upon by employer and employee for inclusion. [Reyes v. NLRC GR No. 160233].

Question 65

What shall not be included in “one-half month salary” for purpose of computing retirement pay?

Answer 65

It shall not include the following:

1. cost of living allowance;
2. profit-sharing payments; and
3. other monetary benefits which are not considered as part of or integrated into the regular salary of the employees. [Reyes v. NLRC GR No. 160233].