Professional Documents
Culture Documents
Issue: W/N there was a diminution of benefits based on alleged company practice of paying the equivalent of 1 month salary/year of service? Held: No diminution of benefits. month salary/year computation upheld. Art. 283 of the Labor Code provides that employees who were dismissed not due to closure of the business, but not due to insolvency should receive the equivalent of 1 month salary or month salary/year of service, with 6 months being counted as 1 year. As the closure of the business was done in good faith due to the effectivity of the CARL, and because of the silence of the CBA as to the method of computing the separation pay, the Labor Code provision shall govern. There was also no company practice violated despite SDPI
Issue: W/N Petitioners decision to deduct overpayment from the salaries constituted a violation of the non-diminution of benefits provided in the LC? Held: No. There was no violation of the non-diminution provision. Pursuant to the CBA, which is law between the parties, Petitioner granted the salary increase for 2001 & 2002. This was the general provision in the CBA. However, there was a special provision following such, which stated that any subsequent increase mandated by a Wage Order subsequent to Wage Order # 7 shall be deemed credited or included in the salary increase for said years. Thus, the wage increase granted by Wage Order # 8 should be credited against or subtracted from the 12% salary increase supposedly granted in 2001. The difference is the one, which should rightly be considered as the increase in 2001. Diminution of benefits is defined as: 1. The grant is founded on a policy that has ripened into practice for a long period of time 2. Practice is consistent and deliberate 3. Practice is not due to error in interpretation of doubtful question of law 4. Diminution is done unilaterally by employer Petitioner proved that the overpayment was done as a result of an error, which was immediately rectified by Petitioner. Since it is a past error that was committed, there can be no vested right nor any diminution in benefit.
Issue: W/N respondents are entitled to bonuses? Held: No. Respondents are not entitled to bonuses. Respondents have been given bonuses for the past 13 years, as such, they reason that this has already become a vested right. However, the petitioners are correct in pointing out that due to financial losses and its present condition being under conservatorship, they cannot be compelled to pay the alleged bonus differentials. Bonuses are amounts granted and paid to an employee for his industry and loyalty which contributed to the success of the business. This is a management prerogative as something given in addition to what is ordinarily received by or strictly due to the recipient. Thus, it is not an enforceable or demandable obligation, specially when the employer is already experiencing deep financial losses. x------------------------------------x 1.1.1.6 Increasing the Divisor Trans-Asia Phils Employees Assoc v NLRC Facts: Petitioners and Respondents entered into a CBA which provided that a 200% holiday pay would be given, plus a 60% premium. Petitioners requested for the payment of holiday pay in arrears but was not granted by respondent Petitioner then filed a complaint with the LA Issue: W/N Respondents are liable for holiday pay? Held: No. Respondents have already incorporated the payment for legal holidays in the monthly salary of the employees.
Although management has the prerogative to lessen the work schedule of its employees, it may only do so for valid business reasons. In the case at bar, the employees failed to show that the rotation schedule was actually done with good faith and with due regard for the rights of labor. x------------------------------------x 1.1.1.5 Right to a Bonus Producers Bank v NLRC Facts: Respondents are employees of petitioner Respondents filed a complaint against
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where 52 = # of weeks in a year 48 = # of work hours per week 8 = #of work hours per day 286 already takes into account the 10 legal holidays in a year, as it only subtracts the 52 Sundays and 26 Saturdays (employees are required to work day every Saturday). However, the court still suggests that there is a need to adjust the 286 day divisor to 287 for computations which would be advantageous to the laborer, such as in computing the deductions for absences. 287 divisor is arrived at by taking into account EO 203, taking into account 2 additional special holidays (all saints day & last day of the year) and subtracting one legal holiday (national heroes day, which always falls on a Sunday). Arellano University v CA Facts: Petitioner filed a Notice of Strike with the NLRC charging respondents with violation of Unfair Labor Practice, including a diminution in benefits by using 314 days as divisor in computing the daily wage of the workers. Although NLRC tried to mediate, petitioners still staged a strike Issue: W/N there was a diminution in benefits due to respondent using 314 as divisor? Held: No. There was no diminution in pay. Respondents use 314 as they merely deducted the 52
Siemens Philippines v Domingo Facts: In 1987, Domingo signed an Employment Contract with MATEC (a subsidiary of Siemens Philippines) as a consultant. Thereafter, Domingo was given additional work by MATEC, in which he was paid on top of his original salary. The extra work was the result of a contract entered into by MATEC and Siemens Germany (a German company which has an investment in Siemens Philippines), whereby MATEC, at the request of Siemens Germany, hired Domingo to handle the operation of OEN OEV TD. On January 1992, ETSI (a subsidiary of Siemens Philippines) availed of Domingos services as assistant manager. The Contract of Employment of Domingo with ETSI provides that the latter shall have the right to assign the said contract in favor of Siemens Philippines. On March 16, 1992, while still an assistant manager of ETSI, Domingo was hired as a consultant by Siemens Germany in the field of text and data networks for a period of twelve (12) months. As compensation, he received DM20,000.00, payable once for every twelvemonth period. On March 31, 1992, Siemens Germany sent a letter to ETSI guaranteeing the consultancy agreement. On June 1, 1992, Domingo signed a Contract of Employment with Siemens Philippines. In, 1993, while Domingo was already in the employ of Siemens Philippines, Siemens Germany extended the consultancy agreement with Domingo for another twelve (12) months. Again, in 1994, Siemens Germany renewed the consultancy agreement with Domingo for another six (6) months expiring on September 1994. Complacent that the consultancy agreement would be renewed in accordance
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(b) The employer or any of his agents or representatives does not receive any pecuniary benefit directly or indirectly from the arrangement;
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OMNIBUS RULES IMPLEMENTING LC BOOK III, RULE VII A, SEC 4 7 Sec. 4. Cash Wage. The minimum wage rates prescribed in Section 1 hereof shall be basic, cash wages without deducting therefrom whatever benefits, supplements or allowances which the employees enjoy free of charge aside from the basic pay. An 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 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 that such deduction is with the written authorization of the employees concerned.
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LC ART. 104 Place of payment. Payment of wages shall be made at or near the place of undertaking, except as otherwise provided by such regulations as the Secretary of Labor and Employment may prescribe under conditions to ensure greater protection of wages. OMNIBUS RULES IMPLEMENTING LC BOOK III, RULE VIII, SEC 4 As a general rule, the place of payment shall be at or near the place of undertaking. Payment in a place other than the work place shall be permissible only under the following circumstances: (a) When payment cannot be effected at or near the place of work by reason of the deterioration of peace and order conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or other calamity rendering payment thereat impossible; (b) When the employer provides free transportation to the employees back and forth; and
(c) Under any other analogous circumstances; Provided, That the time spent by the employees in collecting their wages shall be considered as compensable hours worked; (d) No employer shall pay his employees in any bar, night or day club, drinking establishment, massage clinic, dance hall, or other similar places or in places where games are played
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LC ART. 101 Payment by results. The Secretary of Labor and Employment shall regulate the payment of wages by results, including pakyao, piecework, and other nontime work, in order to ensure the payment of fair and reasonable wage rates, preferably through time and motion studies or in consultation with representatives of workers and employers organizations. OMNIBUS RULES IMPLEMENTING LC BOOK III, RULE VII A, SEC 8 Sec. 8. Payment of Results. On petition of any interested party, or upon its initiative, the Department of labor shall use all available devises, including the use of time and motion studies and consultation with representatives of employers and workers organizations, to determine whether the employees in any industry or enterprise are being compensated in accordance with the minimum wage requirements of this Rule. (b) The basis for piece, output performance minimum skill the establishment of rates for or contract work shall be the of an ordinary worker of or ability.
OMNIBUS RULES IMPLEMENTING LC BOOK III, RULE VIII, SEC 3 (a) Wages shall be paid not less than once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days, unless payment cannot be made with such regularity due to force majeure or circumstances beyond the employer's control in which case the employer shall pay the wages immediately after such force majeure or circumstances have ceased. (b) In case of payment of wages by results involving work which cannot be finished in two (2) weeks, payment shall be made at intervals not exceeding sixteen days in proportion to the
(c) An ordinary worker of minimum skill or ability is the average worker of the lowest producing group representing 50% of the total number of employees engaged in similar employment in a particular establishment, excluding learners, apprentices and handicapped
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LC ART. 105 Direct payment of wages. Wages shall be paid directly to the workers to whom they are due, except: a) In cases of force majeure rendering such payment impossible or under other special circumstances to be determined by the Secretary of Labor and Employment in appropriate regulations, in which case, the worker may be paid through another person under written authority given by the worker for the purpose; or b) Where the worker has died, in which case, the employer may pay the wages of the deceased worker to the heirs of the latter without the necessity of intestate proceedings. The claimants, if they are all of age, shall execute an affidavit attesting to their relationship to the deceased and the fact that they are his heirs, to the exclusion of all other persons. If any of the heirs is a minor, the affidavit shall be executed on his behalf by his natural guardian or next-ofkin. The affidavit shall be presented to the employer who shall make payment through the
LC ART. 112 119 Art. 112. Non-interference in disposal of wages. No employer shall limit or otherwise interfere with the freedom of any employee to dispose of his wages. He shall not in any manner force, compel, or oblige his employees to purchase merchandise, commodities or other property from any other person, or otherwise make use of any store or services of such employer or any other person. Art. 113. Wage deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except: 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; 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 In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment.
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x------------------------------------x 1.2.3.3 Intentional Quantitative Differences Metropolitan Bank v NLRC Facts: Petitioners entered into a CBA on May 1989 with respondent bank, which granted a wage increase of: - P900/mo effective 1989 - P600/mo for 1990 - P200/mo for 1991 On 1989, only the regular employees were given the P900/mo increase On July 1989, RA 6727 was enacted, fixing new wage rates - Minimum wage was increased by P25 - Provided, those already receiving above minimum wage up to P100 shall also receive P25 increase in the daily wage Respondent bank gave P25 increase/day or P750/mo to its probationary employees or to those who were just promoted to regular, but were still receiving P100 and below Petitioners contend that RA 6727 resulted in categorization of: 1. Probationary employees as of enactment of RA 6727 & those promoted to regular status but receiving P100 or less 2. Regular employees as of January 1989 with over P100/day wage Petitioners aver that this reduced the salary gap Bank said only 6.8% of regular employees benefited from wage increase LA ruled in favor of petitioners, saying there IS wage distortion - It is enough that there is a SEVERE CONTRACTION of the
LC ART. 100 Prohibition against elimination or diminution of benefits. Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code. LC ART. 127 Non-diminution of benefits. No wage order issued by any regional board shall provide for wage rates lower than the statutory minimum wage rates prescribed by Congress. x------------------------------------x 1.2.3.1 Scope of Legal Obligation to Correct Wage Distortion BANKARD v NLRC Facts: Issue: Held:
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Issue: W/N RA 6727 mandating an increase in pay of P25 created a wage distortion? Held: Yes. There is wage distortion. Wage distortion is defined as a situation where an increase in prescribed wage results in the elimination or SEVERE CONTRACTION of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation. The law does not require the complete elimination of the difference or gap between the salary groups. It is enough that there is a severe contraction or an extreme decrease in the difference between such groups. The CBA set the intentional quantitative difference when it agreed to give a P900 increase/mo to those already regularized as of the effectivity of the CBA. Since the increase was granted only to those who were not benefitted by the CBA, the gap between the 2 groups lessened. Thus, there is a need to adjust the salary of those who were benefited by the CBA by using the formula of the Presiding Commissioner.
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Issue: W/N wage distortion resulted from implementation of the wage orders? Held: No. There was no wage distortion. Quantitative difference remained the same in all branches in the affected region. Disparity in wages among those located in the same rungs in the corporate ladder, but in different regions, does not constitute wage distortion. Wage distortion arises when wage order results in wage parity between employees in different rungs but in the same region, not the other way around. RA 6727 (Wage Rationalization Act) recognizes the existing regional disparities in the cost of living. In determining wage increases, the board looks at the existing regional disparities in the COLA and other socio-economic factors. Wages in other areas may be increased to prevent migration to the NCR, hence, decongesting the metropolis. There are, after all, different needs for different situations in different regions of the country. This does not violate equal pay for equal work because there are varying necessities in each region & the increase will be
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(c) Exempted from the provisions of this Act are household or domestic helpers and persons employed in the personal service of another, including family drivers. Retail/service establishments regularly employing not more than ten (10) workers may be exempted from the applicability of this Act upon application with and as determined by the
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1. The P22.00 per day COLA prescribed in this Order shall apply to all minimum wage earners in the private sector in NCR, regardless of their position, designation or status of employment and irrespective of the method by which they are paid; 2. The P22.00 per day COLA shall NOT cover household or domestic helpers, persons in the personal service of another, including family drivers, and workers of duly registered Barangay Micro Business Enterprises (BMBEs) with Certificates of Authority pursuant to Republic Act 9178; 3. The following may be exempted from the applicability of the Wage Order: 1) Distressed Establishments; 2) Retail/Service Establishments Regularly Employing Not More Than Ten (10) Workers; 3) Establishments whose Total Assets including those arising from loans but exclusive of the land on which the particular business entitys office, plant and equipment are situated, are not more than P3 Million; and 4) Establishments Adversely Affected by Natural Calamities. 4. This Order shall not reduce any existing wage rates, allowances and benefits of any form under existing laws, decrees, issuances, executive orders and/or under any contract or agreement between the workers and employers; 5. This Order shall not prevent workers in particular firms or industries from bargaining for higher wages with their respective employers;
Any person. corporation. trust. firm. parmersnip. association or entity which refuses or fails to pay any of the prescribed increases or adjustments in the wage rales made in accordance with this Act shall be punished by a fine not less than Twenty-five thousand pesos (P25.000) nor more than One hundred thousand pesos (P100.000) or imprisonment of not less than two (2) years nor more than four (4) years or both such fine and imprisonment at the discretion of the court: Provided. That any person convicted under this Act shall not be entitled to the benefits provided for under the Probation Law. The employer concerned shall be ordered to pay an arnount equivalent to double the unpaid benefits owing to the employees: Provided. That payment of indemnity shall not absolve the employer from the criminal liability imposable under this Act. If the violation is committed by a corporation. trust or firm. partnership, association or any other entity, the penalty of imprisonment shall be imposed upon the entity's responsible officers including but not limited to the president, vicepresident, chief executive
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(7) Parent left solo or alone with the responsibility of parenthood due to abandonment of spouse for at least one (1) year; (8) Unmarried mother/father who has preferred to keep and rear her/his child/children instead of having others care for them or give them up to a welfare institution; (9) Any other person who solely provides parental care and support to a child or children; (10) Any family member who assumes the responsibility of head of family as a result of the death, abandonment, disappearance or prolonged absence of the parents or solo parent. A change in the status or circumstance of the parent claiming benefits under Republic Act No. 8972, such that he/she is no longer left alone with the responsibility of parenthood, shall terminate his/her eligibility for these benefits. Who are considered as children? Children refer to those living with and dependent upon the solo parent for support who are unmarried, unemployed and not more than eighteen (18) years of age, or even over eighteen (18) years but are incapable of self-support because of mental and/or physical defect/disability. What is parental responsibility? With respect to minor children, it refers to the rights and duties of the parents as defined in Article 220 of Executive Order No. 209 (also known as the Family Code of the Philippines). Article 220 provides that the parents and those exercising parental authority
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Flexible work schedule. This refers to the right of a solo parent employee to vary his/her arrival and departure time without affecting the core work hours
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RA 9849 (1) Unless otherwise modified by law, order, or proclamation, the following regular holidays and special days shall be observed in the country: (a) Regular Holidays New Year's Day - January 1 Maundy Thursday- Movable Date Good Friday - Movable Date Eidul Fitr - Movable Date Eidul Adha- Movable Date Araw ng Kagitingan (Bataan and Corregidor Day) Monday nearest April 9 Labor Day - Monday nearest May 1 Independence Day - Monday nearest June 12 National Heroes Day - Last Monday of August Bonifacio Day - Monday nearest November 30 Christmas Day - December 25 Rizal Day - Monday nearest December 30 (b) Nationwide Special Holidays Ninoy Aquino Day- Monday nearest August 21 All Saints Day - November 1 Last Day of the Year - December 31 (c) In the event the holiday falls on a Wednesday,
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where 52 = # of weeks in a year 48 = # of work hours per week 8 = #of work hours per day 286 already takes into account the 10 legal holidays in a year, as it only subtracts the 52 Sundays and 26 Saturdays (employees are required to work day every Saturday). However, the court still suggests that there is a need to adjust the 286 day divisor to 287 for computations which would be advantageous to the laborer, such as in computing the deductions for absences. 287 divisor is arrived at by taking into account EO 203, taking into account 2 additional special holidays (all saints day & last day of the year) and subtracting one legal holiday (national heroes day, which always falls on a Sunday).
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Nothing herein shall be construed to authorize any employer to eliminate, or diminish in any
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Issue: W/N PAL is liable to pay the 13th month pay to those regularized after the guidelines were issued by PAL? YES. W/N 13th month pay or mid-year bonus can be equated to Christmas bonus? NO. Held: Yes. PAL should still pay them 13th month pay. The CBA entered into actually referred to all employees in the bargaining unit, without distinction as to whether they were regular or non-regular employees. All employees in PAL are entitled to the same benefits. Even those not belonging to the chosen bargaining labor organization are included in the enjoyment of the benefits, so long as they are in the same bargaining unit. No. Despite payment of Christmas bonus, employer is still liable for 13th month pay.
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On any amount in excess of P100,000 10% (D) Capital Gains from Sale of Real Property. (1) In General. - The provisions of Section 39(B) notwithstanding, a final tax of six percent (6%) based on the gross selling price or current fair market value as determined in accordance with Section 6(E) of this Code, whichever is higher, is hereby imposed upon capital gains presumed to have been realized from the sale, exchange, or other disposition of real property located in the Philippines, classified as capital assets, including pacto de retro sales and other forms of conditional sales, by individuals, including estates and trusts: Provided, That the tax liability, if any, on gains from sales or other dispositions of real property to the government or any of its political subdivisions or agencies or to government-owned or controlled corporations shall be determined either under Section 24 (A) or under this Subsection, at the option of the taxpayer. (2) Exception. - The provisions of paragraph (1) of this Subsection to the contrary notwithstanding, capital gains presumed to have been realized from the sale or disposition of their principal residence by natural persons, the proceeds of which is fully utilized in acquiring or constructing a new principal residence within eighteen
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The grossed-up monetary value of the fringe benefit represents the whole amount of income realized by the employee which includes the net amount of money or net monetary value of property which has been received plus the amount of fringe benefit tax thereon otherwise due from the employee but paid by the employer for and in behalf of his employee, pursuant to the provisions of this Section. Coverage These Regulations shall cover only those fringe benefits given or furnished to managerial or supervisory employees and not to the rank and file. The term, "RANK AND FILE EMPLOYEES" means all employees who are holding neither managerial nor supervisory position. The Labor Code of the Philippines, as amended, defines "managerial employee" as one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off,
The tax imposed under Sec. 33 of the Code shall be treated as a final income tax on the employee which shall be withheld and paid by the employer on a calendar quarterly basis as provided under Sec. 57
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(1) If the fringe benefit is granted in money, or is directly paid for by the employer, then the value is the amount granted or paid for. (2) If the fringe benefit is granted or furnished by the employer in property other than money and ownership is transferred to the employee, then the value of the fringe benefit shall be equal to the fair market value of the property as determined in accordance with Sec. 6 (E) of the Code (Authority of the Commissioner to Prescribe Real Property Values). (3) If the fringe benefit is granted or furnished by the employer in property other than money but ownership is not transferred to the employee, the value of the fringe benefit is equal to the depreciation value of the property. Taxation of fringe benefit received by a non-resident alien individual who is not engaged in trade or business in the Philippines A fringe benefit tax of twenty-five percent (25%) shall be imposed on the grossed-up monetary value of the fringe benefit. The said tax base shall be computed by dividing the monetary value of the fringe benefit by seventy-five per cent (75%).
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(7) Expenses for foreign travel (a) Reasonable business expenses which are paid for by the employer for the foreign travel of his employee for the purpose of attending business meetings or conventions shall not be treated as taxable fringe benefits. In this instance, inland travel expenses (such as expenses for food, beverages and local transportation) except lodging cost in a hotel (or similar establishments) amounting to an average of US$300.00 or less per day, shall not be subject to a fringe benefit tax. The expenses should be supported by documents proving the actual occurrences of the meetings or conventions. The cost of economy and business class airplane ticket shall not be subject to a fringe benefit tax. However, 30 percent of the cost of first class airplane ticket shall be subject to a fringe benefit tax. (b) In the absence of documentary evidence showing that the employee's travel abroad was in connection with business meetings or conventions, the entire cost of the ticket, including cost of hotel accommodations and other expenses incident thereto shouldered by the employer, shall be treated as taxable fringe benefits. The business meetings shall be evidenced by official
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Grossed-up monetary benefit granted (P66,000.00 divided by 66% factor for calendar year 1998 times 50% taxable portion) P50,000.00 Fringe benefit tax due thereon (34%) P17,000.00 ========= ABC Corporation shall take up in its books of accounts the P66,000.00 fringe benefit furnished to Mr. Dela Cruz, under account title "Fringe Benefit Expense" and the amount of 17,000.00 under the account title "Fringe Benefit Tax Expense". The aforesaid amounts shall be fully allowed as deductions from the gross income of ABC Corporation and shall be taken up in the said employer's books of accounts as follows: Debit: Fringe Benefit Expense P66,000 Debit: Fringe Benefit Tax Expense P17,000 Credit: Cash P83,000 To record fringe benefit expense and fringe benefit tax paid on rental of the
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The following shall be considered as "de minimis" benefits not subject to income tax as well as withholding tax on compensation income of both managerial and rank and file employees: a) Monetized unused vacation leave credits of private employees not exceeding ten (10) days during the year; b) Monetized value of vacation and sick leave credits paid to government officials and employees; c) Medical cash allowance to dependents of employees, not exceeding P750 per employee per semester or P125 per month; d) Rice subsidy of P1,500 or one (1) sack of 50 kg. rice per month amounting to not more than P1,500; e) Uniform and Clothing allowance not exceeding P4,000 per annum; f) Actual medical assistance, e.g. medical allowance to cover medical and healthcare needs, annual medical/executive check-up, maternity assistance, and routine consultations, not exceeding P10,000.00 per annum; g) Laundry allowance not exceeding P300 per month; h) Employees achievement awards, e.g., for length of service or safety achievement, which must be in the
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Statutory Minimum Wage (SMW) shall refer to the rate fixed by the Regional Tripartite Wage and Productivity Board (RTWPB), as defined by the Bureau of Labor and Employment Statistics (BLES) of the Department of Labor and Employment (DOLE). The RTWPB of each region shall determine the wage rates in the different regions based on established criteria and shall be the basis of exemption from income tax for this purpose. Holiday pay, overtime pay, night shift differential pay and hazard pay earned by the aforementioned MWE shall likewise be covered by the above exemption. Provided, however, that an employee who receives/earns additional compensation such as commissions, honoraria, fringe benefits, benefits in excess of the allowable statutory amount of P30,000.00, taxable allowances and other taxable income other than the SMW, holiday pay, overtime pay, hazard pay and night shift differential pay shall not enjoy the privilege of being a MWE and, therefore, his/her entire earnings are not exempt from income tax and, consequently, from withholding tax. MWEs receiving other income, such as income from the conduct of trade, business, or practice of profession, except income subject to final tax, in addition to compensation income are not exempted from income tax on their entire income earned during the taxable year. This rule, notwithstanding, the SMW, Holiday pay, overtime pay, night shift differential pay and hazard pay shall still be exempt from withholding tax.
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(14) Compensation income of employees in the public sector with compensation income of not more than the SMW in the nonagricultural sector, as fixed by RTWPB/NWPC, applicable to the place where he/she is assigned. The aforesaid income shall exempted from income tax. likewise be
The basic salary of MWEs in the public sector shall be equated to the SMW in the nonagricultural sector applicable to the place where he/she is assigned. The determination of the SMW in the public sector shall likewise adopt the same procedures and consideration as those of the private sector. Holiday pay, overtime pay, night shift differential pay and hazard pay earned by the aforementioned MWE in the public sector shall likewise be covered by the above exemption. Provided, however, that a public sector employee who receives additional compensation such as commissions, honoraria, fringe benefits, benefits in excess of the allowable statutory amount of P30,000.00, taxable allowances and other taxable income other than the SMW, holiday pay, overtime pay, night shift differential pay and hazard pay shall not enjoy the privilege of being a MWE and, therefore, his/her entire earnings are not exempt from income tax and, consequently, from withholding tax. MWEs receiving other income, such as income from the conduct of trade, business, or practice of profession, except income subject to final tax, in addition to compensation
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BIR Ruling No. 045-00 (Civil Service Commission) INCOME TAX; Monetization of leave credits to a maximum of 30 days and even up to 50 days not allowed for tax exemption purposes The ten-day allowable monetization of leave credits for tax exemption purposes have been crafted into
BIR Ruling No. DA-219-00 (ABB Group of Companies) This refers to your follow up letter dated March 6, 2000 correcting your original request dated January 20, 2000 for exemption from fringe benefit and withholding tax on
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BIR Ruling No. 061-99 (Petron Corporation) INCOME TAX; Overtime Meal Allowance The overtime meal allowances of P80.00/P90.00/P100.00 given by Petron to its rank and file employees, who have actually rendered overtime work, are not considered
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BIR Ruling No. 128-99 (De la Salle University) INCOME TAX - Section 2.79 of Revenue
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On the other hand, if the qualified faculty member is considered as a non-resident citizen, then he is taxable only on income derived from sources within the Philippines. Thus, income earned by a non-resident citizen abroad is exempt from income tax. An employer may be an individual, a corporation, a partnership, a trust, an estate, a joint-stock company, an association, or a syndicate, group, pool, joint venture, or other unincorporated organizations, group or entity. A trust or estate, rather than the fiduciary acting for or behalf of the trust or estate, is generally the employer. It can be inferred that a trust had been created between the University and the local companies in favor of the faculty members, and between the University and the graduate school students in favor of the said faculty. Hence, it is the trust that is the employer and not the University which only acts as an agent or fiduciary. Nonetheless, being the agent, fiduciary or other person who has the control, receipt, custody or disposal of, or pays the compensation payable by another employer to such employee, the amount of tax required to be withheld on each compensation payment made through an agent, fiduciary, or person shall, whether the compensation is paid separately on behalf of all such employers, be determined based on the aggregate amount of such compensation payment or payments in the same manner as if such aggregate amount had been paid by one employer. Since the University has the control, receipt, custody or disposal of or is
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BIR Ruling No. DA-081-03 (Lacson & Lacson Insurance Brokers) This refers to your letter dated December 27, 2002 requesting clarification on the following: (1) If non-insured in medical benefits provided by an employer to its employees and their dependents are subject to tax; and (2) If an employer decides to buy medical insurance for its employees and their dependents, are the insurance premiums subject to tax. In reply thereto, please be informed that Section 33 of the Tax Code of 1997 provides that a final tax of 32% beginning January 1, 2000 shall be imposed on the grossed-up monetary value of fringe benefit furnished or granted to the employee (except rank and file employees) by the employer, whether an individual or a corporation (unless the fringe benefit is required by the nature of, or necessary to the trade, business or profession of the employer, or when the fringe benefit is for the convenience or advantage of the employer). The term "fringe benefit" means any good,
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BIR Ruling No. DA-335-03 (International Flavors and Fragrances, Inc.) In reply, please be informed that the following rules shall generally apply in considering the tax consequences of certain benefits given by employers to their employees, whether rankand-file, supervisory or managerial. 1. Facilities or privileges that are categorized de minimis benefits under pertinent rules and regulations shall not be included as items of gross income for income tax purposes. They shall not also be included in the computation of the P30,000.00 threshold for a determination of the items of income that are to be excluded from income under Section 32(B)(7)(e) of the Tax Code of 1997.
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BIR Ruling No. 057-98 (Manggagawa ng Komunikasyon sa Pilipinas) FRINGE BENEFIT TAX - Fringe benefit in the form of Educational Assistance granted by the PLDT Management to the members of MKP, is in all cases exempt from the imposition of fringe benefits tax imposed under Section 33 (A) of the Tax Code of 1997 since it is one of those enumerated under Subsection ( C)(3) which provides for the non-taxability of benefits given to rank-and-file employees whether under a CBA or not. Such benefits, regardless of the amount, provided that the same fall under the definition of ordinary and necessary business expense, are considered as valid deductible expenses of PLDT. (BIR Ruling No. 057-98 dated May 21, 1998) x------------------------------------x 3.4.4 Premiums for Group Hospitalization Benefits (HMO)
BIR Ruling No. DA-469-06 (NEC Tokin Electronics, Inc.) This refers to your letter dated February 16, 2005 requesting on behalf of your client, NEC Tokin Electronics (Philippines), Inc. ("NEC Tokin" for brevity) for confirmation of your opinion that premiums for the group hospitalization benefits it provides to its nonrank and file employees under a Health Maintenance Organization (HMO) are not subject to fringe benefits tax (FBT) under Sec.
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BIR Ruling No. 055-99 (ABB Power Inc.) INCOME TAX; Meaning of Fringe Benefits - Fringe benefits means any goods, service or other benefit furnished or granted by an employer in cash or in kind, in addition to basic salaries, to an employee (except rank and file employee) such as housing. Section 33(a) of the Tax Code of 1997 stipulates that fringe benefits which are "required by the nature of, or necessary to the trade, business or profession of the employer, or when the fringe benefits is for the convenience or advantage of the employer" are not subject to the fringe benefit tax. If the living quarters are furnished to an employee for the convenience of the employer, the value thereof need not be included as part of compensation income subject to withholding. It appearing that the 3
BIR Ruling No. 003-97 In other words, for taxation purposes, the general rule is that the monetary value of the housing benefits to the employee shall be added to his remuneration for the purpose of determining the gross compensation income, EXCEPT where the living quarters are furnished to him for his employer's convenience. The question of when is the
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BIR Ruling No. 061-99 (Petron Corporation) INCOME TAX; Overtime Meal Allowance -
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This refers to your letter dated June 1, 2007 requesting for a ruling on the tax implication, if any, of the discounted purchase of shares of stock pursuant to a Stock Purchase Plan. It is represented that Intel Corporation ("Intel") is a corporation organized and existing under the laws of the United States of America and is the ultimate parent company of ITPI; that ITPI is a corporation registered and existing under Philippine laws and a PEZA registered enterprise/locator in Cavite; that under Intel Group's Stock Purchase Plan ("SPP"), employees of Intel and Intel participating subsidiaries such as ITPI, are given the opportunity to purchase common stock of Intel, which are traded at the NASDAQ Stock Exchange; that the SPP was designed as additional incentive to attract, retain, and motivate employees by providing the opportunity to purchase common stock shares of Intel at a discount; that at present, stock purchases are made twice a year, in February and August. In reply, please be informed as follows: Section 32 (A) of the Tax Code of 1997, as amended, defines gross income as all income derived from whatever source, including compensation for services in whatever form paid, including but not limited to, fees, salaries, wages, commissions and similar items. As implemented, compensation includes payment in some form of medium other than money. In the instant case, the SPP incentive is provided to all qualified or eligible employees,
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If the remuneration paid by an employer to an employee for services performed during onehalf (1/2) or more of any payroll period of not more than thirty-one (31) consecutive days constitutes wages, all the remuneration paid by such employer to such employee for such period shall be deemed to be wages; but if the remuneration paid by an employer to an employee for services performed during more than one -half (1/2) of any such payroll period does not constitute wages, then none of the remuneration paid by such employer to such employee for such period shall be deemed to be wages. RR 02-98 2.78.1(A) paragraphs 1-4 SECTION 2.78.1. Withholding of Income Tax on Compensation Income. (A) Compensation Income Defined. In general, the term "compensation" means all remuneration for services performed by an employee for his employer under an employer-employee relationship, unless specifically excluded by the Code. The name by which the remuneration for services is designated is immaterial. Thus, salaries, wages, emoluments and honoraria, allowances, commissions (e.g. transportation, representation, entertainment and the like); fees including director's fees, if the director is, at the same time, an employee of the employer/corporation; taxable bonuses and fringe benefits except those which are subject to the fringe benefits tax under
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(2) Living quarters or meals. If a person receives a salary as remuneration for services rendered, and in addition thereto, living quarters or meals are provided, the value to such person of the quarters and meals so furnished shall be added to the remuneration paid for the purpose of determining the amount of compensation subject to withholding. However, if living quarters or meals are furnished to an employee for the convenience of the employer, the value thereof need not be included as part of compensation income. (3) Facilities and privileges of a relatively small value. Ordinarily, facilities and privileges (such as entertainment, medical services, or so called "courtesy" discounts on purchases), furnished or offered by an employer to his employees generally, are not considered as compensation subject to withholding if such facilities or privileges are of relatively small value and are offered or furnished by the employer merely as a means of promoting the health, goodwill, contentment, or efficiency of his employees. Where compensation is paid in property other than money, the employer shall make necessary arrangements to ensure that the amount of the tax required to be withheld is available for payment to the Commissioner.
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BIR Ruling 128-99 (De la Salle University) INCOME TAX - Section 2.79 of Revenue Regulations No. 2-98, provides that every employer must withhold from compensation paid, an amount computed in accordance with these regulations. Provided, that no withholding of tax shall be required where the total compensation income of an individual does not exceed the statutory minimum wage of five thousand pesos (P5,000.00) monthly or sixty thousand pesos (P60,000.00) a year,
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RMC No. 34-2008 (Tax Treatment of Directors Fees for Income Tax and Business Tax Purposes) REVENUE MEMORANDUM CIRCULAR NO. 34-2008 issued on April 18, 2008 clarifies the tax treatment of directors fees for Income Tax and business tax purposes. Under section 79, in relation to Section 24(A), both of the National Internal Revenue Code (Tax Code), as amended, directors fees are subject to the withholding tax on wages. The said tax treatment applies whenever it is established that the director and the corporation has an employer-employee relationship (i.e President of a corporation sitting as a member of the Board of Directors). Revenue Regulations (RR) No. 2-98 provides that the term compensation means all remuneration for services performed by an employee for his employer under an employer-employee relationship, unless specifically excluded by the Code. Thus, fees including directors fees, if the director is, at the same time, an employee of the employer/corporation constitute compensation income (Section 2.78.1, RR No. 2-98). Accordingly, the directors fees received by employees are exempt from the Value -Added Tax (VAT) under Section 109 of the Tax Code. However, if these fees are paid to a director who is not an employee of the corporation paying such fees (i.e. whose duties are
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BIR Ruling No. DA-306-04 In reply thereto, please be informed that the Superintendent of the Norwegian missionaries who does not receive any fixed salary but only gifts and free-will offerings from abroad and from individuals and churches, is exempt from the payment of income tax and consequently from the filing of the corresponding income tax return. (BIR Ruling No. 082-94 dated April 4, 1994) Similarly situated is BIR Ruling No. DA196-00 dated March 30, 2000, where this Office ruled that ". . . that since the financial support being received by the foreign missionaries are not compensation and/or salary but mere donations, said financial support are not, therefore subject to Philippine income tax." On the other hand, the term "fringe benefit" means any good, service or other benefit furnished or granted by an employer in cash or in kind, in addition to basic salary, to an individual employee (except rank and file employee). (see Sec. 33(B), Tax Code of 1997) It is clear that the aforesaid benefits are given to employees who are holding managerial and supervisory positions. Inasmuch as foreign missionaries are not
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SECTION 2.78.2. Payroll Period. The term "payroll period" means the period of services for which a payment of compensation is ordinarily made to an employee by his employer. It is immaterial that the compensation is not always paid at regular intervals. EXAMPLE: if an employer ordinarily pays the weekly wages of his employees at the end of the week, but if for some reason a particular employee receives payment of his salaries for the past week in the middle of the current week and receives the remainder at the end of the same week, the payroll period is still the calendar week; or if, instead, the employee is sent on a three (3)-week trip by his employer and receives at the end of the trip a single compensation payment for three (3)-week services, the payroll period is still the calendar week, and the compensation payment shall be treated as though it were three (3) separate weekly compensation payments. For the purpose of determining the tax, an employee can have but one payroll period with respect to the compensation paid by any one employer. Thus, if an employee is paid a regular compensation for the weekly payroll and in addition thereto is paid supplemental compensation (for example taxable bonuses) determined with respect to a different period, the payroll period is the weekly payroll period. RR 02-98 2.79(B)(1) (as amended by RR 10-2008 3) (1) Use of Withholding Tax Tables. In
The numerals (1-4) affixed to the status symbols ME and S represent the number of qualified legitimate, illegitimate, or legally adopted children. Exemption - means the amount of exemption in thousand pesos an employee is entitled to claim as a deduction from gross compensation income in accordance with the status and number of qualified dependent children. x------------------------------------x 8.7 Payroll National Internal Revenue Code 78 (B) (B) Payroll Period. - The term 'payroll period' means a period for which payment of wages is ordinarily made to the employee by his employer, and the term "miscellaneous payroll period" means a payroll period other than, a daily, weekly, biweekly, semi-monthly, monthly, quarterly, semi-annual, or annual period.
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National Internal Revenue Code 51(A) (A) Requirements. (1) Except as provided in paragraph (2) of this Subsection, the following individuals are required to file an income tax return: (a) Every Filipino citizen residing in the Philippines; (b) Every Filipino citizen residing outside the Philippines, on his income from sources within the Philippines; (c) Every alien residing in the Philippines, on income derived from sources within the Philippines; and (d) Every nonresident alien engaged in trade or business or in the exercise of profession in the Philippines. (2) The following individuals shall not be required to file an income tax return; (a) An individual whose gross income does not exceed his total personal and additional exemptions for dependents under Section 35: Provided, That a citizen of the Philippines and any alien individual engaged in business or practice of profession within the Philippine shall file an income tax return, regardless of the amount of gross income; (b) An individual with respect to pure compensation income, as defined in Section 32 (A)(1), derived from sources within the Philippines, the income tax on which has been
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National Internal Revenue Code 83 SEC. 83. Statements and Returns. (A) Requirements. - Every employer required to deduct and withhold a tax shall furnish to each such employee in respect of his employment during the calendar year, on or before January thirty-first (31st) of the succeeding year, or if his employment is terminated before the close of such calendar year, on the same day of which the last payment of wages is made, a written statement confirming the wages paid by the employer to such employee during the calendar year, and the amount of tax deducted and withheld under this Chapter in respect of such wages. The statement required to be furnished by this Section in respect of any wage shall contain such other information, and shall be furnished at such other time and in such form as the Secretary of Finance, upon the recommendation of the Commissioner, may, by rules and regulation, prescribe. (B) Annual Information Returns. - Every employer required to deduct and withhold the taxes in respect of the wages of his
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