Page 1 of 7

E. Worker Preference in the Event of Bankruptcy Art 110 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. (As amended by Sec 1, RA No. 6715, 1989) Sec 10, Rule 8, Book III, OR Payment of wages and other monetary claims in case of bankruptcy. – In case of bankruptcy or liquidation of the employer’s business, the unpaid wages and other monetary claims of the employees shall be given first preference and shall be paid in full before the claims of government and other creditors may be paid. Art 1707, CC The laborer’s wage shall be a lien on the goods manufactured or the work done. Art 2241 (6), CC With reference to specific movable property of the debtor, the following claims or liens shall be preferred:  Claims for laborer’s wages, on the goods manufactured or the work done Art 2242 (3), CC 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:  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 Art 2244 (2), CC With reference to other property, real and personal of the debtor, the following claims or credits shall be preferred in the order named:  Credits for services rendered the insolvent by employees, laborers or household helpers for 1 year preceding the commencement of the proceedings in insolvency; REPUBLIC v PERALTA (1987; Feliciano, J.) DBP v NLRC (1995; Bellosillo, J.) F. Wage Recovery/Jurisdiction Art 128 Visitorial and Enforcement Power a. The Secretary of Labor and Employment or his duly authorized representatives, including labor regulation officers, shall have access to employer’s records and premises at any time of the day or night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules and regulations issued pursuant thereto.

b. Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the
relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. (As amended by Republic Act No. 7730, June 2, 1994). An order issued by the duly authorized representative of the Secretary of Labor and Employment under this Article may be appealed to the latter. In case said order involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from. (As amended by Republic Act No. 7730, June 2, 1994)

c. The Secretary of Labor and Employment may likewise order stoppage of work or suspension of operations of
any unit or department of an establishment when non-compliance with the law or implementing rules and regulations poses grave and imminent danger to the health and safety of workers in the workplace. Within twenty-four hours, a hearing shall be conducted to determine whether an order for the stoppage of work or

Page 2 of 7

d.

suspension of operations shall be lifted or not. In case the violation is attributable to the fault of the employer, he shall pay the employees concerned their salaries or wages during the period of such stoppage of work or suspension of operation. It shall be unlawful for any person or entity to obstruct, impede, delay or otherwise render ineffective the orders of the Secretary of Labor and Employment or his duly authorized representatives issued pursuant to the authority granted under this Article, and no inferior court or entity shall issue temporary or permanent injunction or restraining order or otherwise assume jurisdiction over any case involving the enforcement orders issued in accordance with this Article.

e. Any government employee found guilty of violation of, or abuse of authority, under this Article shall, after
appropriate administrative investigation, be subject to summary dismissal from the service.

f. The Secretary of Labor and Employment may, by appropriate regulations, require employers to keep and

maintain such employment records as may be necessary in aid of his visitorial and enforcement powers under this Code.

Art 129 Recovery of Wages, Simple Money Claims and Other Benefits Upon complaint of any interested party, the Regional Director of the Department of Labor and Employment or any of the duly authorized hearing officers of the Department is empowered, through summary proceeding and after due notice, to hear and decide any matter involving the recovery of wages and other monetary claims and benefits, including legal interest, owing to an employee or person employed in domestic or household service or househelper under this Code, arising from employer-employee relations: – Provided, That such complaint does not include a claim for reinstatement: – Provided further, That the aggregate money claims of each employee or househelper does not exceed Five thousand pesos (P5,000.00). The Regional Director or hearing officer shall decide or resolve the complaint within thirty (30) calendar days from the date of the filing of the same. Any sum thus recovered on behalf of any employee or househelper pursuant to this Article shall be held in a special deposit account by, and shall be paid on order of, the Secretary of Labor and Employment or the Regional Director directly to the employee or househelper concerned. Any such sum not paid to the employee or househelper because he cannot be located after diligent and reasonable effort to locate him within a period of three (3) years, shall be held as a special fund of the Department of Labor and Employment to be used exclusively for the amelioration and benefit of workers. Any decision or resolution of the Regional Director or hearing officer pursuant to this provision may be appealed on the same grounds provided in Article 223 of this Code, within five (5) calendar days from receipt of a copy of said decision or resolution, to the National Labor Relations Commission which shall resolve the appeal within ten (10) calendar days from the submission of the last pleading required or allowed under its rules. The Secretary of Labor and Employment or his duly authorized representative may supervise the payment of unpaid wages and other monetary claims and benefits, including legal interest, found owing to any employee or househelper under this Code. (As amended by Section 2, Republic Act No. 6715, March 21, 1989) Art 217 Jurisdiction of the Labor Arbiters and the Commission a. Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or nonagricultural: 1. Unfair labor practice cases; 2. Termination disputes; 3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment; 4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter

a. b.

Page 3 of 7

by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. (As amended by Section 9, Republic Act No. 6715, March 21, 1989) Art 111 Attorney’s Fees (a) In cases of unlawful withholding of wages, the culpable party may be assessed attorney’s fees equivalent to 10% 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 10% of the amount of wages recovered. Sec 1, Rule 10, Book III Visitorial power The Labor Sec or his duly authorized representatives, including Labor Regulations Officers or Industrial Safety Engineers, shall have access to employer's records and premises at any time of the day or night whenever work is being undertaken therein, and right to copy therefrom, to question any employee, and to investigate any fact, condition or matter relevant to the enforcement of any provision of the Code and of any labor law, wage order or rules and regulations issued pursuant thereto. Sec 2, Rule 10, Book III Enforcement power

(a)

Regional Director in cases where employer relations shall exist, shall have the power to order and administer, after due notice and hearing, compliance with the labor standards provisions of the Code and other labor legislations based on the findings of the Labor Regulation Officers or Industrial Safety Engineers (Labor Standard and Welfare Officer) and made in the course of inspection, and to issue writs of execution to the appropriate authority of the enforcement of his order. In line with the provisions of Article 128 in relation to Articles 289 and 290 of the Labor Code as amended in cases, however, where the employer contests the findings of the Labor Standards and Welfare Officers and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection, the Regional Director concerned shall indorse the case to the appropriate arbitration branch of the NLRC for adjudication. (b) Regional Director shall give the employer 15 days within which to comply with his order before issuing a writ of execution. Copy of such order or writ of execution shall immediately be furnished the Secretary of Labor and Employment. Sec 3, Rule 10, Book III Enforcement power on health and safety of workers

(a)

Regional Director may likewise order stoppage of work or suspension of operations of any unit or department of an establishment when non-compliance with the law, safety order or implementing rules and regulations poses grave and imminent danger to the health and safety of workers in the workplace. (b) Within 24 hours from issuance of the order of stoppage or suspension, a hearing shall be conducted to determine whether the order for the stoppage of work or suspension of operation shall be lifted or not. The proceedings shall be terminated within 72 hours and a copy of such order or resolution shall be immediately furnished the Secretary of Labor and Employment. In case the violation is attributable to the fault of the employer, he shall pay the employees concerned their salaries or wages during the period of such stoppage of work or suspension of operation. Sec 4, Rule 10, Book III Power to review

(a)

(b)

Labor Sec, at his own initiative or upon request of the employer and/or employee, may review the order of the Regional Director. The order of the Regional Director shall be immediately final and executory unless stayed by the Secretary of Labor and Employment upon posting by the employer of a reasonable cash or surety bond as fixed by the Regional Director. In aid of his power of review, the Labor Sec may direct the Bureau of Working Conditions to evaluate the findings or orders of the Regional Director. The decision of the Secretary of Labor and Employment shall be final and executory.

Sec 5, Rule 10, Book III Interference and injunctions prohibited It shall be unlawful for any person or entity to obstruct, impede, delay or otherwise render ineffective the exercise of the enforcement power of the Secretary of Labor and Employment, Regional Director or their duly authorized representatives pursuant to the authority granted by the Code and its implementing rules and regulations, and no inferior court or entity shall issue temporary or permanent injunction or restraining order or otherwise assume jurisdiction over any case involving the enforcement orders issued in accordance with the Code. In addition to the penalties provided for by the Labor Code, any government employees found guilty of violation or abuse of authority, shall be subject to the provisions of Presidential Decree No. 6.  Labor Secretary or his duly authorized representative 1. Access to employer's records and premises

Page 4 of 7

2. Right to copy records 3. Right to question any employee 4. Investigate any fact, condition or matter which may be necessary to determine violations, or which may be 5. Order and administer, after due notice and hearing, compliance with the Labor Standards provisions 6. Issue writs of execution to the appropriate authority for enforcement of their orders 7. Order stoppage of work or suspension of operations when non-compliance with law and implementing
 regulations poses grave and imminent danger to the health and safety of workers in the workplace (only Secretary of Labor has this power) Regional Director cannot enforce results of Visitorial Power when: 1. Employer contests the findings 2. Issues raised requires examination of evidentiary matters 3. Such matters are not verifiable in the normal course of inspection Jurisdictional authority Amount involved Art 128 Original: DOLE Sec Delegated: DOLE Regional Director None Art 129 ORIGINAL and EXCLUSIVE: DOLE Regional Director Should not exceed P5,000 Art 217 (a) ORIGINAL and EXCLUSIVE: NLRC Labor Arbiter (3) P5,000 and below with claim for reinstatement (6) Beyond P5,000 regardless of claim for reinstatement Adjudication EER exists and there is a claim for reinstatement NLRC (Art 223) Necessary to perfect an appeal (Art 223) 10 days (Art 223) necessary to aid in enforcement of this code or any labor law or order.

Nature Employeremployee relationship Appeal Appeal Bond Period to Appeal

Routine inspection – normally done Existing. No dismissal yet DOLE Sec (see Sec 4, Rule X) Jurisdictionally required Within 10 calendar days

Complaint inspection – done upon complaint Has ceased but no claim for reinstatement NLRC (Art 159) Not required 5 days

PEOPLE’S BROADCASTING v SEC OF LABOR (2009; Tinga, J.) CATHOLIC VICARIATE v HON. STO. TOMAS (2008; Tingan, J.)

6. Thirteenth Month Pay
a. History of the Law
DENTECH MFG CORP v NLRC (1989; Ponente) QUICK FACTS: ISSUE: HELD & RATIO:

b. Coverage
Sec 1, PD 851 All employers are hereby required to pay all their employees receiving a basic salary of not more than P1,000 a month, regardless of the nature of their employment, a 13th-month pay not later than December 24 of every year. Sec 2, PD 851 Employers already paying their employees a 13th-month pay or its equivalent are not covered by this Decree. Sec 1, Revised Guidelines on the Implementation Removal of salary ceiling On August 13, 1986, President Corazon C. Aquino issued Memorandum Order No. 28 which provides as follows:

Page 5 of 7

"Section 1 of Presidential Decree No. 851 is hereby modified to the extent that all employers are hereby required to pay all their rank-and-file employees a 13th month pay not later than December 24 of every year." Before its modification by the aforecited Memorandum Order, P.D. No. 851 excludes from entitlement to the 13th month pay those employees who were receiving a basic salary of more than P1,000.00 a month. With the removal of the salary ceiling of P1,000.00, all rank and file employees are now entitled to a 13th month pay regardless of the amount of basic salary that they receive in a month if their employers are not otherwise exempted from the application of P.D. No. 851. Such employees are entitled to the benefit regardless of their designation or employment status, and irrespective of the method by which their wages are paid, provided that they have worked for at least one (1) month during a calendar year. Sec 2, Revised Guidelines on the Implementation Exempted employers; still not covered by PD 851

a. The Government and any of its political subdivisions, including government-owned and controlled b. c. d.
corporations, excepts those corporations operating essentially as private subsidiaries of the Government; Employers already paying their employees a 13th month pay or more in a calendar year or its equivalent at the time of this issuance; Employers of household helpers and persons in the personal service of another in relation to such workers; and Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing 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 grant the required 13th month pay to such workers.

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. Sec 3, Revised Guidelines on the Implementation Who are rank and file employees The Labor Code distinguishes a rank-and-file employee from a managerial employee. It provides that a managerial employee is one who is vested with powers of prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall discharge, assign or discipline employees, or to effectively recommend such managerial actions. All employees not falling within this definition are considered rank-and-file employees. The above distinction shall be used as guide for the purpose of determining who are rank-and-file employees entitled to the mandated 13th month pay. Sec 5, Revised Guidelines on the Implementation 13th Month Pay for certain types of employees

(a) Employees Paid by Results. — Employees who are paid on piece work basis are by law entitled to the
13th month pay. Employees who are paid a fixed or guaranteed wage plus commission are also entitled to the mandated 13th month pay, based on their total earnings during the calendar year, i.e., on both their fixed or guaranteed wage and commission. (b) Those with Multiple Employers. — Government employees working part time in a private enterprise, including private educational institutions, as well as employees working in two or more private firms, whether on full or part time basis, are entitled to the required 13th month pay from all their private employers regardless of their total earnings from each or all their employers. (c) Private School Teachers. — Private school teachers, including faculty members of universities and colleges, are entitled to the required 13th month pay, regardless of the number of months they teach or are paid within a year, if they have rendered service for at least one (1) month within a year. Sec 6, Revised Guidelines on the Implementation An employee who has resigned or whose services were terminated at any time before the time for payment of the 13th month pay is entitled to this monetary benefit in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year up to the time of his resignation or termination from the service. Thus, if he worked only from January up to September his proportionate 13th month pay should be equivalent of 1/12 his total basic salary he earned during that period. The payment of the 13th month pay may be demanded by the employee upon the cessation of employeremployee relationship. This is consistent with the principle of equity that as the employer can require the

Page 6 of 7

employee to clear himself of all liabilities and property accountability, so can the employee demand the payment of all benefits due him upon the termination of the relationship. Sec 7, Revised Guidelines on the Implementation The mandated 13th month pay need not be credited as part of regular wage of employees for purposes of determining overtime and premium pays, fringe benefits insurance fund, Social Security, Medicare and private retirement plans. Sec 8, Revised Guidelines on the Implementation Nothing herein shall be construed to authorize any employer to eliminate, or diminish in any way, supplements, or other employee benefits or favorable practice being enjoyed by the employee at the time of promulgation of this issuance. ARCHILLES MANUFACTURING CORP v NLRC (1995; Bellosillo, J.) QUICK FACTS: ISSUE: HELD & RATIO:

a. Rationale
Whereas clauses of PD 851 • • • WHEREAS, it is necessary to further protect the level of real wages from the ravage of worldwide inflation; WHEREAS, there has been no increase in the legal minimum wage rates since 1970; WHEREAS, the Christmas season is an opportune time for society to show its concern for the plight of the working masses so they may properly celebrate Christmas and New Year.

a. Amount and Date of Payment
1) Basic Wages / Commission Sec 4, Revised Guidelines PD 851

(a) Minimum of the Amount. — The minimum 13th month pay required by law shall not be less than onetwelfth of the total basic salary earned by an employee within a calendar year. For the year 1987, the computation of the 13th month pay shall include the cost of living allowances (COLA) integrated into the basic salary of a covered employee pursuant to Executive Order 178. E.O. No. 178 provides, among other things, that the P9.00 of the daily COLA of P17.00 for non-agricultural workers shall be integrated into the basic pay of covered employees effective 1 May 1987, and the remaining P8.00 effective 1 October 1987. For establishments with less than 30 employees and paid-up capital of P500,000 or less, the integration of COLAs shall be as follows: P4.50 effective on 1 May 1987; P4.50 on 1 October 1987; and P8.00 effective 1 January 1988. Thus, in the computation of the 13th month pay for 1987, the COLAs integrated into the basic pay shall be included as of the date of their integration. Where the total P17.00 daily COLA was integrated effective 1 May 1987 or earlier the inclusion of said COLA as part of the of the basic pay for the purpose of computing the 13th month pay shall be reckoned from the date of actual integration. The “basic salary” of an employee for the purpose of computing the 13th month pay shall include all remunerations or earning paid by this employer for services rendered but does not include allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the ○ cash equivalent of unused vacation and sick leave credits, ○ overtime, ○ premium, ○ night differential and ○ holiday pay, and ○ cost-of-living allowances However, these salary-related benefits should be included as part of the basic salary in the computation of the 13th month pay if by: ○ individual or collective agreement, ○ company practice or policy, the same are treated as part of the basic salary of the employees.

Page 7 of 7

(a) Time of Payment. — The required 13th month pay shall be paid not later than December 24 of each year.
An employer, however, may give to his employees one half (½) of the required 13th month pay before the opening of the regular school year and the other half on before the 24th of December of every year. The frequency of payment of this monetary benefit may be the subject of agreement between the employer and the recognized/collective bargaining agent of the employees. SONGCO v NLRC BOIE TAKEDA v DELA SERNA PHIL DUPLICATORS INC v NLRC INTERCONTINENTAL BROADCASTING CORP v PANGANIBAN (2007; Austria-Martinez, J.) LETRAN CALAMBA FACULTY & EMPLOYEES ASSOC v NLRC (2008; Austria-Martinez, J.) 1) Substitute Payment Sec 2, Revised Guidelines PD 851 The term “its equivalent” as used on paragraph (b) hereof shall include: Christmas bonus, mid-year bonus, cash bonuses and other payments amounting to not less than 1/12 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 required 1/12th of the employees basic salary, the employer shall pay the difference. ○ ○ ○ ○ FRAMANLIS FARMS INC v MOLE (1989; Grino-Aquino, J.)

7. Bonus
a. Nature
PHIL DUPLICATORS INC v NLRC (1995; Ponente)

b. Definition; When Demandable
PROTACIO v LAYA MANANGHAYA & CO (2009; Ponente) MARCOS v NLRC (1995; Regalado, J.)