University of Santo Tomas
Faculty of Civil Law
Labor Law
Questions Asked
More Than Once
(QuAMTO 2016)
*QUAMTO is a compilation of past bar questions with answers as
suggested by UPLC and other distinct luminaries in the academe,
and updated by the UST Academics Committee to fit for the 2016
Bar Exams.
*Bar questions are arranged per topic and were selected based on
their occurrence on past bar examinations from 1990 to 2015.
A
CADEMICS
C
OMMITTEE
K
ATRINAG
RACEC.
O
NGOCOM
ANAGINGE
DITORR
EUBENB
ERNARDM.
S
ORIANOE
RINNM
ARIELC.
P
EREZM
A.
N
INNAR
OEMA.
B
ONSOLE
XECUTIVEC
OMMITTEER
EUBENB
ERNARDM.
S
ORIANOJ
UANP
AOLOM
AURINOR.
O
LLEROL
AYOUT ANDD
ESIGNJ
OHNR
EEE.
D
OCTORQ
U
AMTO
C
OMMITTEE
M
EMBERS
CALOS
LEANDRO
L.
ARRIERO
ELISE
MARIE
B.
BERTOS
GABRIELA
LOUISE
O.J.
CANDELARIA
WARREN RODANTE D. GUZMAN
MARY GRACE D. LUNA
LEAN
JEFF
M.
MAGSOMBOL
JUAN
PAOLO
MAURINO
R.
OLLERO
ANN CAIRA C. SURIO
MARY
JANE
D.
VILARAY
A
TTY.
A
LC
ONRADB.
E
SPALDON1
LABOR LAW
FUNDAMENTAL PRINCIPLES AND POLICIES
Q: How do the provisions of the law on labor relations interrelate, if at all, with the provisions pertaining to labor standards? (2003)
A: There are two classifications of labor legislations. They
are labor standards which provides for the minimum standards of terms and conditions of work; and labor relations which focuses on the regulation and stabilization of the relationship between employers and employees. Instead of being mutually exclusive, these two classifications work together in forming the entire legal framework of Philippine labor laws. An example wherein these two concepts are interrelated is during collective bargaining. In instances of collective bargaining, labor standards prescribe the minimum terms and conditions of work; and as such, the employer cannot negotiate for terms and conditions lower than that of the prescribed minimum. On the other hand, labor relations govern the employer-employee relationship by providing for Collective Bargaining Negotiations, which is an avenue for the parties to settle and compromise on their differences.
CONSTITUTIONAL PROVISIONS
Article XIII, Secs. 1, 2, 3, 13, 14
Q: What are the rights of an employer and an employee? (1996)
A: An employer is a person who employs the services of
another and pays for their wages and salaries. As such, Art. XIII, Sec. 3 of the Constitution provides and guarantees them with the following rights:
1. Reasonable return of investment 2. Expansion
3. Growth
On the other hand, an employee is a person who works under the employ of another in exchange of a valuable consideration in the form of wages, salaries, benefits, etc. Art. XIII, Sec. 3 of the Constitution similarly provides and similarly guarantees them the following rights:
1. Security of tenure 2. Receive a living wage 3. Humane conditions of work
4. Just share in the fruits of production 5. Right to self-organization
6. Conduct collective bargaining or negotiation with management
7. Engage in peaceful concerted activities including strike
8. Participate in policy and decision making process
LABOR CODE
Article 4
Q: Clarito, an employee of Juan, was dismissed for allegedly stealing Juan’s wristwatch. In the illegal dismissal case instituted by Clarito, the Labor Arbiter, citing Article 4 of the Labor Code, ruled in favor of Clarito upon finding Juan’s testimony doubtful. On appeal, the NLRC reversed the Labor
Arbiter holding that Article 4 applies only when the doubt involves "implementation and interpretation" of the Labor Code provisions. The NLRC explained that the doubt may not necessarily be resolved in favor of labor since this case involves the application of the Rules on Evidence, not the Labor Code. Is the NLRC correct? Reasons. (2009)
A: The NLRC is not correct. It is well settled doctrine that
if doubts exist between the evidence presented by the employer and the employee, the scale of justice must be tilted in favor of the latter. It is a time honored rule that in controversies between laborer and master, doubts necessarily arising from the evidence or in the implementation of the agreement and writing should be resolved in favor of labor.
Article 212
Q: Who are the managerial, supervisory and rank and-file employees? (1996, 2003)
A: "MANAGERIAL EMPLOYEE" is one who is vested with
powers or prerogatives to lay down and execute management policies or to hire, transfer, suspend, layoff, recall, discharge, assign or discipline employees.
SUPERVISORY EMPLOYEES are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment.
All employees who are neither managerial nor supervisory employees are considered RANK AND FILE EMPLOYEES. (Art. 212(m), Labor Code).
RECRUITMENT AND PLACEMENT
RECRUITMENT OF LOCAL AND MIGRANT WORKERS Q: Phil-Norksgard Company, Inc., a domestic corporation engaged in the optics business, imported from Sweden highly sophisticated and sensitive instruments for its laboratory. To install the instruments and operate them, the company intends to employ Borja Anders, a Swedish technician sojourning as a tourist in the Philippines.
As lawyer of the company, what measures will you take to ensure the legitimate employment of Borja Anders and at the same time protect Philippine labor. Discuss fully. (1995)
A: As the lawyer of the said company, in order to ensure
the legitimacy of hiring Borja Anders, I will consider the requisites in hiring non-resident aliens which are provided under Art. 40. Firstly, I would ensure that a determination of the non-availability of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired is conducted. Subsequently, I would ascertain that an employment permit issued by the Department of Labor is obtained by Borja Anders.
Illegal Recruitment (Sec. 5, R.A. No. 10022)
Q: A was approached for possible overseas deployment to Dubai by X, an interviewer of job applicants for Alpha Personnel Services, Inc., an
2
overseas recruitment agency. X required A to submit certain documents (passport, NBI clearance, medical certificate) and to pay P25,000 as processing fee. Upon payment of the said amount to the agency cashier, A was advised to wait for his visa. After five months, A visited the office of Alpha Personnel Services, Inc. during which X told him that he could no longer be deployed for employment abroad. A was informed by the Philippine Overseas Employment Administration (POEA) that while Alpha Personnel Services, Inc. was a licensed agency, X was not registered as its employee, contrary to POEA Rules and Regulations. Under POEA Rules and Regulations, the obligation to register personnel with the POEA belongs to the officers of a recruitment agency. (2010)
a. May X be held criminally liable for illegal recruitment? Explain.
A: No. X performed his work with the knowledge that he
works for a licensed recruitment agency. He is in no position to know that the officers of said recruitment agency failed to register him as its personnel (People v. Chowdur, G.R. No. 129577-80, February 15, 2000). The fault not being attributable to him, he may be considered to have apparent authority to represent Alpha in recruitment for overseas employment.
b. May the officers having control, management or direction of Alpha Personnel Services, Inc. be held criminally liable for illegal recruitment? Explain.
A: Yes. Alpha, being a licensed recruitment agency, still
has obligations to A for processing his papers for overseas employment. Under Section 6(m) of R.A. 8042, failure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker’s fault, amounts to illegal recruitment.
License v. Authority
Q: A Recruitment and Placement Agency declared voluntary bankruptcy. Among its assets is its license to engage in business. Is the license of the bankrupt agency an asset which can be sold in public auction by the liquidator? (1998)
A: No. Art. 29 provides for the rules on the
non-transferability of license or authority. The said provision states that no license or authority shall be used directly or indirectly by any person other than the one in whose favour it was issued or at any place other than that stated in the license or authority, nor may such license or authority be transferred, conveyed or assigned to any other person or entity.
Therefore, if the law prohibits transfer, conveyance or assignment, then it can be inferred that it all the more prohibits the sale of a license or authority as it is a permanent transfer of the rights and privileges granted to a specific individual under the license or authority. Illegal Recruitment in Large Scale
Q: Maryrose Ganda's application for the renewal of her license to recruit workers for overseas
employment was still pending with the Philippine Overseas Employment Administration (POEA). Nevertheless, she recruited Alma and her three sisters, Ana, Joan, and Mavic, for employment as housemates in Saudi Arabia. Maryrose represented to the sisters that she had a license to recruit workers for overseas employment. Maryrose also demanded and received P30,000.00 from each of them for her services. However, Maryrose's application for the renewal of her license was denied, and consequently failed to employ the four sisters in Saudi Arabia. The sisters charged Maryrose with large scale illegal recruitment. Testifying in her defense, Maryrose declared that she acted in good faith because she believed that her application for the renewal of her license would be approved. Maryrose adduced in evidence the Affidavits of Desistance which the four private complainants had executed after the prosecution rested its case. In the said affidavits, they acknowledge receipt of the refund by Maryrose of the total amount of P120,000.00 and indicated that they were no longer interested to pursue the case against Maryrose. Resolve the case with reasons. (2005) A: Yes, the charges against Maryrose will prosper. First,
her act of recruiting the sisters while her license was still pending renewal was in violation of the Migrant Workers’ Act of 1995. Under this statute, illegal recruitment is committed by a non-license or non-holder of authority who offers or promises employment abroad in consideration of a fee. In the case at bar, Maryrose could be considered as a non-licensee or non-holder of authority for her license to recruit was still pending renewal. Thus, for all intents and purposes, during the time that she recruited the sisters her license is to be considered expired and non-existent for it is still subject to the approval or denial of the proper government agency. The subsequent denial of her application to renew is immaterial for what is important is the status of the license at the time the recruitment happened. Nonetheless, the subsequent denial serves to bolster the sisters’ claims that Maryrose was an illegal recruiter. Secondly, the sisters are correct in charging Maryrose with large scale illegal recruitment. Art. 38 (b) provides that illegal recruitment is considered committed in large scale when it is committed against three or more persons either individually or collectively. In the case at bar, the recruitment of Ana, Joan and Mavic fall within the second circumstance for they were recruited as a group.
Lastly, the claims of Maryrose that she acted in good faith does not hold water for the Migrant Workers’ Act of 1995 is a special penal law which is in the nature of a malum prohibitum. Under this nature, good faith is not a defense for what is penalized is the commission of the criminal act and not the intent of the offender. (People v. Saulo, G.R. No. 125903, November 15, 2000).
Illegal Recruitment as Economic Sabotage
Q: When is illegal recruitment considered a crime of economic sabotage? Explain briefly. (2002, 2015) A: Under Art. 38 (b), Illegal recruitment is considered as
a crime of economic sabotage when it is committed by a syndicate composed of three or more perpetrators or when it is committed in large scale against three or more persons individually or as a group.
3
Q: What qualifying circumstances will convert "illegal recruitment" to "economic sabotage," thus subjecting its perpetrator or perpetrators to a penalty of life imprisonment and a fine of at least P500,000.00? Please explain your answer briefly. (2005)
A: An illegal recruitment is considered to have evolved
into economic sabotage when it is committed by a syndicate or committed in large scale. Illegal recruitment is deemed to have been committed by a syndicate when the recruitment is carried out by a group of three or more persons conspiring and/or confederating with one another in carrying out any act under Art. 38. On the other hand, it is deemed committed in large scale if it is committed against three or more persons individually or as a group. (Alcantara, 2009).
Liabilities
Local Recruitment Agency
Q: Is a corporation, seventy percent (70%) of the authorized and voting capital of which is owned and controlled by Filipino citizens, allowed to engage in the recruitment and placement of workers, locally or overseas? Explain briefly. (2002, 2015)
A: No. The minimum requirement of authorized and
voting capital stock in a juridical entity to be able to engage in the recruitment of workers locally and overseas is 75% as provided under Art. 27.
REGULATION AND ENFORCEMENT
Suspension or Cancellation of License or Authority (Art. 35, Labor Code)
Q: Concerned Filipino contract workers in the Middle East reported to the Department of Foreign Affairs (DFA) that XYZ, a private recruitment and placement agency, is covertly transporting extremists to terrorist training camps abroad. Intelligence agencies of the government allegedly confirmed the report.
Upon being alerted by the DFA, the Department of Labor and Employment issued orders cancelling the licenses of XYZ, and imposing an immediate travel ban on its recruits for the Middle East. XYZ appealed to the Office of the President to reverse and set aside the DOLE orders, citing damages from loss of employment of its recruits, and violations of due process including lack of notice and hearing by DOLE. The DOLE in its answer claimed the existence of an emergency in the Middle East which required prompt measures to protect the life and limb of OFWs from a clear and present danger posed by the ongoing war against terrorism.
Should the DOLE orders be upheld or set aside? (2004)
A: Yes, the DOLE order must be upheld. Art. 35 bestows
upon the Secretary of Labor the power to suspend or cancel the license or authority or recruitment agencies to recruit employees for overseas employment for violations of the rules and regulations issued by DOLE, the Bureau of Employment Services, the Overseas Employment Development Board, and the National
Seamen Board, for violations of the provisions of the Labor Code and other Presidential Decrees, the Revised Penal Code, the Anti-Dummy Law, General Orders and Letters of Instructions.
Currently, we have the Human Security Act of 2007 which penalizes individuals who engage in the acts of terrorism either as principals, accomplices or accessories. In this case the Act of XYZ clearly falls within the said law. Therefore, in the interest of safeguarding the public from acts of terrorism, it is but justified that DOLE had cancelled its license.
Prohibited Activities
Q: Wonder Travel and Tours Agency (WTTA) is a well-known travel agency and an authorized sales agent of the Philippine Air Lines. Since majority of its passengers are overseas workers, WTTA applied for a license for recruitment and placement activities. It stated in its application that its purpose is not for profit but to help Filipinos find employment abroad. Should the application be approved? (2006)
A: No. The application should be disapproved. The law
clearly states that travel agencies and sales agencies of airline companies are prohibited from engaging in the business of recruitment and placement of workers for overseas employment whether for profit or not. (Article 26, Labor Code).
In the present case, it is clear that WTTA is the authorized sales agency of PAL; and thus falling within the prohibition of Art. 26. Furthermore, its intention of providing Filipinos with employment abroad will not hold water to approve its application no matter how noble it is, because Art. 26 provides for an absolute prohibition and does not place any merit on the intention of the applicant.
LABOR STANDARDS
HOURS OF WORK
Coverage/Exclusions (Art. 82, Labor Code)
Q: Gil Bates, a computer analyst and programmer of Hard Drive Company, works eight hours a day for five days a week at the main office providing customers information technology assistance.
On Saturdays, however, the company requires him to keep his cellular phone open from 8:00 A.M. to 5:00 P.M. so that the Management could contact him in case of heavy work load or emergency problems needing his expertise. May said hours on Saturdays be considered compensable working hours “while on call”? If so, should said compensation be reported to the Social Security System? (2004)
A: Said hours on Saturdays should be considered as
compensable working hours "while on call". In accordance with the Rules and Regulations Implementing the Labor Code, an employee who is not required to leave word at his home or with company officials as to where he may be reached is not working while on call. But in the question, Gil Bates was required to keep his cell phone open from 8:00 A.M. to 5:00 P.M. Therefore, Bates should be considered as working while on call, if he cannot use effectively and gainfully for his own purpose the time
4
from 8:00 A.M. to 5:00 P.M. on Saturdays when he is required to keep his cellphone open.
ALTERNATIVE ANSWER:
The said hours are not compensable. An employee who is kept “within reach” through a mobile telephone or other contact device is not considered to be in work status. (Azucena, 2013)
The compensation actually received by Bates for working while on call on Saturdays should be reported to the Social Security System because under the Social Security Law, compensation means "all actual remuneration for employment."
Normal Hours of Work Compressed Work Week
Q: Under what conditions may a "compressed work week" schedule be legally authorized as an exception to the "eight-hour a day" requirement under the Labor Code? (2005)
A: "Compressed work week" is resorted to by the
employer to prevent serious losses due to causes beyond his control, such as when there is a substantial slump in the demand for his goods or services or when there is lack of raw materials (Explanatory Bulletin on the Reduction of Workdays on Wages Issued by DOLE, July 23, 1985). The conditions for an allowable "compressed work week" are the following: the workers agree to the temporary change of work schedule and they do not suffer any loss of overtime pay, fringe benefits or their weekly or monthly take-home pay. (DOLE Explanatory Bulletin on the Reduction of Workdays on Wages issued on July 23, 1985).
Overtime Work, Overtime Pay
Q: Danilo Flores applied for the position of driver in the motor-pool of Gold Company, a multinational corporation. Danilo was informed that he would frequently be working overtime as he would have to drive for the company's executives even beyond the ordinary eight-hour work day. He was provided with a contract of employment wherein he would be paid a monthly rate equivalent to 35 times his daily wage, regular sick and vacation leaves, 5 day-leave with pay every month and time off with pay when the company's executives using the cars do not need Danilo's service for more than eight hours a day, in lieu of overtime. Are the above provisions of the contract of employment in conformity with, or violative of, the law? (1997)
A: Except for the provision that Danilo shall have time off
with pay when the company's executives using the cars do not need Danilo's service for more than eight hours a day, in lieu of overtime, the provisions of the contract of employment of Danilo are not violative of any labor law because they instead improve upon the present provisions of pertinent labor laws.
Thus, the monthly rate equivalent to 35 times the daily wage may be sufficient to include overtime pay. There is no labor law requiring the payment of sick and vacation leaves except the provision for a five-day service incentive leave in the Labor Code. The 5-day-leave with
pay every month has no counterpart in Labor Law and is very generous.
As for the provision in Danilo's contract of employment that he shall receive time off with pay in lieu of overtime, this violates the provision of the Labor Code which states that undertime work on any particular day shall not be offset by overtime work on any other day. Permission given to the employer to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation required by the Labor Code.
Q: Socorro is a clerk-typist in the Hospicio de San Jose, a charitable institution dependent for its existence on contributions and donations from well wishers. She renders work eleven (11) hours a day but has not been given overtime pay since her place of work is a charitable institution. Is Socorro entitled to overtime pay? Explain briefly. (2002)
A: Yes. Socorro is entitled to overtime compensation. She
does not fall under any of the exceptions to the coverage of Article 82 (Hours of Work). The Labor Code is equally applicable to non-profit institutions. A covered employee who works beyond eight (8) hours is entitled to overtime compensation.
Q: A case against an employer company was filed charging it with having violated the prohibition against offsetting undertime for overtime work on another day. The complainants were able to show that, pursuant to the Collective Bargaining Agreement (CBA), employees of the union had been required to work "overtime" on Saturday but were paid only at regular rates of pay on the thesis that they were not required to complete, and they did not in fact complete, the eight-hour work period daily from Monday through Friday. Given the circumstances, the employer contended that the employees were not entitled to overtime compensation, i.e., with premium rates of pay. Decide the controversy. (2003)
A: Art. 88 of the Labor Code provides that undertime
work on any particular day shall not be offset by overtime work on any other day. The CBA, the law between the parties and the Union has shown that the employees are required to render overtime work on Saturdays, thus the contention of the employer is not tenable. The employer cannot use the undertime incurred from Monday through Friday to offset the overtime on Saturday. Hence, the employees are entitled to overtime compensation, i.e. premium rates of pay on Saturday.
Q: After working from 10 a.m. to 5 p.m. on a Thursday as one of 5,000 employees in a beer factory, A hurried home to catch the early evening news and have dinner with his family. At around 10 p.m. of the same day, the plant manager called and ordered A to fill in for C who missed the second shift. (2010)
a. May A validly refuse the plant manager’s directive? Explain.
A: Yes. A may validly refuse to fill in for C. A may not be
compelled to perform overtime work considering that the plant manager’s directive is not for an emergency overtime work, as contemplated under Article 89 of the Labor Code.
5
b. Assuming that A was made to work from 11 p.m. on Thursday until 2 a.m. on Friday, may the company argue that, since he was two hours late in coming to work on Thursday morning, he should only be paid for work rendered from 1 a.m. to 2 a.m.? Explain?
A: No. Undertime is not off-set by overtime. (Art. 88,
Labor Code).
Q: LKG Garments Inc. makes baby clothes for export. As part of its measures to meet its orders, LKG requires its employees to work beyond eight (8) hours everyday, from Monday to Saturday. It pays its employees an additional 35% of their regular hourly wage for work rendered in excess of eight (8) hours per day. Because of additional orders, LKG now requires two (2) shifts of workers with both shifts working beyond eight (8) hours but only up to a maximum of four (4) hours. Carding is an employee who used to render up to six (6) hours of overtime work before the change in schedule. He complains that the change adversely affected him because now he can only earn up to a maximum of four (4) hours' worth of overtime pay. Does Carding have a cause of action against the company? (2015)
A: No. A change in work schedule is a management
prerogative of LKG. Thus, Carding has no cause of action against LKG if, as a result of its change to two (2) shifts, he now can only expect a maximum of four (4) hours overtime work. Besides, Art. 87 of the Labor Code does not guarantee Carding a certain number of hours of overtime work. In Manila Jockey Employees’ Union v. Manila Jockey Club (G.R. No. 167760, March 7, 2007), the Supreme Court held that the basis of overtime claim is an employee’s having been “permitted to work”. Otherwise, as in this case, such is not demandable.
Night Work (R.A. No. 10151), Night Shift Differential
Q: As a tireman in a gasoline station, open twenty- four (24) hours a day with only five (5) employees, Goma worked from 10:00 P.M. until 7:00 A.M. of the following day. He claims he is entitled to night shift differential. Is he correct? Explain briefly. (2002) A: No. Under Art 86 of the Labor Code, night shift
differential shall be paid to every employee for work performed between 10:00 o'clock in the evening to six o'clock in the morning. The Omnibus Rules Implementing the Labor Code (In Book III, Rule II dealing with night shift differential) provides that the provisions on night shift differential shall NOT apply to employees of "retail and service establishments regularly employing not more than five (5) workers". Because of this provision, Goma is not entitled to night shift differential because the gasoline station where he works has only five employees.
WAGES
Q: Lita Cruz, a full time professor in San Ildefonso University, is paid on a regular monthly basis. Cruz teaches for a period of ten months in a school year, excluding the two months summer break.
During the semestral break, the University did not pay Lita Cruz her emergency Cost of Living allowance (ECOLA) although she received her regular salary since the semestral break was allegedly not an
integral part of the school year and no teaching service were actually rendered by her. In short, the University invoked the principle of "no work, no pay". Lita Cruz seeks your advice on whether or not she is entitled to receive her ECOLA during semestral breaks. How would you respond to the query? (1997) A: I would respond by saying that her entitlement to
mandatory living allowances during semestral breaks now depends on her existing CBA with the university. The law granting ECOLA had long been repealed as the mandatory living allowances previously granted in the repealed PD’s are already integrated by law in the basic salary of employees.
Q: Are the principal officers of a corporation liable in their personal capacity for non-payment of unpaid wages and other monetary benefits due its employees? (1997)
A: As a general rule, the obligations incurred by the
principal officers and employees of a corporation are not theirs but the direct accountabilities of the corporation they represent. However, SOLIDARY LIABILITIES may at times be incurred but only when exceptional circumstances warrant such as, generally, in the following cases, when directors and trustees or, in appropriate cases, the officers of a corporation:
1. Vote for or assent to patently unlawful acts of the corporation;
2. Act in bad faith or with gross negligence in directing the corporate affairs;
3. Are guilty of conflict of Interest to the prejudice of the corporation, its stockholders or members, and other persons. In labor cases, the Supreme Court has held corporate directors and officers solidarily liable with the corporation for the termination of employment of employees done with malice or bad faith. (Sunio v. NLRC, G.R. No. L-57767, January 31, 1984; General Bank and Trust Co. v. Court of Appeals, 135 SCRA 659).
Q: The rank-and-file union staged a strike in the company premises which caused the disruption of business operations. The supervisors union of the same company filed a money claim for unpaid salaries for the duration of the strike, arguing that the supervisors' failure to report for work was not attributable to them. The company contended that it was equally faultless, for the strike was not the direct consequence of any lockout or unfair labor practice. May the company be held liable for the salaries of the supervisor? Decide (2008)
A: No, I will apply the “No work, No pay” principle. The
supervisors are not entitled to their money claim for unpaid salaries, as they should not be compensated for services skipped during the strike of the rank-and-file union. The age-old rule governing the relation between labor and capital, or management and employee of a “fair day’s wage for a fair day’s labor” remains as the basic factor in determining employees’ wages. (Aklan Electric Cooperative, Inc. v. NLRC, G.R. No.121439, January 25, 2000).
Q: Benito is the owner of an eponymous clothing brand that is a top seller. He employs a number of male and female models who wear Benito's clothes in promotional shoots and videos. His deal with the models is that Benito will pay them with 3 sets of free
6
clothes per week. Is this arrangement allowed? (2015)
A: No. The arrangement is not allowed. The models are
Benito’s employees. As such, their services are required to be paid only in legal tender, even when expressly requested by the employee (Art. 102, Labor Code). Hence, no lawful deal in this regard can be entered into by and between Benito and his models.The three (3) sets of clothes, regardless of value, are in kind; hence, the former’s compensation is not in the form prescribed by law.
ALTERNATIVE ANSWER:
The models are not employees, therefore, Art. 102 of the Labor Code do not apply. The payment does not have to be in legal tender.
Wage v. Salary
Q: Distinguish "salary" from "wages." (1994)
A: In the case of GAA v. Court of Appeals (G.R. No. L-44169,
Dec. 3, 1985), the Supreme Court had the opportunity to distinguish salary and wages. According to the Supreme Court, the term wages refer to the compensation given in consideration of manual labor, skilled or unskilled. On the other hand, salary denotes a compensation for a higher degree of employment.
Q: Are salary subject to attachment and execution? (1994)
A: In GAA v. Court of Appeals (G.R. No. L-44169, Dec. 3,
1985), the Supreme Court ruled that by virtue of Art. 1708 of the Civil Code, it is only wages, not salaries that are exempted from attachment and execution. The said provision specifically states that, a laborer’s wage shall not be subject to execution or attachment, except for debts incurred for food, shelter, clothing and medical attendance.
Note: The distinction between salary and wage in GAA v.
Court of Appeals (G.R. No. L-44169, Dec. 3, 1985) was for the purpose of Article 1708 of the Civil Code which mandates that, “the laborer’s wage shall not be subject to execution or attachment, except for debts incurred for food, shelter, clothing and medical attendance.” In labor law, however, the distinction appears to be merely semantics. That wage and salary are synonymous has been settled in Songco v. National Labor Relations Commission (G.R. No. L-50999, March 23, 1990). Broadly, the word “salary” means a recompense or consideration made to a person for his pains or industry in another man’s business. Whether it be derived from “salarium,” or more fancifully from “sal,” the pay of the Roman soldier, it carries with it the fundamental idea of compensation for services rendered. Indeed, there is eminent authority for holding that the words “wages” and “salary” are in essence synonymous. (Equitable Banking Corporation v. Sabac, G.R. No. 164772, June 8, 2006). Minimum Wage of Workers Paid by Results
Workers Paid by Results
Q: TRX, a local shipping firm, maintains a fleet of motorized boats plying the island barangays of AP, a coastal town. At day’s end the boat operators/crew
members turn over to the boat owner their cash collections from cargo fees and passenger fares, less the expenses for diesel fuel, food, landing fees and spare parts. Fifty percent (50%) of the monthly income or earnings derived from the operations of the boats are given to the boatmen by way of compensation. Deducted from the individual shares of the boatmen are their cash advance and peso value of their absences, if any.
Are these boatmen entitled to overtime pay, holiday pay, and 13th month pay? (2004)
A: No. The boatmen are considered as workers who are
paid by results. More specifically, they are task workers who are paid not based on the number of units produced, but are paid based on the completion of their task, with appropriate deductions based on circumstances such as road and traffic conditions. (Adriano Quintos, et al. v. D.D. Transportation Co., NLRC Case No. RB-IV-20941, May 31, 1979). In the case at bar, the boatmen’s payment differs depending on conditions such as the increase or decrease of the price of diesel, food expenses, landing fees and spare parts.
In connection, their payment although being direct remunerations or compensation for their service cannot be considered as wages for they do not partake the nature of wages as defined by the laws on labor. Instead, their payment is considered as commissions; and as held by the Supreme Court in the case of King of Kings Transport, Inc. et al. v. Mamac, (GR No. 166208, June 29, 2007), workers who are paid by commission are not entitled to
the 13th month pay.
Deductions from Wages
Q: An explosion in a mine site resulted in the death of fifty (50) miners. At the time of the accident
1. The Mining Company has not yet paid the wages, overtime, holiday and rest day compensation of the deceased miners;
2. All the deceased miners owed the Miners Cooperative Union sums of money;
3. The Mining Company was served by a sheriff Writs of Garnishment of Wages of some of the deceased miners by virtue of final Judgments in several collection suits.
After the accident, the wives, paramours, brothers, sisters and parents of the deceased miners filed their claims for unpaid wages, overtime, holiday and rest day compensation. The Company has acknowledged its obligations. However, it is in a quandary as to how to adjudicate the conflicting claims; and whether it can deduct from the monies due the miners their unpaid debts with the credit union.
How will you advise the mining company on the following:
a. Can the Mining Company defer payment of the money claims until an appropriate court has ruled on the conflicting claims?
A: No. Art. 105 (b) provides that 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
7
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.
b. Can the Mining Company deduct from the amount due to each miner an amount equivalent to their debt and remit the same to the Credit Union? (1998)
A: No. As a general rule Art 113 provides that no
employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees. However, by way of exception, Art. 113 (b) provides that for union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned.
The case at bar falls within the general rule for there was no showing that the dead miners had authorized their employer to deduct from their wages their unpaid union dues. Moreover there can no longer be any authorization made for the only persons recognized by law who can make the authorization are already dead.
Q: A worked as a room boy in La Mallorca Hotel. He sued for underpayment of wages before the NLRC, alleging that he was paid below the minimum wage. The employer denied any underpayment, arguing that based on long standing, unwritten policy, the Hotel provided food and lodging to its housekeeping employees, the costs of which were partly shouldered by it and the balance was charged to the employees. The employees’ corresponding share in the costs was thus deducted from their wages. The employer concluded that such valid deduction naturally resulted in the payment of wages below the prescribed minimum. If you were the Labor Arbiter, how would you rule? Explain. (2010)
A: I will rule in favor of A. Even if food and lodging were
provided and considered as facilities by the employer, the employer could not deduct such facilities from its workers’ wages without compliance with the law (Mayon Hotel & Restaurant v. Adana, G.R. No. 157634, May 16, 2005). In Mabeza v. NLRC (G.R. No. 118506, April 18, 1997), the Supreme Court held that the employer simply cannot deduct the value from the employee’s wage without satisfying the following:
a. Proof that such facilities are customarily furnished by the trade;
b. The provision of deductible facilities is voluntarily accepted in writing by the employee; and
c. The facilities are charged at fair and reasonable value.
Q: Gamma Company pays its regular employees P350.00 a day, and houses them in a dormitory inside its factory compound in Manila. Gamma Company also provides them with three full meals a day. In the course of a routine inspection, a Department of Labor and Employment (DOLE) Inspector noted that the workers' pay is below the prescribed minimum wage of P426.00 plus P30.00 allowance, and thus required Gamma Company to pay wage differentials. Gamma Company denies any liability, explaining that after the market value of the company-provided board and lodging are added to the employees' P350 cash daily wage, the employees' effective daily rate would be
way above the minimum pay required by law. The company counsel further points out that the employees are aware that their food and lodging form part of their salary, and have long accepted the arrangement. Is the company's position legally correct? (2013)
A: No. The following requisites were not complied with:
a. Proof that such facilities are customarily furnished by the trade.
b. The provision of deductible facilities is voluntarily accepted by the employee
c. The facilities are charged at the fair and reasonable value. Mere availment is not sufficient to allow deduction from employees’ wages. (Mayon Hotel & Restaurant v. Adana, G.R. No. 157634, May 16, 2005)
Q: Pablo works as a driver at the National Tire Company (NTC). He is a member of the Malayang Samahan ng Manggagawa sa NTC, the exclusive rank-and-file collective bargaining representative in the company. The union has a CBA with NTC which contains a union security and a check-off clause. The union security clause contains a maintenance of membership provision that requires all members of the bargaining unit to maintain their membership in good standing with the union during the term of the CBA under pain of dismissal. The check-off clause on the other hand authorizes the company to deduct from union members' salaries defined amounts of union dues and other fees. Pablo refused to issue an authorization to the company for the check-off of his dues, maintaining that he will personally remit his dues to the union. (2013)
a. Would the NTC management commit unfair labor practice if it desists from checking off Pablo's union dues for lack of individual authorization from Pablo?
A: No. Check-offs in truth, impose an extra burden on the
employer in the form of additional administrative and bookkeeping costs. It is a burden assumed by management at the instance of the union and for its benefit, in order to facilitate the collection of dues necessary for the latter‘s life and sustenance. But the obligation to pay union dues and agency fees obviously devolves not upon the employer, but the individual employee. It is a personal obligation not demandable from the employer upon default or refusal of the employee to consent to a check-off. The only obligation of the employer under a check-off is to effect the deductions and remit the collections to the union. (Holy Cross of Dauan College v. Joaquin, G.R. No. 110007, October 18, 1996).
b. Can the union charge Pablo with disloyalty for refusing to allow the check off of his union dues and, on this basis, ask the company to dismiss him from employment?
A: No. The “check-off clause in the" CBA will not suffice.
The law prohibits interference with the disposition of one’s salary. The law requires “individual written authorization” to deduct union dues from Pablo’s salaries. For as long as he pays union dues, Pablo cannot be terminated from employment under the union security clause. As a matter of fact, filing a complaint against the union before the Department of Labor for
8
forcible deduction from salaries does not constitute acts of disloyalty against the union. (Tolentino v. Angeles, 52 O.G. 4262)
Non-diminution of Benefits
Q: Little Hands Garment Company, an unorganized manufacturer of children's apparel with around 1,000 workers, suffered losses for the first time in history when its US and European customers shifted their huge orders to China and Bangladesh. The management informed its employees that it could no longer afford to provide transportation shuttle services. Consequently, it announced that a normal fare would be charged depending on the distance traveled by the workers availing of the service. Was the Little Hands Garments Company within its rights to withdraw this benefit which it had unilaterally been providing to its employees? Select the best answer(s) and briefly explain your reason(s) therefor.
a. Yes, because it can withdraw a benefit that is unilaterally given
b. Yes, because it is suffering losses for the very first time
c. Yes, because this is a management prerogative which is not due any legal or contractual obligation
d. No, because this amounts to a diminution of benefits which is prohibited by the Labor Code e. No, because it is a fringe benefit that has already
ripened into a demandable right or entitlement (2005)
A: Letter B. As a general rule, the Labor Code guarantees
that any benefit voluntarily given by an employer cannot be withdrawn as it has become a part of the terms and conditions of work of the employees. Such can only be withdrawn upon mutual agreement of the parties. In order for this prohibition to apply, the employer must have given such benefit to his employees fully aware of the fact that the latter are not legally nor contractually entitled to such. The giving of such benefits must be deliberate and for a long period of time.
However, by way of exception, the prohibition against withdrawal of benefit will not apply if the payment of the benefits had been made dependent upon the profitability of the employer's business. Under such circumstances, the employees cannot demand for the benefit to be continuously given because the giving of such benefit is merely by reason of their employer's gratuity or act of liberality.
By virtue of such principles, the applicable rule in the case shall be the exception. Little Hands is clearly within its right to withdraw the free shuttle service because the benefit is given merely out of its liberality thereby the employees are not legally nor contractually entitled to it. The law recognizes that the withdrawal of the benefit by reason of loss of profit is clearly within the employer's management prerogative. In addition, to require Little Hands to continue providing for such benefit would be tantamount to punishing it for its past generosity.
Q: Can an employer and an employee enter into an agreement reducing or increasing the minimum percentage provided for night differential pay, overtime pay, and premium pay? (2006)
A: No, if the agreement is with regards to reduction. Art.
100 provides for the prohibition against elimination or diminution of benefits. However, if the agreement seeks to increase the minimum percentage, it is allowed because there is nothing in the law which prohibits the same. What is expressly prohibited under the law is only reduction.
Q: Far East Bank (FEB) is one of the leading banks in the country. Its compensation and bonus packages are top of the industry. For the last 6 years, FEB had been providing the following bonuses across-the-board to all its employees:
(a) 13th month pay;
(b) 14th to 18th month pay;
(c) Christmas basket worth P6,000; (d) Gift check worth P4,000; and
(e) Productivity-based incentive ranging from a 20% to 40% increase in gross monthly salary for all employees who would receive an evaluation of "Excellent" for 3 straight quarters in the same year.
Because of its poor performance over-all, FEB decided to cut back on the bonuses this year and limited itself to the following:
(a) 13th month pay; (b) 14th month pay;
(c) Christmas basket worth P4,000; and (d) Gift check worth :P2,000
Katrina, an employee of FEB, who had gotten a rating of "Excellent" for the last 3 quarters, was looking forward to the bonuses plus the productivity incentive bonus. After learning that FEB had modified the bonus scheme, she objected. Is Katrina's objection justified? Explain. (2015)
A: Katrina’s objection is justified. Having enjoyed the
across-the-board bonuses, Katrina has earned a vested right. Hence, none of them can be withheld or reduced. In the problem, the company has not proven its alleged losses to be substantial. Permitting reduction of pay at the slightest indication of losses is contrary to the policy of the State to afford full protection to labor and promote full employment. (Linton Commercial Co. v. Hellera, G.R. No. 163147, October 10, 2007).
As to the withheld productivity-based bonuses, Katrina is deemed to have earned them because of her excellent performance ratings for three quarters. On this basis, they cannot be withheld without violating the Principle of Non-Diminution of Benefits.
Moreover, it is evident from the facts of the case that what was withdrawn by FEB was a productivity bonus. Protected by RA 6791 which mandates that the monetary value of the productivity improvement be shared with the employees, the “productivity-based incentive” scheme of FEB cannot just be withdrawn without the consent of its affected employees.
9
Wage Distortion/Rectification
Q: Define Wage Distortion. May a wage distortion, alleged by the employees but rejected by the employer to be such, be a valid ground for staging a strike? (1997, 2006, 2009)
A: (a) A WAGE DISTORTION is that brought about where
an increase in the 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 rates based on skills, length of service and other logical bases of differentiation.
(b) No, the existence of wage distortion is not a valid ground for a strike because Art. 124 of the Labor Code provides for a specific method of procedure for correcting wage distortion. In Ilaw at Buklod ng Manggagawa vs. NLRC (G.R. No. 91980, June 27, 1991), the Court said: It goes without saying that these joint or coordinated activities may be forbidden or restricted by law or contract. For the particular instance of "distortions of the wage structure within an establishment" resulting from the application of any prescribed wage increase by virtue of a law or wage order. Section 3 of Republic Act No. 6727 prescribes a specific, detailed and comprehensive procedure for the correction thereof, thereby implicitly excluding strikes or lockouts or other concerted activities as modes of settlement of the issue.
Q: How should a wage distortion be resolved (1) in case there is a collective bargaining agreement and (2) in case there is none? Explain briefly. (2002, 2009)
A: Art. 126 provides for the resolution of wage
distortions.
In cases where there is a CBA, the law provides that any dispute arising from wage distortions shall be resolved through the grievance procedure under their CBA and, if it remains unresolved, through voluntary arbitration. Unless otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary arbitrator or panel of voluntary arbitrators within 10 calendar days from the time the said dispute was referred to voluntary arbitration.
On the other hand, in cases where there is no CBA, the law provides that the employers and employees shall endeavour to correct such distortions. Any dispute arising therefrom shall be settled through the NCMB, and if it remains unresolved after 10 calendar days of conciliation, shall be referred to the appropriate branch of the NLRC.
REST PERIODS
Weekly Rest Day
Q: A Ladies Dormitory run or managed by a charitable non-profit organization claims that it is exempt from the coverage of the Weekly Rest Period provision of the Labor Code. Is the claim valid? (1998)
A: No. The claim is not valid. The provisions on weekly
rest periods in the Labor Code cover every employer,
whether operating for profit or not. (See Article 91 of the Labor Code).
Q: This year, National Heroes Day (August 25) falls on a Sunday. Sunday is the rest day of Bonifacio whose daily rate is P500.00.
a. If Bonifacio is required by his employer to work on that day for eight (8) hours, how much should he be paid for his work? Explain.
A: For working on his scheduled rest day, according to
Art 93(a), Bonifacio should be paid P500.00 (his daily rate) plus P150.00 (30% of his daily rate) = P650.00. This amount of P650.00 should be multiplied by 2 = P1,300.00. This is the amount that Bonifacio as employee working on his scheduled rest day which is also a regular holiday, should receive. Art. 94(c) of the Labor Code provides that an employee shall be paid a compensation equivalent to twice his regular rate for work on any regular holiday. The "regular rate" of Bonifacio on May 1, 2002 is with an additional thirty percent because the day is also his scheduled rest day.
b. If he works for ten (10) hours on that day, how much should he receive for his work? Explain. (2002)
A: P1,300.00 which is the amount that Bonifacio is to
receive for working on May 1, 2002 should be divided by 8 to determine his hourly rate of P162.50. This hourly rate should be multiplied by 2 (the number of hours he worked overtime). Thus, the amount that Bonifacio is entitled to receive for his overtime work on May 1, 2002 is P325.00.
HOLIDAY PAY/PREMIUM PAY
Coverage, Exclusions
Q: Nemia earns P7.00 for every manicure she does in the barber shop of a friend which has nineteen (19) employees. At times she takes home P175.00 a day and at other times she earns nothing. She now claims holiday pay. Is Nemia entitled to this benefit? Explain briefly (2002)
A: No. Sec. 1, Rule IV, Book III of the IRR provides that the
rule on holiday pay shall apply to all employees except: a. Those of government and any of the political
subdivisions, including government owned and controlled corporations;
b. Those of retail and service establishments regularly employing less than 10 workers;
c. Domestic helpers and persons in the personal service of another;
d. Managerial employees as defined in Book III of the Code;
e. Field personnel and other employees whose time and performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.
Nemia clearly falls under letter (e) of the exception for she is paid purely on commission basis.
10
Q: On orders of his superior, Efren, a high-speed sewing machine technician, worked on May 1, Labor Day. If he worked eight (8) hours on that day, how much should he receive if his daily rate is P400.00? (2002)
A: Efren should receive P800.00. Art 92 of the Labor Code
provides that the employer may require an employee to work on any regular holiday but such employee shall be paid a compensation equivalent to twice his regular rate.
LEAVES
Maternity Leave
Paternity Leave (R.A. No. 8187)
Q: How many times may a male employee go on Paternity Leave? Can he avail himself of this benefit for example, 50 days after the first delivery by his wife? (2002)
A: A male employee may go on Paternity Leave up to four
(4) children. (Sec. 2, RA 8187) On the question of whether or not he can avail himself of this benefit 50 days after the delivery of his wife, the answer is: Yes, he can because the Rules Implementing Paternity Leave Act says that the availment should not be later than 60 days after the date of delivery.
Note: Delivery may include childbirth or miscarriage.
Abortion, however, was not mentioned in the law.
Q: Mans Weto had been an employee of Nopolt Assurance Company for the last ten (10) years. His wife of six (6) years died last year. They had four (4) children. He then fell in love with Jovy, his coemployee, and they got married. In October this year, Weto's new wife is expected to give birth to her first child. He has accordingly filed his application for paternity leave, conformably with the provisions of the Paternity Leave Law which took effect in 1996. The HRD manager of the assurance firm denied his application, on the ground that Weto had already used up his entitlement under the law. Weto argued that he has a new wife who will be giving birth for the first time, therefore, his entitlement to paternity leave benefits would begin to run anew.
a. Whose contention is correct, Weto or the HRD manager?
A: The contention of Weto is correct. The law provides
that every married male is entitled to a paternity leave of seven (7) days for the first four (4) deliveries of the legitimate spouse with whom he is cohabiting. Jovy is Weto's legitimate spouse with whom he is cohabiting. The fact that Jovy is his second wife and that Weto had 4 children with his first wife is beside the point. The important fact is that this is the first child of Jovy with Weto. The law did not distinguish and we should therefore not distinguish. The paternity leave was intended to enable the husband to effectively lend support to his wife in her period of recovery and/or in the nursing of the newly born child (Sec. 3, RA. No. 8187). To deny Weto this benefit would be to defeat the rationale for the law. Moreover, the case of Weto is a gray area and the doubt should be resolved in his favor.
b. Is Jovy entitled to maternity leave benefits? (2005)
A: Yes, Jovy's maternity benefit is personal to her and she
is entitled under the law to avail herself of the same for the first four times of her deliver. (R.A. No. 8282)
Note: A female member’s maternity benefit does not
depend on his marriage since she can avail of the same even if she is not legally married. The law merely used the term “female member” without qualifying the same. (Sec. 14-A, Social Security Act of 1997).
THIRTEENTH MONTH PAY
Q: Concepcion Textile Co. included the overtime pay, night-shift differential pay, and the like in the computation of its employees' 13th month pay.
Subsequently, with the promulgation of the decision of the Supreme Court in the case of San Miguel Corporation vs. Inciong (G.R. No. L-49774, February
24, 1981) holding that these other monetary claims
should not be included in the computation of the 13th
month pay, Concepcion Textile Co. sought to recover under the principle of solutio indebiti its overpayment of its employees' 13th month pay, by debiting against
future 13th month payments whatever excess
amounts it had previously made. a. Is the Company's action tenable?
A: No, the company’s claim is not tenable. The principle
of solutio indebitii only arises where there is a mistake in the payment. In the case at bar, when the company paid the employees, there was no mistake yet, for the mistake in the payment that the company alleged occurred later on when the decision in the San Miguel case was promulgated. Therefore, it can be concluded that when the payment was made, it was valid and due to the employees for all intents and purposes.
If the company would deduct the said overpayment, it would be similar to a situation where an employee is punished for an act that was valid when committed but was subsequently invalidated.
b. With respect to the payment of the 13th month
pay after the San Miguel Corporation, ruling, what arrangement, if any, must the Company make in order to exclude from the 13th month pay
all earnings and remunerations other than the basic pay. (1994)
A: After the 1981 San Miguel ruling, the High Court
decided the case of Philippine Duplicators Inc. vs. NLRC, on 11 November 1993, Accordingly, management may undertake to exclude sick leave, vacation leave, maternity leave, premium pay for regular holiday, night differential pay and cost of living allowance. Sales commissions, however, should be included based on the settled rule as earlier enunciated in Songco v. National Labor Relations Commission (G.R. No. L-50999, March 23, 1990)
Q: What would be your advice to your client, a manufacturing company, who asks for your legal opinion on whether or not the 13th Month Pay Law
(Presidential Decree No. 851) covers a casual employee who is paid a daily wage? (1998)
