LABOR LAWS ASSIGNMENT NO.

1. What is the definition of wages?

Article 97 paragraph (f) of the Labor Code defines wages paid to an
employee as the remuneration or earnings, however designated, capable of
being expressed in terms of money, whether fixed or ascertained on a time,
task, piece, or commission basis, or other methods of calculating the same,
which is payable by an employer to an employee, which is payable by an
employer to an employee under a written or unwritten contract of employment
for work done or to be done or for services rendered or to be rendered and
includes the fair and reasonable value, as determined by the Secretary of Labor
and Employment, of board, lodging, or other facilities, customarily furnished by
the employer to the employee. “Fair and reasonable value” shall not include
any profit to the employer, or to any person affiliated with the employer.
What is the basic distinction between wage and salary?
The term “wage” is used to characterize the compensation paid for
manual skilled or unskilled labor. “Salary,” on the other hand, is used to describe
the compensation for higher or superior level of employment.
What is the distinction in respect to execution, attachment or garnishment?
In cases of execution, attachment or garnishment of the compensation of
an employee received from work issued by the court to satisfy a judicially-
determined obligation, a distinction should be made whether such
compensation is considered “wage” or “salary.” Under Article 1708 of the Civil
Code, if considered a “wage,” the employee’s compensation shall not be
subject to execution or attachment or garnishment, except for debts incurred
for food, shelter, clothing and medical attendance. If deemed a “salary,” such
compensation is not exempt from execution or attachment or garnishment.
Thus, the salary, commission and other remuneration received by a managerial
employee (as distinguished from an ordinary worker or laborer) cannot be
considered wages. Salary is understood to relate to a position or office, or the
compensation given for official or other service; while wage is the
compensation for labor.
Basic Wage
The term “basic wage” means all the remuneration or earnings paid by an
employer to a worker for services rendered on normal working days and hours
but does not include cost of living, allowances, profit-sharing, payments,
premium payments, 13th month pay, or other monetary benefits which are not
considered as part of or integrated into the regular salary of workers.
Further, as held in Honda, the following should be excluded from the
computation of “basic salary” to wit: payments for sick, vacation, and maternity
leaves, night differentials, regular holiday pay and premiums for work done on
rest days and special holidays.
Attributes of Wages
“Wage” paid to any employee has the following attributions:
a.) It is the remuneration of money or earnings, however designated, for
work done or to be done or for services rendered or to be rendered;
b.) It is capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece, or commission basis., or other methods
of calculating the same;
c.) It is payable by an employer to an employee under a written or an
unwritten contract of employment for work done or to be done or for
services rendered or to be rendered
d.) It includes the fair and reasonable value, as determined by DOLE
Secretary, 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.

2. What are facilities? 3. What are supplements?

Facilities v. Supplements
A. The term, “facilities” include articles or services for the benefit of the
employee or his family but does not include tools of the trade or articles
or services primarily for the benefit of the employer or necessary to the
conduct of the employer’s business. (Section 2, Rule VII-A, Book III, Rules
to Implement Labor Code, as amended by Memorandum Circular No. 3,
Nov. 4, 1992.).
 They are items of expense necessary for the laborer’s and his family’s
existence and subsistence which form part of the wage and when
furnished by the employer, are deductible therefrom, since if they are not
so furnished, the laborer would spend and pay for them just the same.
(State Marine Cooperation and Royal Line Inc. v. Cebu Seamen’s
Association Inc.
B. The term “supplement” means extra remuneration or special privileges
or benefits given to or received by the laborer over and above their
ordinary earnings or wages. (Atok Big Wedge Mining Corporation Inc. v.
Atok Big Wedge Mutual Benefit Association)
C. The benefit or privilege given to the employee which constitutes an
extra remuneration over and above his basic or ordinary earning or wage
is supplement; and when said benefit or privilege is made part of the
laborer’s basic wage, it is a facility. The criterion is not so much with the
kind of the benefit or item (food, lodging, bonus, or sick leave.) gives but
its purpose. Thus, free meals supplied by the ship operator to crew
members, out of necessity, cannot be considered as facilities but
supplements which could not be reduced having been given not as part
of wages but as necessary matter in the maintenance of the health and
efficiency of the crew during voyage.
Some Principles on Facilities and Supplements
- Facilities are deductible from wage but not supplements
- Legal requirements must be complied with before facilities may be
deducted from wages. The employer simply cannot deduct the value
from the employee’s wages without satisfying the following:
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.
3. Facilities must be charged at fair and reasonable value.
- The employer may provide subsidized meals and snacks to his
employees provided that the subsidy shall not be less than 30% of the fair
and reasonable value of such facilities. In such a case, the employer may
 deduct from the wages of the employees not more than 70% of the value
of the meals and snacks enjoyed by the employees, provided further that
such deduction is with the written authorization of the employees
concerned.
- The free board and lodging petitioner SIP furnished its employees cannot
operate as a set-off for the underpayment of wages.

4. How should wages be paid?

ART 102. Forms of Payment. -- No employer shall pay the wages of
an employee by means of promissory notes, vouchers, coupons, tokens,
tickets, chits, or any object other than legal tender, even when expressly
requested by the employee.
Payment of wages by check or money order shall be allowed when
such manner of payment is customary on the date of effectivity of the
Code, or is necessary because of special circumstances as specified in
appropriate regulations to be issued by the Secretary of Labor and
Employment or as stipulated in a collective bargaining agreement.

5. When and where should wages be paid?

ART. 103. Time of Payment -- Wages shall be paid at least once every 2
weeks or twice a month at intervals not exceeding sixteen (16) days. If on
account of force majeure or circumstances beyond the employer’s control,
payment of wages on or within the time herein provided cannot be made, the
employer shall pay the wages immediately after such force majeure or
circumstances have ceased. No employer shall make payment with less
frequency than once a month.
The payment of wages of employees engaged to perform a task which
cannot be completed in two weeks shall be subject to the following conditions,
in the absence of a collective bargaining agreement or arbitration award:
(1) That payments are made at intervals not exceeding sixteen (16) days
in proportion to the amount of work completed.
(2) That final settlement is made upon completion of the work.
 ART. 104. Place of Payment -- Payment of wages shall be made at or near
the place of undertaking, except otherwise provided by such regulations as the
Secretary of Labor and Employment may prescribe under conditions to ensure
greater protection of wages.
Art. 105. Direct payment of wages. Wages shall be paid directly to the
workers to whom they are due, except:
In cases of force majeure rendering such payment impossible or under
other special circumstances to be determined by the Secretary of Labor and
Employment in appropriate regulations, in which case, the worker may be paid
through another person under written authority given by the worker for the
purpose; or
Where the worker has died, in which case, the employer may pay the
wages of the deceased worker to the heirs of the latter without the necessity of
intestate proceedings. The claimants, if they are all of age, shall execute an
affidavit attesting to their relationship to the deceased and the fact that they
are his heirs, to the exclusion of all other persons. If any of the heirs is a minor, the
affidavit shall be executed on his behalf by his natural guardian or next-of-kin.
The affidavit shall be presented to the employer who shall make payment
through the Secretary of Labor and Employment or his representative. The
representative of the Secretary of Labor and Employment shall act as referee in
dividing the amount paid among the heirs. The payment of wages under this
Article shall absolve the employer of any further liability with respect to the
amount paid.

6. What are the prohibitions regarding the payment of wages?

(1) NON-INTERFERENCE BY EMPLOYER IN THE DISPOSAL BY EMPLOYEES OF THEIR
WAGES.
No employer is allowed to limit or otherwise interfere with the freedom of
any employee to dispose of his wages and no employer shall in any manner
oblige any of his employees to patronize any store or avail of the services
offered by any person.
(2) WAGES NOT SUBJECT TO EXECUTION OR ATTACHMENT; EXCEPTION.
 The general rule is that laborer’s wages are not subject to execution or
attachment. The exception is when such execution or attachment is made for
debts incurred for food, shelter, clothing and medical attendance.
(3) PROHIBITION ON DEDUCTIONS FROM WAGES.
May employer deduct from wage of employees?
The general rule is that an employer, by himself or through his
representative, is PROHIBITED from making any deductions from the wages of his
employees. The employer is not allowed to make unnecessary deductions
without the knowledge or authorization of the employees.
Are there EXCEPTIONS to this rule?
Yes.
(a) In cases where the worker is insured with his consent by the
employer, and the deduction is to recompense the employer for
the amount paid by him as premium on the insurance;
(b) 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; and
(c) In cases where the employer is authorized by law or regulations
issued by the DOLE Secretary.
(d) Deductions for loss or damage under Article 114 of the Labor
Code;
(e) Deductions made for agency fees from non-union members
who accept the benefits under the CBA negotiated by the
bargaining union. This form of deduction does not require the
written authorization of the non-bargaining union member
concerned;
(f) Deductions for value of meal and other facilities;
(g) Deductions for premiums for SSS, PhilHealth, employees’
compensation and Pag-IBIG;
(h) Withholding tax mandated under the National Internal Revenue
Code (NIRC);
(i) Withholding of wages because of the employee’s debt to the
employer which is already due;
 (j) Deductions made pursuant to a court judgment against the
worker under circumstances where the wages may be the subject
of attachment or execution but only for debts incurred for food,
clothing, shelter and medical attendance;
(k) When deductions from wages are ordered by the court;
(4) PROHIBITION AGAINST DEPOSIT REQUIREMENT.
Article 114 of the Labor Code prohibits the employer to require that
workers should make a deposit from which deductions shall be made for the
reimbursement of loss of tools, materials or equipment supplied by him, or any
damages thereto.
PERMISSIBLE DEDUCTIONS FOR LOSS OR DAMAGES.
If the employer is engaged in a trade, occupation or business where there
is such practice of making deductions or requiring deposits to answer for the
reimbursement of loss of or damage to tools, materials or equipment supplied by
the employer to the employee.
(5) PROHIBITION ON WITHHOLDING OF WAGES.
Article 116 of the Labor Code prohibits any person, whether employer or
not, directly or indirectly, to withhold any amount from the wages of a worker.
Under Article 1706 of the Civil Code, withholding of the wages, except for
a debt due, is not allowed to be made by the employer.
Moreover, under Article 1709 of the same Code, the employer is not allowed to
seize or retain any tool or other articles belonging to the laborer.
(6) KICKBACKS.
Article 116 of the Labor Code also prohibits “kickback” which consists in
the act of any person, whether employer or not, directly or indirectly, to induce
a worker to give up any part of his wages by force, stealth, intimidation, threat
or by any other means whatsoever, without the worker’s consent.
(7) PROHIBITION AGAINST DEDUCTION TO ENSURE EMPLOYMENT.
Article 117 of the Labor Code prohibits any person, whether the employer
himself or his representative or an intermediary, to require that a deduction be
made or to actually make any deduction from the wages of any employee or
worker, for the benefit of such employer or his representative or an intermediary,
as consideration of a promise of employment or, when already employed, for
the continuation of such employment or retention therein.
(8) RETALIATORY ACTIONS BY EMPLOYER.
Article 118 of the Labor Code prohibits the employer:
(a) to refuse to pay the wages and benefits of an employee; or
(b) to reduce his wages and benefits; or
(c) to discharge him from employment; or
(d) to discriminate against him in any manner; on account and by reason
of said employee’s:
(1) act of filing any complaint or institution of any proceeding
under Title II [Wages], Book III of the Labor Code; or
(2) act of testifying in said proceedings or when he is about to
testify therein.
(9) FALSE STATEMENT, REPORT OR RECORD.
Article 119 of the Labor Code prohibits any person, whether employer or
not, to make any false statement, report or record required to be filed or kept in
accordance with and pursuant to the provisions of the Labor Code, knowing
such statement, report or record to be false in any material respect.
Examples: Payrolls, time records, employment records and production
records, among others.

7. What is the principle of the non-diminution of benefits?

What is the applicability of the non-diminution rule in Article 100 of the Labor
Code?
Albeit Article 100 is clear that the principle of non-elimination and non-
diminution of benefits apply only to the benefits being enjoyed “at the time of
the promulgation” of the Labor Code, the Supreme Court has consistently cited
Article 100 as being applicable even to benefits granted after said
promulgation. It has, in fact, been treated as the legal anchor for the
declaration of the invalidity of so many acts of employers deemed to have
eliminated or diminished the benefits of employees.
The 2014 case of Wesleyan University-Philippines v. Wesleyan University-
Philippines Faculty and Staff Association,1 succinctly pointed out that the Non-
Diminution Rule found in Article 100 of the Labor Code explicitly prohibits
employers from eliminating or reducing the benefits received by their
employees. This rule, however, applies only if the benefit is based on any of the
following:
(1) An express policy;
(2) A written contract; or
(3) A company practice.
There is not much controversy if the benefit involved is provided for under
Nos. 1 and 2 above. Thus, if it is expressly laid down in a written policy unilaterally
promulgated by the employer, the employer is duty-bound to adhere and
comply by its own policy. It cannot be allowed to renege from its commitment
as expressed in the policy.
If the benefit is granted under a written contract such as an employment
contract or a collective bargaining agreement (CBA), the employer is likewise
under legal compulsion to so comply therewith.

What is company practice?

Company practice is a custom or habit shown by an employer’s
repeated, habitual customary or succession of acts of similar kind by reason of
which, it gains the status of a company policy that can no longer be disturbed
or withdrawn.
To ripen into a company practice that is demandable as a matter of right,
the giving of the benefit should not be by reason of a strict legal or contractual
obligation but by reason of an act of liberality on the part of the employer.
What are the criteria that may be used to determine the existence of company
practice?
Since there is no hard and fast rule which may be used and applied in
determining whether a certain act of the employer may be considered as
having ripened into a practice, the following criteria may be used to determine
whether an act has ripened into a company practice:
(1) The act of the employer has been done for a considerable
period of time;
(2) The act should be done consistently and intentionally; and
 (3) The act should not be a product of erroneous interpretation
or construction of a doubtful or difficult question of law or provision in the
CBA.
1. THE ACT OF THE EMPLOYER HAS BEEN DONE FOR A CONSIDERABLE PERIOD
OF TIME.
If done only once as in the case of Philippine Appliance Corporation (Philacor)
v. CA,3 where the CBA signing bonus was granted only once during the 1997
CBA negotiation, the same cannot be considered as having ripened into a
company practice.
In the following cases, the act of the employer was declared company practice
because of the considerable period of time it has been practiced:
(a) Davao Fruits Corporation v. Associated Labor Unions.4 - The act of the
company of freely and continuously including in the computation of the
13th month pay, items that were expressly excluded by law has lasted for
six (6) years, hence, was considered indicative of company practice.
(b) Sevilla Trading Company v. A. V. A. Semana.5 - The act of including
non-basic benefits such as paid leaves for unused sick leave and
vacation leave in the computation of the employees’ 13th month pay for
at least two (2) years was considered a company practice.
(c) The 2010 case of Central Azucarera de Tarlac v. Central Azucarera de
Tarlac Labor Union-NLU,6 also ruled as company practice the act of
petitioner of granting for thirty (30) years, its workers the mandatory 13th
month pay computed in accordance with the following formula: Total
Basic Annual Salary divided by twelve (12) and Including in the
computation of the Total Basic Annual Salary the following: basic monthly
salary; first eight (8) hours overtime pay on Sunday and legal/special
holiday; night premium pay; and vacation and sick leaves for each year.
2. THE ACT SHOULD BE DONE CONSISTENTLY AND INTENTIONALLY.
The following cases may be cited to illustrate this principle:
(a) Tiangco v. Leogardo, Jr.,1 where the employer has consistently
been granting fixed monthly emergency allowance to the employees
from November, 1976 but discontinued this practice effective February,
1980 insofar as non-working days are concerned based on the principle of
 “no work, no pay.” The Supreme Court ruled that the discontinuance of
said benefit contravened Article 100 of the Labor Code which prohibits
the diminution of existing benefits.
3. THE ACT SHOULD NOT BE A PRODUCT OF ERRONEOUS INTERPRETATION OR
CONSTRUCTION OF A DOUBTFUL OR DIFFICULT QUESTION OF LAW OR PROVISION
IN THE CBA.
The general rule is that if it is a past error that is being corrected, no vested
right may be said to have arisen therefrom nor any diminution of benefit may
have resulted by virtue of the correction thereof. The error, however, must be
corrected immediately after its discovery; otherwise, the rule on non-diminution