LABOR LAWS AND SOCIAL LEGISLATION

WAGES
MODULE NO. 5
A.
TOPICS LEARNING OBJECTIVES

Wages • Understand the what, when and how of wages

B. DISCUSSION

WAGES
Definition
(a) It is the remuneration or earnings, however designated, capable of being expressed
in terms of money,
(b) Whether fixed or ascertained on a time, task, piece, or commission basis, or other
method of calculating the same,
(c) Which is payable by an employer to an employee
(d) Under a written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered and
(e) 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 to the employer, or to any
person affiliated with the employer. [Art. 97(f), LC]

“No work no pay” Principle

General Rule: the age old rule governing the relation between labor and capital or
management and employee is that a "fair day's wage for a fair day's labor." [Sugue
v. Triumph International (2009)]

PREPARED BY: ATTY. ALFRED STALIN P. FRANCISCO, R.N. 1

Exception: When the laborer was able, willing and ready to work but was illegally locked
out, suspended or dismissed, or otherwise illegally prevented from working. [Sugue v
Triumph International, supra]

“Equal Work for Equal Pay” Principle

Employees working in the Philippines, if they are performing similar functions and
responsibilities under similar working conditions should be paid equally. If an
employer accords employees the same position and rank, the presumption is that
these employees perform equal work. [International School Alliance of Educators v.
Hon. Quisumbing (2000)]
Coverage/Exclusions
Wage includes the fair and reasonable value of facilities furnished by the employer to
the employee [Art. 97(f)] while allowances are excluded from the basic salary or
wage computation. [Cebu Institute of Technology v Ople (1987)]

Applicability
The Labor Code Title on wages shall not apply to the following [Art. 98 and Book 3, Rule
VII, Sec 3, IRR]:
(1) Farm tenancy or leasehold;
(2) Household or domestic helpers, including family drivers and other persons in
the personal service of another;
(3) Homeworkers engaged in needlework;
(4) Workers in registered cottage industries who actually work at home;
(5) Workers in registered cooperatives when so recommended by the Bureau of Cooperative
Development upon approval of the Secretary of Labor;

Note: Workers in registered barangay micro business enterprise are only exempted from the
Minimum Wage Law, not from the Title on Wages [RA 9178].

PREPARED BY: ATTY. ALFRED STALIN P. FRANCISCO, R.N. 2

B.1. WAGES VS SALARY
Wages and salary are in essence synonymous. [Songco v. NLRC (1990)]
There are slight differences:
Wage Salary
Paid for skilled or unskilled manuallabor Paid to white collar workers and
denote a higher grade of
employment
Not subject to execution, garnishment or Not exempt from execution,
attachment except for debts related to necessities garnishment or attachment
[Art. 1708] [Gaa vs. CA,1985]

1.. PAYMENT OF WAGES

B.1.A. Form Of Payment [Secs. 1-2, Rule VIII, Book III, IRR]
General rule: Legal Tender Only
Exception: Check/Money Order if customary OR necessary because of special circumstances,
as specified by the Secretary of Labor or the CBA
Not allowed:
1. Promissory Notes
2. Vouchers
3. Tokens
4. Tickets
5. Chits; or
6. Any object other than legal tender, even when expressly requested by the
employee

Conditions for payment through check:

1. Bank/Facility for encashment is within 1- km radius from the workplace
2. ER did not receive any pecuniary benefit because of said arrangement
3. EEs are given reasonable time during banking hours to withdraw their wages
(compensable hours, if during working hours)
4. The payment by check is with the written consent of the EEs concerned, in the
absence of a CBA

PREPARED BY: ATTY. ALFRED STALIN P. FRANCISCO, R.N. 3

 Time of Payment [Secs. 3, Rule VIII, Book III, Omnibus Rules]

TIME OF PAYMENT*
At least once every 2 weeks or 2x per month
Frequency

Intervals Must not be more than 16 days

Valid excuse for delayed payment

Force Majeure BUT ER must pay immediately after cessation

Payments should be made with intervals not

more thanv16 days, in proportion to work
completed
Tasks which cannot be completed in 2 weeks

Final settlement is made upon completion of

the work.

A... Place of Payment

[Secs. 4, Rule VIII, Book III, Omnibus Rules]
General Rule: Shall be made at or near the place of undertaking (workplace)
Exceptions:
1. Deterioration of peace and order conditions, or by reason of actual or impending
emergencies (fire, flood, epidemic)
2. Free transportation to the employees back and forth
3. Under any other analogous circumstances provided, that the time spent by the
employees in collecting their wages shall be considered as compensable hours
worked.

PREPARED BY: ATTY. ALFRED STALIN P. FRANCISCO, R.N. 4

 NO PAYMENT in any bar, night or day club, drinking establishment, massage clinic, dance hall,
or other similar places or in places where games are played with stakes of money or things
representing money except in the case of persons employees in such places

Condition for ATM payment

[Labor Advisory on Payment of Salaries thru ATM (1996)]:
1. ATM system of payment is with the written consent of the EEs
2. EEs are given reasonable time to withdraw their wages from the banking facility
(compensable hours, if during work hours)
3. System shall allow workers to reeive their wages within the period/frequency provided
by law
4. There is a bank/ATM facility within 1km radius from the place of work
5. Upon request of the concerned EEs, the ER shall issue a record of payment of wages,
benefits and deductions for a particular period
6. There shall be no additional expenses and no diminution of benefits and privileges
7. The ER shall assume responsibility in case the wage protection provisions of law and
regulations are not complied with under thearrangement

Person to Pay [Sec 5, Rule VIII, Book III, Omnibus Rules]

General Rule: Directly to EE Exceptions:
1. Member of EE’s family if ER is authorized in writing by the
EE
2. A 3rd person if authorized by law (e.g. insurance companies
for premiums, union dues where the right to check-off has
been recognized by ER in accordance with a CBA or
authorized in writing by EE concerned)
3. Heirs in case of death of EE, without necessity of intestate
proceedings
• If heirs are of age they shall execute an affidavit attesting to their
relationship to the deceased and the fact that they are his heirs to the
exclusion of others
• If any of the heirs is a minor such affidavit shall be executed in his behalf by
his natural guardian or next of kin.

PREPARED BY: ATTY. ALFRED STALIN P. FRANCISCO, R.N. 5

B.2. FACILITIES vs SUPPLEMENTS
The distinction between facilities and supplement is relevant because the former is
wage-deductible while the latter is not. Simply put, a wage includes facilities. [Art. 97,
LC)

The IRR definition [IRR Book III Rule 7-A Sec. 5]

has 2 components:
(1) Facilities are articles or services for the benefit of the employee or his family.
This 1st part defines facilities.
(2) Facilities shall not include tools of the trade or articles or service primarily for
the benefit of the employer or necessary to the conduct of the employer’s
business. This 2nd part is essentially defines what a supplement is.

Criterion: In determining whether a privilege is a facility, the criterion is not so much its
kind but it’s PURPOSE [Millares v NLRC & PICOP, 1999]
Facilities are items of expense necessary for the laborer’s and his family’s existence and
subsistence. [States Marine Corp. v. Cebu Seamen's Assoc., Inc., 1963]

Comparison between Facilities and Supplements

Facilities Supplements
What it is
Extra remuneration or special benefits / articles
Articles or services/items of expense; EXCLUDES
or services / tools of the trade given to or
tools of the trade or articles or service
received by laborers over and above their
primarily for the benefit of ER
ordinary earning or wages
Who Benefits
For the benefit of the employee and his family;
for their existence and subsistence For the benefit or convenience of the
employer
Part of Wage?
Yes No
Deductible from Wage?
No - Independent of the Wage so not
Yes - Part of wage so it is deductible
deductible
Examples
Meals, board and lodging

PREPARED BY: ATTY. ALFRED STALIN P. FRANCISCO, R.N. 6

Requirements for deducting value of facilities:

Mere availment is not sufficient to allow

deductions from employees’ wages. Before the value of facilities can be deducted from the
employees’ wages, the following requisites must all be attendant:
(1) Proof must be shown that such facilities are customarily furnished by the trade;
(2) The provision of deductible facilities must be voluntarily accepted in writing by
the employee; and
(3) Facilities must be charged at reasonable value.

[SLL International Cable Specialists v. NLRC, 2011]

Value of Facilties = Cost of Operation and maintenance + Adequate depreciation +
reasonable allowance (not more than 5.5% interest)
If the fair rental value is lower than the computed value, fair rental value will be used.

B.3. NON-DIMINUTION OF WAGES

General Rule: There is a prohibition against elimination or diminution of benefits [Art.
100]
No wage order issued by any regional board shall provide for wage rates lower than
the statutory minimum wage rates prescribed by Congress. [Art. 127, as amended by
Republic Act No. 6727, June 9, 1989]

Requisites
If the following are met, then the employer cannot remove or reduce benefits [Vergara
Jr. v Coca-Cola Bottlers Phils]:
(1) Ripened company policy: Benefit is founded on a policy which has ripened into a
practice over a long period
(2) Practice is consistent and deliberate and
(3) Not due to error in the construction or application of a doubtful or difficult
question of law. [Globe Mackay Cable vs. NLRC, 1988]
(4) The diminution or discontinuance is done unilaterally by the employer.

When not applicable: At least one of the requisites is absent.

(1) Mistake in the application of the law [Globe Mackay Cable v. NLRC, June 29, 1988]
(2) Negotiated benefits [Azucena]

PREPARED BY: ATTY. ALFRED STALIN P. FRANCISCO, R.N. 7

 (3) Reclassification of Positions – e.g. loss of some benefits by promotion.
(4) Contingent or Conditional Benefits – the rule does not apply to a benefit whose grant
depends on the existence of certain conditions, so that the benefit is not demandable
if those preconditions are absent.
Benefits initiated through negotiation between Employee and Employer, e.g. CBA, can only
be eliminated or diminished bilaterally.

B.4. PROHIBITIONS REGARDING WAGES

1. Interference in disposal of wages [Art 112, LC]
2. Wage deduction [Art 113, LC]
3. Requirement to make deposits for loss or damage [Art 114-115, LC]
4. Withholding of wages [Art 116, LC]
5. Deduction to ensure employment [Art 117, LC]
6. Retaliatory measures [Art 118, LC]
7. False reporting [Art 119, LC]

B.4.A. Prohibition against Interference In Disposal Of Wages

Art. 112 LC

Non-interference in disposal of wages. No employer shall limit or otherwiseinterfere 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 fromany other person, or otherwise make use of any store or services of such employer or any
other person.

B.4.B. Prohibition against Wage Deduction

[Art 113, LC]
General Rule: ER cannot make any deduction from the wages of his EE
Exceptions:
1. Insurance premiums
2. Union dues
3. Other deductions authorized by law/Secretary of Labor

In case of Bankruptcy or Liquidation of an ER’s business [Art 110, LC]: Workers shall enjoy first
preference as regards their wages and other monetary claims, any provision of law to the
contrary nowithstanding. Such unpaid wages and monetary claims shall be paid in full before
the claims of the Government and other creditors may be paid [NOTE: Art 110, LC amended

PREPARED BY: ATTY. ALFRED STALIN P. FRANCISCO, R.N. 8

 Art 2244 of the Civil Code (ordinary preferred credits) by elevating #2 of Art. 2244 to 1st
priority]

B.4.C. Prohibition against Requirement To Make Deposits For Loss Or

Damage [Art. 114, LC]
General Rule: No ER 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.
Exception: ER 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.
No deduction from the deposits of an EE for the actual amount of the loss/damage
shall be made unless:
1. There is reasonable opportunity for EE to show cause why deduction should not be
made [Art 115, LC]
2. EE’s responsibility has been clearly
shown [Art 115, LC]
3. Amount is fair and reasonable and shall not exceed the actual loss of damage; and
4. Must not exceed 20% of weekly pay
Attorney’s fees in any judicial or administrative proceedings for the recovery of wages shall
not exceed 10% of the amount awarded

A... Prohibition against Withholding of Wages

Withholding of wages and kickbacks prohibited. It shall be unlawful for any person, directly or indirectly, to withhold any
amount from the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by
any other means whatsoever without the worker’s consent.

Exceptions:
1. Deduction is for insurance premiums
2. For union dues
3. Authorized by law/ DOLE Sec
4. Due & demandable debt to ER

PREPARED BY: ATTY. ALFRED STALIN P. FRANCISCO, R.N. 9

 B.4.D. Prohibition Against Deduction To Ensure Employment
Deduction to ensure employment. It shall be unlawful to make any deduction from the wages of any employee for the
benefit of the employer or his representative or intermediary as consideration of a promise of employment or retention in
employment.

Prohibition Against Retaliatory Measures

Art. 118, LC

Retaliatory measures. It shall be unlawful for an employer to refuse to pay or reduce the wages and benefits,
discharge or in any manner discriminate against any employee who has filed any complaint or instituted any
proceeding under this Title or has testified or is about to testify in such proceedings.

SELF ASSESSMENT ACTIVITY

1. Read and Summarize the case of Stanley Fine Furniture v. Gallano (G.R. No. 190486,
November 26, 2014)
a. Did the Supreme Court find that there was a retaliatory measure against Gallano
committed by his employer?

C. REFERENCES
1. The Labor Code, as amended and renumbered
2. Prof. Joselito G. Chan, The 2017 Bar Reviewer on Labor Law
3. Atty. Cesario A. Azucena, Jr., The Labor Code with Comments and Cases (Vol. 1 & 2)

PREPARED BY: ATTY. ALFRED STALIN P. FRANCISCO, R.N. 10