SUN TZU NOTES

Al L. Beronque

Employee
 includes any individual employed by an employer
 Employer-Employee relationship is governed by the Labor
Code whereas Principal-Agent relationship is by Civil Code.
[art 97c]
 one who works for an employer, a person working
Principal-Agent Relationship
for salary or wages; any person in the service of
another under a contract for hire, express or
Art 1868 CC: By the contract of agency, a person binds
implied, oral or written [alcantara].
himself to render some service or to do something in
 always a natural person [may include Filipino
representation or on behalf of another, with the consent or
citizens and foreigners]
authority of the latter.
Employer-Employee Relationship
 It is the principal who selects the agent
 An agent is compensated under the contract of agency for
 it is in personam, involves the rendition of
services rendered.
personal service by the employee, and partakes
 An agent is disciplined by the principal because former is
of master and servant relationship.
under the authority of the latter.
 contractual in character, it arises from the
 The principal controls the means and methods of the work
agreement of the parties.
of an agent.
Four-Fold Test
[Relate above to the four-fold test]
1. The selection and engagement of the employee.
2. The payment of wages or salaries for services.  There is only one party in a principal-agent relationship,
3. The power of dismissal or to impose disciplinary the agent is merely an extension of the principal. They are
actions. regarded as one. So if there is a contractor relationship, it
4. The employer’s power to control the employee is not between 3 parties but is between the principal or
the agent as an extension of the principal and the other
with respect to the means and methods by which
party.
the work is to be accomplished. This is also
known as the “control test”.
Note: To make a distinction between a principal-agent
relationship and that of an employer-employee relationship,
Control Test
the four-fold test will not be used because the 1) agent is
 the most important element
selected by the principal 2) compensated by the principal 3)
 that is, whether the employer controls or has
and most oftentimes, the principal also substitutes his own
reserved the right to control the employee not
judgment for that of the agent.
only as to the result of the work to be done but
also as to the means and methods by which the
Employer-Employee vs. Principal-Contractor
same is to be accomplished [investment planning
corp v. sss 11/18/67]
Contractor:
 carries on a distinct and independent business and
Q: Why is it important to determine whether the
undertakes to perform the job, work or service on its own
relationship between the parties is that of employer
account and under its own responsibility, according to its
and employee or that of principal and independent
own manner and method, and free from the control and
contractor or of principal-agent?
direction of the principal in all matters connected with the
performance of the work except as to the results thereof
A: To determine what laws will govern the rights
[DO 9].
and liabilities of the parties, and what tribunal or
 Maybe an individual, corporate or juridical contractor
court will have jurisdiction over their disputes.
Principal-Contractor Relationship

 principal selects the contractor

Relationship Governing Tribunal
 contractor is compensated for services rendered.
Laws
Employer- Labor laws Labor tribunal  The contractor is not under the discipline of the principal.
Employee
Principal- obligations Regular courts
 the contractor is not under the control of the principal.
The definition says that aside from engaging in a business
Independent and Contracts
separately distinct from the principal, to perform job, work
Contractor [CC]
or service, according to his own means and methods, free
Principal- Civil Code Regular courts
from control and direction of the principal except as to the
Agent
results thereof.

[relate above with four-fold test]

Employer-Employee vs. Principal-Agent
 this relationship exists also in situations under art 106-
109 LC.

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for
every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
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 SUN TZU NOTES
Al L. Beronque
3. RIGHT TO HIRE
Right or Prerogative?
 Strictly speaking, the employer has no right to
hire a person as his employee. The matter of
selecting a person as one’s employee is more
appropriately described as a prerogative. It is
not a right in which you can go to court and
enforce the right to hire a person, otherwise it
will violate the constitutional provision against
involuntary servitude, if one is compelled to be
another’s employee. No person can be compelled
against his will to do an act whether legal or
illegal. Thus, an employer cannot go to court and
get an injunction to compel a person to become
his employee. If at all, the employee can only
exercise the prerogative to invite that person and
to hire him if he so desires. In that sense, the
right to hire is essentially a management
prerogative.
Management Prerogative
 An act of the employer according to his own
judgment or discretion to regulate his business.
This includes hiring, transfer, dismissal, etc.
Exercise of Right or Prerogative Absolute?
 No, it is regulated by law.
Legal Limitations/Prohibitions Prior to Hiring
A. Under the Labor Code
1. Prohibition on Stipulation Against Marriage
Art 136. Stipulation against marriage. - It shall
be unlawful for an employer to require as a condition
of employment or continuation of employment that a
woman employee shall not get married, or to
stipulate expressly or tacitly that upon getting
married, a woman employee shall be deemed
resigned or separated, or to actually dismiss,
discharge, discriminate or otherwise prejudice a
woman employee merely by reason of her marriage.
Marquez: It prohibits the employer from imposing
as a condition of employment that a woman
employee shall not get married.
 Applies to women in ordinary and special
occupations
 It assaults good morals and public policy, tending
to deprive a woman of freedom to choose her
status, a privilege that by all accounts inheres in
the individual as an intangible and inalienable
right [pt&t v. nlrc 272 scra 596]
2. Minimum Employable Age
If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for
every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
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ART. 139. Minimum employable age. - (a) No child below
fifteen (15) years of age shall be employed, except when he
works directly under the sole responsibility of his parents or
guardian, and his employment does not in any way interfere
with his schooling. [see RA 7610 as amended]
(b) Any person between fifteen (15) and eighteen (18) years
of age may be employed for such number of hours and such
periods of the day as determined by the Secretary of Labor
and Employment in appropriate regulations.
(c) The foregoing provisions shall in no case allow the
employment of a person below eighteen (18) years of age in
an undertaking which is hazardous or deleterious in nature as
determined by the Secretary of Labor and Employment.
3. ART. 248. Unfair labor practices of employers. - It
shall be unlawful for an employer to commit any of the
following unfair labor practice:
(b) To require as a condition of employment that a person or
an employee shall not join a labor organization or shall
withdraw from one to which he belongs [yellow dog
contract]
B. Under Special Laws
1. REPUBLIC ACT NO. 7610
[Special Protection Against Child Abuse, Exploitation
and Discrimination Act]
 Amended Art 139
 Subsequently amended by RA 7658 & 9231
 RA 9231 is implemented by DO 65-04
Sec. 12. Employment of Children. – Children below fifteen
(15) years of age may be employed except:
(1) When a child works directly under the sole responsibility
of his parents or legal guardian and where only members of
the employer’s family are employed: Provided, however, That
his employment neither endangers his life, safety and health
and morals, nor impairs his normal development: Provided,
further, That the parent or legal guardian shall provide the
said minor child with the prescribed primary and/or secondary
education; or
(2) When a child’s employment or participation in public &
entertainment or information through cinema, theater, radio
or television is essential: Provided, The employment contract
concluded by the child’s parent or guardian, with the express
agreement of the child concerned, if possible, and the
approval of the Department of Labor and Employment:
Provided, That the following requirements in all instances are
strictly complied with:
(a) The employer shall ensure the protection, health, safety
and morals of the child;
(b) the employer shall institute measures to prevent the
child’s exploitation or discrimination taking into account the
 SUN TZU NOTES
Al L. Beronque
system and level of remuneration, and the duration
and arrangement of working time; and
© The employer shall formulate and implement,
subject to the approval and supervision of competent
authorities, a continuing program for training and
skill acquisition of the child.
In the above exceptional cases where any such child
may be employed, the employer shall first secure,
before engaging such child, a work permit from the
Department of Labor and Employment which shall
ensure observance of the above requirement.
The Department of Labor and Employment shall
promulgate rules and regulations necessary for the
effective implementation of this Section.
Sec. 14. Prohibition on the Employment of
Children in Certain Advertisements. – No person
shall employ child models in all commercials or
advertisements promoting alcoholic beverages,
intoxicating drinks, tobacco and its byproducts and
violence.
 RA 7610 amended art 139 LC
REPUBLIC ACT NO. 7658
An act prohibiting the employment of children below
15 years of age in public and private undertakings,
amending for this purpose section 12, article
viii of r. a. 7610.
Section 1. Section 12, Article VIII of R. A. No.
7610 otherwise known as the “Special Protection of
Children Against Child Abuse, Exploitation and
Discrimination Act” is hereby amended to read as
follows:
“Sec. 12. Employment of Children. — Children
below fifteen (15) years of age shall not be employed
except:
(1) When a child works directly under the sole
responsibility of his parents or legal guardian and
where only members of the employer’s family are
employed: Provided, however, That his employment
neither endangers his life, safety, health and morals,
nor impairs his normal development; Provided,
further, That the parent or legal guardian shall
provide the said minor child with the prescribed
primary and/or secondary education; or
(2) Where a child’s employment or participation
in public entertainment or information through
cinema, theater, radio or television is essential:
Provided, The employment contract is concluded by
the child’s parents or legal guardian, with the
express agreement of the child concerned, if
possible, and the approval of the Department of
Labor and Employment: and Provided, That the
following requirements in all instances are strictly
complied with:
If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for
every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
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(a) The employer shall ensure the protection, health,
safety, morals and normal development of the child;
(b) The employer shall institute measures to prevent the
child’s exploitation or discrimination taking into account the
system and level of remuneration, and the duration and
arrangement of working time; and
© The employer shall formulate and implement, subject
to the approval and supervision of competent authorities, a
continuing program for training and skills acquisition of the
child.
In the above exceptional cases where any such child may be
employed, the employer shall first secure, before engaging
such child, a work permit from the Department of Labor and
Employment which shall ensure observance of the above
requirements.
The Department of Labor and Employment shall promulgate
rules and regulations necessary for the effective
implementation of this Section.”
REPUBLIC ACT NO. 9231
An act providing for the elimination of the worst forms of child
labor and affording stronger protection for the working child,
amending for this purpose republic act no. 7610, as
amended, otherwise known as the “special protection of
children against child abuse, exploitation and discrimination
act”
Section 1. Section 2 of Republic Act No. 7610, as amended,
otherwise known as the “Special Protection of Children
Against Child Abuse, Exploitation and Discrimination Act”, is
hereby amended to read as follows:
Sec. 2. Section 12 of the same Act, as amended, is hereby
further amended to read as follows:
“Sec. 2. Employment of Children – Children below fifteen
(15) years of age shall not be employed except:
“1) When a child works directly under the sole responsibility
of his/her parents or legal guardian and where only members
of his/her family are employed: Provided, however, That
his/her employment neither endangers his/her life, safety,
health, and morals, nor impairs his/her normal development:
Provided, further, That the parent or legal guardian shall
provide the said child with the prescribed primary and/or
secondary education; or
“2) Where a child’s employment or participation in public
entertainment or information through cinema, theater, radio,
television or other forms of media is essential: Provided, That
the employment contract is concluded by the child’s parents
or legal guardian, with the express agreement of the child
concerned, if possible, and the approval of the Department of
Labor and Employment: Provided, further, That the following
requirements in all instances are strictly complied with:
“(a) The employer shall ensure the protection, health, safety,
morals and normal development of the child;
“(b) The employer shall institute measures to prevent the
child’s exploitation or discrimination taking into account the
 SUN TZU NOTES
Al L. Beronque

system and level of remuneration, and the duration

and arrangement of working time; and

“© The employer shall formulate and implement,

subject to the approval and supervision of competent
authorities, a continuing program for training and
skills acquisition of the child.

“In the above exceptional cases where any such child

may be employed, the employer shall first secure,
before engaging such child, a work permit from the
Department of Labor and Employment which shall
ensure observance of the above requirements.

“For purposes of this Article, the term “child” shall

apply to all persons under eighteen (18) years of
age.”

Sec. 3. The same Act, as amended, is hereby

further amended by adding new sections to be
denominated as Sections 12-A, 12-B, 12-C, and 12-
D to read as follows:
“Sec. 12-A. Hours of Work of a Working Child. –
Under the exceptions provided in Section 12 of this
Act, as amended:
“(1) A child below fifteen (15) years of age may be
allowed to work for not more than twenty (20) hours
a week: Provided, That the work shall not be more
than four (4) hours at any given day;

“(2) A child fifteen (15) years of age but below

eighteen (18) shall not be allowed to work for more
than eight (8) hours a day, and in no case beyond
forty (40) hours a week;

“(3) No child below fifteen (15) years of age shall be

allowed to work between eight o’clock in the evening
and six o’clock in the morning of the following day
and no child fifteen (15) years of age but below
eighteen (18) shall be allowed to work between ten
o’clock in the evening and six o’clock in the morning
of the following day.”

“Sec. 12-D. Prohibition Against Worst Forms of Child

Labor. – No child shall be engaged in the worst forms
of child labor. The phrase “worst forms of child labor”
shall refer to any of the following:

“(1) All forms of slavery, as defined under the “Anti-

trafficking in Persons Act of 2003”, or practices
similar to slavery such as sale and trafficking of
children, debt bondage and serfdom and forced or
compulsory labor, including recruitment of children
for use in armed conflict; or

“(2) The use, procuring, offering or exposing of a

child for prostitution, for the production of
pornography or for pornographic performances; or

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for
every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
Page 4 of 28

“(3) The use, procuring or offering of a child for
illegal or illicit activities, including the production and
trafficking of dangerous drugs and volatile
substances prohibited under existing laws; or
“(4) Work which, by its nature or the circumstances
in which it is carried out, is hazardous or likely to be
harmful to the health, safety or morals of children,
such that it:
“a) Debases, degrades or demeans the intrinsic
worth and dignity of a child as a human being; or
“b) Exposes the child to physical, emotional or
sexual abuse, or is found to be highly stressful
psychologically or may prejudice morals; or
“c) Is performed underground, underwater or at
dangerous heights; or
“d) Involves the use of dangerous machinery,
equipment and tools such as power-driven or
explosive power-actuated tools; or
“e) Exposes the child to physical danger such as, but
not limited to the dangerous feats of balancing,
physical strength or contortion, or which requires the
manual transport of heavy loads; or
“f) Is performed in an unhealthy environment
exposing the child to hazardous working conditions,
elements, substances, co-agents or processes
involving ionizing, radiation, fire, flammable
substances, noxious components and the like, or to
extreme temperatures, noise levels, or vibrations; or
“g) Is performed under particularly difficult
conditions; or
“h) Exposes the child to biological agents such as
bacteria, fungi, viruses, protozoans, nematodes and
other parasites; or
“i) Involves the manufacture or handling
explosives and other pyrotechnic products.”
Section 5. Section 14 of the same Act is hereby
amended to read as follows:
“Sec. 14. Prohibition on the Employment of
Children in Certain Advertisements. – No child
shall be employed as a model in any advertisement
directly or indirectly promoting alcoholic beverages,
intoxicating drinks, tobacco and its byproducts,
gambling or any form of violence or pornography.”
Department Order No. 65-04 series of 2004 [see
on separate sheet]
If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for
every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
SUN TZU NOTES
Al L. Beronque
2. REPUBLIC ACT NO. 7877
[Anti-Sexual Harassment Act of 1995]
SECTION 3. Work, Education or Training -Related, Sexual
Harassment Defined. - Work, education or training-related
sexual harassment is committed by an employer, employee,
manager, supervisor, agent of the employer, teacher,
instructor, professor, coach, trainor, or any other person who,
having authority, influence or moral ascendancy over another
in a work or training or education environment, demands,
requests or otherwise requires any sexual favor from the
other, regardless of whether the demand, request or
requirement for submission is accepted by the object of said
Act.
(a) In a work-related or employment environment,
sexual harassment is committed when:
(1) The sexual favor is made as a condition in the hiring
or in the employment, re-employment or continued
employment of said individual, or in granting said individual
favorable compensation, terms of conditions, promotions, or
privileges; or the refusal to grant the sexual favor results in
limiting, segregating or classifying the employee which in any
way would discriminate, deprive ordiminish employment
opportunities or otherwise adversely affect said employee;
3.REPUBLIC ACT NO. 8504
[Philippine Aids and Prevention Control Act of 1998]
ARTICLE VII
DISCRIMINATORY ACTS AND POLICIES
SECTION 35. Discrimination in the workplace. —
Discrimination in any form from pre-employment to post-
employment, including hiring, promotion or assignment,
based on the actual, perceived or suspected HIV status of an
individual is prohibited. Termination from work on the sole
basis of actual, perceived or suspected HIV status is deemed
unlawful.
4. RA 9208 [Anti-trafficking of Persons Act of 2003]
of (d) Forced Labor and Slavery - refer to the extraction of
work or services from any person by means of enticement,
violence, intimidation or threat, use of force or coercion,
including deprivation of freedom, abuse of authority or moral
ascendancy, debt-bondage or deception.
Sec. 4. Acts of Trafficking in Persons. - It shall be unlawful
for any person, natural or juridical, to commit any of the
following acts:
(a) To recruit, transport, transfer; harbor, provide, or receive
a person by any means, including those done under the
pretext of domestic or overseas employment or training or
apprenticeship, for the purpose of prostitution, pornography,
sexual exploitation, forced labor, slavery, involuntary
servitude or debt bondage;
Page 5 of 28

(b) To introduce or match for money, profit, or
material, economic or other consideration, any
person or, as provided for under Republic Act No.
6955, any Filipino woman to a foreign national, for
marriage for the purpose of acquiring, buying,
offering, selling or trading him/her to engage in
prostitution, pornography, sexual exploitation,
forced labor, slavery, involuntary servitude or debt
bondage;
 Please refer to the whole text of this law
5. REPUBLIC ACT NO. 7277
[Magna Carta for Disabled Persons]
Prohibition on Discrimination Against Disabled
Persons
Sec. 32. Discrimination on Employment. — No
entity, whether public or private, shall discriminate
against a qualified disabled person by reason of
disability in regard to job application procedures,
the hiring, promotion, or discharge of employees,
employee compensation, job training, and other
terms, conditions, and privileges of employment.
The following constitute acts of discrimination:
(a) Limiting, segregating or classifying a disabled
job applicant in such a manner that adversely
affects his work opportunities;
(b) Using qualification standards, employment tests
or other selection criteria that screen out or tend to
screen out a disabled person unless such standards,
tests or other selection criteria are shown to be job-
related for the position in question and are
consistent with business necessity;
(c) Utilizing standards, criteria, or methods
administration that:
(1) have the effect of discrimination on the basis of
disability; or
(2) perpetuate the discrimination of others who are
subject to common administrative control.
(d) Providing less compensation, such as salary,
wage or other forms of remuneration and fringe
benefits, to a qualified disabled employee, by
reason of his disability, than the amount to which a
non-disabled person performing the same work is
entitled;
(e) Favoring a non-disabled employee over a
qualified disabled employee with respect to
promotion, training opportunities, study and
scholarship grants, solely on account of the latter's
disability;
If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for
every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
SUN TZU NOTES
Al L. Beronque
(f) Re-assigning or transferring a disabled employee to a job
or position he cannot perform by reason of his disability;
(g) Dismissing or terminating the services of a disabled
employee by reason of his disability unless the employer can
prove that he impairs the satisfactory performance of the
work involved to the prejudice of the business entity:
Provided, however, That the employer first sought to provide
reasonable accommodations for disabled persons;
(h) Failing to select or administer in the most effective
manner employment tests which accurately reflect the skills,
aptitude or other factor of the disabled applicant or
employee that such tests purports to measure, rather than
the impaired sensory, manual or speaking skills of such
applicant or employee, if any; and
(i) Excluding disabled persons from membership in labor
unions or similar organizations.
5. REPUBLIC ACT NO. 8791
[General Banking Laws of 2000]
Sec 55.4. Consistent with the provisions of Republic Act No.
1405, otherwise known as the Banks Secrecy Law, no bank
shall employ casual or non regular personnel or too lengthy
probationary personnel in the conduct of its business
involving bank deposits.
Involuntary Servitude
Art. 1703. No contract which practically amounts to
involuntary servitude, under any guise whatsoever, shall be
valid.
DOLE Memo Cir. No. 2 series of 1998 [Technical
Guidelines for Classifying Hazardous and Non-
Hazardous Establishments, Workplaces and Work
Processes], see appendix AAA page 590 FOZ.
DO No. 4, Series of 1999 [Hazardous Work and
Activities for Persons Below 18 years of age], see
of
appendix WW page 583 FOZ
Art 97(f)
 Wage paid to employee shall mean 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
method of calculating the same, 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, 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.
Wage vs. Salary
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the conduct of the employer’s business. [book 3 rule 7 sec

Wages
 applies to the compensation for manual labor,
skilled or unskilled, paid at stated times, and
measured by the day, week, month, or season.
 Indicates inconsiderable pay for a lower and less
responsible character of employment.
as distinguished from
Salary
 denotes a higher degree of employment or a
superior grade of services, and implies a position
or office.
 Suggestive of a larger and more permanent or
fixed compensation for more important service.
By some of the authorities, the word “wages” in its
ordinary acceptance, has a less extensive meaning
than the word “salary”, “wages” being ordinarily
restricted to sums paid to artisans, mechanics,
laborers, and other employees of like class, as
distinguished from the compensation of clerks,
officers of public corporations, and public offices. In
many situations, however, the words “wages” and
“salary” are synonymous. [35 Am. Jur. Sec. 63, p.
496-497]
Our SC reached the same conclusion, the words
“wages” and “salary” are in essence synonymous.
Fair Day’s Wage for a Fair Day’s Labor
 If there is no work performed by the employee
there can be no wage or pay unless the laborer
was able, willing and ready to work but was
prevented by management or was illegally locked
out, suspended or dismissed. Where the
employee’s dismissal was for a just cause, it
would neither be fair nor just to allow the
employee to recover something he has not
earned and could not have earned. [Phil Airlines
v. NLRC 6/22/89]
Where the failure of workers to work was not due to
the employer’s fault, the burden of economic loss
suffered by the employees should not be shifted to
the employer. Each party must bear his own loss.
[SSS v. SSS Supervisor’s Union 10/23/82]
Equal Pay for Equal Work
 Employees in the Philippines, if they are
performing similar functions and responsibilities
under similar working conditions, should be paid
under this principle.
Facilities
 Are items of expense necessary for the laborer’s
and his family’s existence and subsistence. [Atok-
Big Wedge Assn v. Atok-Big Wedge Co. 97 phil
294]
 Shall include articles or services for the benefit of
the employee or his family but shall not include
tools of the trade or articles or service primarily
for the benefit of the employer or necessary to
5]
 Wage includes facilities or commodities
 Art 97f provides that “wage” includes the fair and
reasonable value, as determined by the Secretary of
Labor, of board, lodging, or other facilities customarily
furnished by the employer to the employee.
This means that an employer may provide, for instance,
food and housing to his employees but he may deduct their
values from the employees’ wages.
Requisites for facilities to be considered as an integral
part of an employee’s wage
1. Must be customarily furnished by the employer to the
employee
2. Must be charged at fair and reasonable value
3. The provision on deductible facilities must be voluntarily
accepted by the employee in writing.
[Mabeza v. NLRC 271 scra 670]
 If the requisites are all present, that facilities may take
the place of the cash payment of the employee’s wage.
This is one exception of the requirement that an
employee’s wage shall be paid in legal tender, you cannot
pay it in kind.
Supplements
 Constitute extra remuneration or special privileges or
benefits given to or received by the laborers over and
above their ordinary earnings or wages. [Atok-Big Wedge
Assn v. Atok-Big Wedge Co. 97 phil 294]
Facilities v. Supplements
 Facilities are wage-deductible, supplements are not.
 The classification of an item of expense as a facility or a
supplement will depend on the purpose and not on the
kind.
 So if it is principally or mainly for the benefit of the
employee, classify as facilities, and the fair and reasonable
value of that can be considered as deductible from the
employee’s wage.
Worker’s Lien
Art 1707 CC: The laborer’s wages shall be a lien on the
goods manufactured or the work done.
Reason: By virtue of this new lien, the laborers who are not
paid by an unscrupulous and irresponsible industrialist or
manager may by legal means have the goods manufactured
thru the sweat of their brow sold, and out of the proceeds get
their salary, returning the excess, if any [Report Code
Commission, p.14]
Goods Manufactured or the work done
 Refers to personal property, not real property. And even
here, the lien is allowed the laborer only if he was directly
employed or engaged by the owner. The rule does not
apply if contractor, with men under him, had undertaken
the job.
Exemption from execution or attachment

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for
every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
Page 7 of 28
 SUN TZU NOTES
Al L. Beronque
Show Desktop.scf
Art 1708 CC: The laborer’s
wages shall not be subject to execution or
attachment, except for debts incurred for food,
shelter, clothing and medical attendance.
GR: Wages are not subject to execution.
Exception: Debts incurred for support such as food,
shelter, clothing, medical attendance.
 The rule applies even when the wages are still in
the possession of the employer whose properties
may have been attached.
Salaries due to government employees cannot
be garnished before they are paid to the
employees concerned because:
1. The incentive for work would be lost
2. Generally, the state cannot be sued; and
3. Finallly, technically, before disbursements, the
money still belongs to the government.
Art 1709 CC: The employer shall neither seize nor
retain any tool or other articles belonging to the
laborer.
 No seizure or retention by the employer
Methods of Fixing Compensation
[see art 97f]
4. Time [daily and monthly paid workers]
5. Commission
6. Job or task basis
7. Piece-rate basis [payment by results]
 These are very important in relation to persons
or employees who are exempted from enjoying
the benefits under the LC because under Art 82,
workers paid by results are exempted from
overtime pay, service incentive leave, etc.
(conditions of employment).
4. WAGE RATIONALIZATION ACT
RA 6727
Wage Rationalization Act
 See the full text page 450 FOZ
Importance: this law, which amended the labor
code will tell us the different government agencies
involved in the fixing of wages and also how to
resolve wage distortion.
Purpose: was intended to rationalize wages;
FIRST, by providing for full-time boards to police
wages round-the-clock.
If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for
every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
Page 8 of 28
SECOND, by giving the boards enough powers to achieve this
objective.
Policies of the State
1. To rationalize the fixing of the minimum wage.
[important]
 It has been rationalized because article 124 of this RA
provides for the standards and criteria that should guide
the agency of government when it comes to fixing the
minimum wage. It is noted that under the standard
criteria, that the congress has tried to weigh the factors
involving the employers, as well as the factors involving
the laborers when it comes to fixing of employee’s wage in
order to rationalize it.
 Before RA 6727, it was only Malacañang through a PD that
dictates how much should be the minimum wage in the
Philippines. Most often than not, those employers in the
far-flung areas are adversely affected because the fixing
of minimum wage is not rationalized. It does not take into
consideration, for example, the capitalization of the
employer, the profit expected, the cost of living in a
particular area.
With the advent of RA 6727, the law deems it necessary
that there shall be tandard criteria in fixing the employee’s
wage.
Art 124 RA 6727: Standards or Criteria for Minimum
Wage Fixing
a. The demand for living wages;
b. Wage adjustment vis-à-vis the consumer price index;
c. The cost of living and changes or increases therein;
d. The needs of workers and their families
e. The need to induce industries to invest in the countryside;
f. Improvements in standards of living
g. The prevailing wage levels;
h. Fair return of the capital invested and capacity to pay of
employers;
i. Effects on employment generation and family income; and
j. The equitable distribution of income and wealth along the
imperatives of economic and social development.
2. To promote productivity-improvement and gain-sharing
measures to ensure a decent standard of living for the
workers and their family.
3. To guarantee the rights of labor to its just share in the
fruits of production
4. To enhance employment generations in the countryside
through industry dispersal.
5. To allow business and industry reasonable returns on
investment, expansion and growth.
6. The state shall promote collective bargaining as the
primary mode of setting wages and other terms and
conditions of employment; and whenever necessary, the
minimum wage rates shall be adjusted in a fair and
equitable manner, considering existing regional disparities
in the cost-of-living and other sociao-economic factors and
the national economic and social development plans.
[important]
 SUN TZU NOTES
Al L. Beronque
 This is an important policy because it promotes
collective bargaining as a mode of settling labor
disputes
GOVERNMENT AGENCIES INVOLVED
A. National Wages and Productivity
Commission [NWPC]
ART. 120 LC. Creation of National Wages and
Productivity Commission. - There is hereby created a
National Wages and Productivity Commission,
hereinafter referred to as the Commission, which
shall be attached to the Department of Labor and
Employment (DOLE) for policy and program
coordination. (As amended by Republic Act No. 6727,
June 9, 1989).
 Determines the offices/headquarters of the
respective Regional Tripartite Wages and
Productivity Boards.
 Art 121C (As amended by Republic Act No. 6727,
June 9, 1989) grants the NWPC the power to
prescribe rules and guidelines for the
determination of appropriate wages in the
country.
Note: Guidelines issued by the RTWPB without the
approval of, or worse, contrary to those promulgated
by the NWPC are ineffectual, void and cannot be the
source of rights and privileges.
Composition [7]
 Art 121 LC (As amended by Republic Act No.
6727, June 9, 1989).
1. Ex-Officio Chairman
Secretary of DOLE
2. Ex-Officio Vice-Chairman
Director-General of NEDA
3. Two (2) members each from workers and
employers sectors
who shall be appointed by the President of
the Phil upon recommendation of the Secretary of
DOLE to be made on the basis of the list of nominees
submitted by the workers and employers sectors,
respectively.
4. The Executive Director shall also be a member of
the Commission
Secretariat [headed by Executive Director]
Executive Director
shall be appointed by the President of the
Phil upon recommendation of the Secretary of DOLE
2 Deputy Directors
shall be appointed by the President of the
Phil upon recommendation of the Secretary of DOLE
If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for
every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
Page 9 of 28
B. Regional Tripartite Wages and Productivity Boards
[RTWPB]
ART. 122 LC. Creation of Regional Tripartite Wages and
Productivity Boards. - There is hereby created Regional
Tripartite Wages and Productivity Boards, hereinafter referred
to as Regional Boards, in all regions, including autonomous
regions as may be established by law. The Commission shall
determine the offices/headquarters of the respective Regional
Boards. (As amended by Republic Act No. 6727, June 9,
1989).
 The SC is of the opinion that Congress meant the boards
to be creative in resolving the annual question of wages
without labor and management knocking on the
legislature’s door at every turn. The Court’s opinion is
that if RA 6727 intended the board alone to set floor
wages, the Act would have no need for a board but an
accountant to keep track of the latest consumer price
index, or better would have Congress done it as the need
arises, as the legislature, prior to the Act has done so for
years.
Composition [7]
 Art 122 LC (As amended by Republic Act No. 6727, June
9, 1989).
1. Chairman
Regional Director of DOLE
2. Vice-Chairmen
Regional Director of NEDA
Regional Director of DTI
3. Two (2) members each from workers and employers
sectors
who shall be appointed by the President of the Phil,
upon the recommendation of the Secretary of DOLE, to be
made on the basis of the list of nominees submitted by the
workers and employers sectors, respectively.
Secretariat
Assisting each Board
Art 126 LC. Prohibition Against Injunction.—No
preliminary or permanent injunction or temporary restraining
order may be issued by any court, tribunal or other entity
against any proceedings before the Commission or the
Regional Boards (As amended by Republic Act No. 6727, June
9, 1989).
Revised Rules of Procedures on Minimum Wage Fixing,
Series of 1995
NWPC Guidelines No. 001-95
 this is adopted and promulgated by NWPC pursuant to Art
121C LC (As amended by Republic Act No. 6727, June 9,
1989)
 these are rules governing proceedings in the NWPC and
the RTWPB in the fixing of minimum wage rates.
 SUN TZU NOTES
Al L. Beronque

 For full text refer to page 476 Appendix AA FOZ 5. Helps employees pay off the needed social security
program.

 This program would require contribution from the

ART. 121 LC. Powers and functions of the
employees themselves, and would be unjust to require
Commission. - The Commission shall have the
such a contribution of those whose wages are not enough
following powers and functions:
for their subsistence. It is unreasonable to ask a man to
set aside something for the future when he does not have
(c) To prescribe rules and guidelines for the enough to eat today.
determination of appropriate minimum wage and
productivity measures at the regional, provincial, or Disadvantages of Minimum Wage Rates
industry levels (As amended by Republic Act No.
6727, June 9, 1989)  wa gyud nako kit-i!!! Sorry!

Statutory Minimum Wage

REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY
 Refers to the lowest basic wages as provided by BOARD
law. [NWPC Guidelines 001-95] [RTWPB]

Minimum Wage
 Is the lowest wage rate fixed by law that an Power to Issue Wage Orders
employer can pay to his workers [Rules
Implementing RA 6727] Art 122b LC. The Regional Boards shall have the following
powers and functions in their respective jurisdiction:
 Compensation which is less than such minimum
rate is considered an underpayment that b. To determine and fix minimum wage rates applicable in
violates the law. their region, provinces or industries therein and to issue the
corresponding wage orders subject to guidelines issued by the
Purpose of Minimum Wage Commission (As amended by Republic Act No. 6727, June 9,
1989).
1. To promote productivity-improvement and gain-
sharing measures to ensure a decent standard of  See page 477 Sec 3 Rule 2 NWPC Guidelines No. 001-95
living for the workers and their families. for the procedures in minimum wage fixing.
2. To guarantee the rights of labor to its just share
in the fruits of production.  Wage Orders issued by the Boards cover only private
3. To enhance employment generation in the sector workers, except for household helpers and persons
countryside through industry dispersal and to in the personal employ of another, including family
allow business and industry reasonable returns drivers.
on investment, expansion and growth.
4. To affirm, as the Constitution expresses it, labor
as a primary social economic force. PROCEDURES IN MINIMUM WAGE FIXING
5. That wages are distributed evenly, and more
importantly, social justice is subserved.
Section 3. Procedures in Minimum Wage Fixing.
Advantages of Minimum Wage Rates
(a) Motu Proprio by the Board
1. Reduces the evils of the “sweating system”.
Whenever conditions in the region, province or industry so
Sweating System:
warrant, the Board may, motu proprio or as directed by the
 the exploiting of workers at wages so low as to
Commission, initiate action or inquiry to determine whether a
be insufficient to meet the bare cost of living.
wage order should be issued. The Board shall conduct public
hearings in the manner prescribed under this Rule and Rule
2. Benefits directly the low-paid employees, who
III. The Board may also conduct consultations with concerned
now receive inadequate wages on which to
sectors/ industries.
support themselves and their families.
3. Benefits all wage earners indirectly by setting a
floor below which their remuneration cannot fall. (b) By Virtue of a Petition Filed
4. It raises the standard of competition among
employers, since it would protect the fair-minded 1) Form and Content of Petition.
employer who voluntarily pays a wage that
supports the wage earner from the competition of
the employer who operates at lower cost only by Any party may file a verified petition for wage increase with
reason of paying his workers a wage below the appropriate Board in ten (10) typewritten legible copies
subsistence. which shall contain the following:

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for
every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
Page 10 of 28
 SUN TZU NOTES
Al L. Beronque
(a) name/s, and address/es of petitioner/s and
signature/s of authorized official/s;
(b) grounds relied upon to justify the increase
being sought;
(c) amount of increase being sought;
(d) area and/or industry covered.
2) Board Action.
If the petition conforms with the requirements
prescribed in the preceding sub-section b.1., the
Board shall conduct public hearings in the manner
prescribed under this Rule and Rule III, to determine
whether a wage order should be issued. The Board
may also conduct consultations with concerned
sectors/industries.
3) Publication of Notice of Petition/Public Hearing.
A notice of the petition and/or public hearing shall be
published in a newspaper of general circulation in the
region and/or posted in public places as determined
by the Board. The notice shall include the name/s
and address/es of the petitioner/s, the subject of the
petition and the date/s, place/s and time of the
hearings. The publication or posting shall be made at
least fifteen (15) days before the date of initial
hearing and shall be in accordance with the
suggested form attached as Annex "A".
4) Opposition.
Any party may file his opposition to the petition on or
before the initial hearing, copy furnished the
petitioner/s. The opposition shall be filed with the
appropriate Board in ten (10) typewritten legible
copies which shall contain the following:
(a) name/s and address/es of the oppositor/s and
signature/s of authorized official/s;
(b) reasons or grounds for the opposition; and
(c) relief sought.
5) Consolidation of Petitions.
If there is more than one petition filed, the Board
may, motu propio or on motion of any party,
consolidate these for purposes of conducting joint
hearings or proceedings to expedite resolutions of
petitions. Petitions received after publication of an
earlier petition need not go through the
publication/posting requirement.
6) Assistance of Other Government and Private
Organizations.
If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for
every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
Page 11 of 28
The Board may enlist the assistance and cooperation of any
government agency or private person or organization to
furnish information in aid of its wage fixing function.
Appeal Procedure [NWPC]
 The Commission may review the Wage Order issued by
the Board motu proprio or upon appeal
Section 1. Appeal to the Commission. Any party aggrieved
by a Wage Order issued by the Board may appeal such Order
to the Commission by filing a verified appeal with the Board in
three (3) typewritten legible copies, not later than ten (10)
days from the date of publication of the Order. The appeal
shall be accompanied by a memorandum of appeal which
shall state the grounds relied upon and the arguments in
support of the appeal.
The Board shall serve notice of the appeal to concerned
parties.
Failure to file an appeal within the reglamentary period
fixed under this section or to submit the required documents
shall be a ground for dismissal of the appeal.
Section 2. Grounds for Appeal. An appeal may be filed on
the following grounds:
(a) non-conformity with prescribed guidelines and/or
procedures;
(b) questions of law;
(c) grave abuse of discretion.
Section 3. Transmittal of Records. Immediately upon
receipt of the appeal, the Board Secretariat shall transmit to
the Commission Secretariat the appeal and a copy of the
subject Wage Order together with the complete records of the
case and all relevant documents.
Section 4. Period to Act on Appeal. The Commission shall
decide on the appeal within sixty (60) days from the filing of
said appeal.
Section 5. Effect of Appeal. The filing of the appeal does
not operate to stay the Order unless the party appealing such
Order shall file with the Commission an undertaking with a
surety or sureties satisfactory to the Commission for payment
to employees affected by the Order of the corresponding
increase, in the event such Order is affirmed.
WAGE ORDERS APPLICABLE IN CEBU, MANDAUE AND
LAPU-LAPU CITY
CURRENT DAILY MINIMUM WAGE RATES
REGION VII (Central Visayas)
Per Wage Order No. ROVII-11a/
Effective June 16, 2005
(In pesos)
 SUN TZU NOTES
Al L. Beronque

2. New Business Enterprises

3. Retail/Service Establishments Regularly Employing Not
More Than Ten Workers
MINIMUM WAGE RATES 4. Establishments Adversely Affected by Natural Calamities
INDUSTRY/
Note: The Board, upon strong and justifiable reasons,
SECTOR CLS CLS CLS CLS subject to the review or approval by the Commission may
A B C D exempt establishments other than those enumerated above if
they are in accord with the rationale of exemption.
NON-
AGRICULTURAL 223 210 200 190
2. Exemption under the Labor Code
SECTOR
AGRICULTURAL Art 98. Application of Title. --- This title [Wages] shall not
SECTOR apply to farm tenancy or leasehold, domestic service and
Non-Sugar 208 195 185 175 persons working in their respective homes in needle work or
Sugar - - 173 - in any cottage industry duly registered in accordance with
SUGAR MILLS - - 188 - law.

 Relate this to employment of home workers, page 33 FOZ.

Granted wage increase to all minimum wage workers
in the region as follows:
P15.00 - Class A; in the Sugar industry both
agricultural and sugar mills.
P12.00 - class B, C, and D.
Issued on 2 June 2005 and published in Sun
Star Daily on 15 July 2005.
Class A - Cities of Cebu, Danao, Mandaue, Lapu-
lapu, and Talisay and the municipalities of Carcar,
Minglanilla,
Naga, Consolacion, Liloan,
Compostela, Cordova, and San Fernando;
Class B - City of Toledo and the rest of the
municipalities in the Province of Cebu except the
municipalities in the island of Bantayan and
Camotes.
Class C - All the cities in the Provinces of Bohol
and Negros Oriental and the municipalities of
Sibulan, Manjuyod,
and Tanjay, and the rest of the
municipalities in the Provinces of Bohol and Negros
Oriental.
Class D - Municipalities in the Province of
Siquijor and the Islands of Bantayan and Camotes.
EXEMPTION FROM MINIMUM WAGE
1. Revised Guidelines on Exemption from Wage
orders
NWPC Guidelines No. 01 Series of 1996
 See page 469 FOZ Appendix Z for the full text
 These are rules on exemption from compliance
with the prescribed wage increases/cost of living
allowances granted by the RTWPBs.
 This is pursuant to Sec 3, Art 121b of RA 6727
and Sec 1 Rule 8 of the Revised Rules of
Procedure on Minimum Wage Fixing [NWPC
Guidelines 001-95]
Exempted from Wage Orders Issued by Boards
If a home worker performs needle work in or at his home,
that person is exempted from employing the minimum
wage by operation of law. So employers of these
employees are not obliged to comply with the minimum
wage. If you are employing a house helper, you are not
covered by the minimum wage by operation of law. That
means you do not have to file an application for
exemption, and you do not have to comply with the
prevailing minimum wage.
3. Exemption Under Special Law
Barangay Micro Business Enterprises Act of 2002 [RA
9178]
 See separate page for full text
Barangay Micro Business Enterprise
[BMBE]
 refers to any business entity or enterprise engaged in the
production, processing or manufacturing of products or
commodities, including agro-processing, trading and
services, whose total assets including those arising from
loans but exclusive of the land on which the particular
business entity's office, plant and equipment are situated,
shall not be more than Three Million Pesos
(P3,000,000.00) The Above definition shall be subjected
to review and upward adjustment by the SMED Council, as
mandated under Republic Act No. 6977, as amended by
Republic Act No. 8289.
 For the purpose of this Act, "service" shall exclude those
rendered by any one, who is duly licensed government
after having passed a government licensure examination,
in connection with the exercise of one's profession.
Power to Issue Rules on Exemption
NWPC

1. Distressed Establishments

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for
every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
Page 12 of 28
 SUN TZU NOTES
Al L. Beronque
ART. 121. Powers and functions of the
Commission. - The Commission shall have the
following powers and functions:
(b) To formulate policies and guidelines on wages,
incomes and productivity improvement at the
enterprise, industry and national levels; (As
amended by Republic Act No. 6727, June 9, 1989)
Power to Grant Exemptions
[RTWP]
ART. 122. Creation of Regional Tripartite
Wages and Productivity Boards. – xxx The
Regional Boards shall have the following powers and
functions in their respective territorial jurisdictions:
(e) To receive, process and act on applications for
exemption from prescribed wage rates as may be
provided by law or any Wage Order; and
Reason for Exemption: A wage exemption is
intended to assist financially beleaguered companies
to meet their labor cost without endangering the
viability of the company.
Wage Distortion
ART. 124. Standards/Criteria for minimum
wage fixing.
xxx As used herein, a wage distortion shall mean a
situation where an increase in prescribed wage rates
results in the elimination or severe contraction of
intentional quantitative differences in wage or salary
rates between and among employee groups in an
establishment as to effectively obliterate the
distinctions embodied in such wage structure based
on skills, length of service, or other logical bases of
differentiation.xxx (As amended by Republic Act No.
6727, June 9, 1989).
 For salary distortion to exist, as defined in Art.
124, the law does not require that there be an
elimination or total abrogation of quantitative
wage or salary differences; a severe contraction
is enough.
 This means, briefly, the disappearance or virtual
disappearance of pay differentials between lower
and higher positions in an enterprise because of
compliance with a wage order.
 An employee has reason to complain whose pay
level advantage is equaled or almost equaled or
overtaken through a mandated wage increase.
For instance, if a wage order raised a messenger's
daily pay from P198 to P223, almost equaling a
technician's pay of P225, the technician may
complain of salary distortion because his pay
If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for
every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
Page 13 of 28
advantage (due to nature of job) has been significantly
reduced from P27 to P2 only.
Example: If “A” was receiving a daily salary which was P100
higher than that of “B” who is “A’s” subordinate, but, because
of a wage order increase given to “B”, the P100 advantage
disappeared or was reduced to say, P30, then it may be said
that the salary distinction between A and B has been
distorted. “A” may complain of a salary distortion.
 Disparity in pay of two or more employees holding the
same position does not necessarily mean salary distortion
referred to in Art 124.
 There is no distortion if the employees, whose wages are
being compared, are located in different regions. This is
because wage-fixing has been regionalized by RA 6727.
 How to rectify the distortion is not specified in the law.
The Court has pointed out that through Art. 124 the law
recognizes the validity of negotiated wage increases to
correct wage distortions. The legislative intent is to
encourage the parties to seek solution to the problem of
wage distortions through voluntary negotiation or
arbitration, rather than strikes, lockouts, or other
concerted activities of the employees or management.
The Court has adopted the following formula as "just and
equitable" to correct a salary distortion:
Mini Wage „, _„ .
-------------- = % x Prescribed Increase = Distortion
Actual salary
Adjustment
Any issue involving wage distortion is not a valid ground for a
strike or lockout.
 Each region has a regional wage board which, in fixing
the wage level, considers criteria or standards existing in
the region. Since those criteria vary from one region to
another, the pay levels of comparable jobs also tend to vary
among regions. But pay disparity of same or comparable
jobs in different regions cannot be considered wage
distortion. Wage distortion, in other words, involves
comparison of jobs located in the same region.
Examination of alleged salary distortion is limited to jobs
or positions in the same employer within a region.
Therefore, the comparison of salaries has to be intra-
region not inter-region region.
Q: Is an employer legally obliged to try and correct a wage
distortion?
A: It appears so, under Art. 124- It says that "the employer
and the union shall negotiate to correct the distortions." If
there is no union, "the employer and workers shall endeavor
to correct such distortions."
Q: Must the previous pay advantage be restored?
A: That indeed is the aim but not necessarily to the last
peso. An appreciable differential, a significant pay gap,
should suffice as correction of the distortion.
Q: When does wage distortion happen?
 SUN TZU NOTES
Al L. Beronque

A: When the employer grants an increase only to a

certain group of employees drastically reducing or
 Where there is no recognized union or collective
bargaining agreement.
eliminating the normal salary differential or gap.
B. If Not Unionized
Possible Causes of Wage Distortion
a) The employer and the workers should negotiate to correct
the distortion.
1. Government decreed increase through wage
orders.
b) If negotiations fail, the matter should be brought to the
2. Merger of establishments [confusion or
National Conciliation and Mediation Board (NCMB)
elimination of the status of the employee]
3. Increase granted by the employers
c) If no settlement is arrived after 10 calendar days of
4. Passage of RA 6727 or the Wage Rationalization
conciliation, the dispute should be brought to the appropriate
Act
branch of the NLRC, which shall conduct continuous hearings
and decide the dispute within 20 calendar days from the time
said dispute is submitted for compulsory arbitration.
Methods of Resolving Wage Distortion
(Brought about by the enactment or passage of a
wage order)
Jurisdiction over wage distortion disputes

 The court has pointed out that thru the passage
of Art 124, the law recognizes the validity of
negotiated wage increases to correct wage
distortion.
 The legislative intent is to encourage the parties
to seek solution to the problem of wage
distortions through voluntary negotiation or
arbitration, rather than strikes, lockouts, or other
concerted activities of the employees or
management.
Labor Arbitration
 Reference of a labor dispute to a third party for
determination on the basis of evidence and arguments
presented by such parties, who are bound to accept the
decision.
Arbitration may be classified on the basis of obligation
on which it is based, it may either be:
1. Voluntary Arbitration

Organized Establishment
 It is the policy of the State to encourage voluntary
arbitration on all labor-management disputes. Before or at
 Refers to a firm or a company where there is a any stage of the compulsory arbitration process, the parties
recognized or certified exclusive bargaining may opt to submit their dispute to voluntary arbitration.
agreement. (Implementing Rules, Book V, Rule XIX, Sec. 5.)

What should be contained in a CBA

 Defined as a contractual proceeding whereby the parties
to any dispute or controversy in order to obtain a speedy
1. terms and conditions of employment
and inexpensive final disposition of the matter, select a
2. wages
judge of their own choice and by consent, submit their
3. hours of work
controversy to him for determination.
4. procedure for resolving grievances

 Under voluntary arbitration, the "judge" is named by the

A. If Unionized
a) the employer and the union should first negotiate
to correct the distortion (contemplates the absence
of grievance procedure).
parties, pursuant to a voluntary arbitration clause in their
collective agreement. He is an impartial third person
authorized by the parties to make a final and binding
decision or award.

b) If negotiations fail, the matter should be brought

 A voluntary arbitrator "is not a public tribunal imposed
upon the parties by a superior authority which the parties
to the grievance (machinery) procedure under their
are obliged to accept. He has no general character to
CBA.
administer justice for a community. He is rather part of a
system of self-government created by and confined to the
c) If no settlement is arrived at, the dispute should
parties." [Maurice S. Trotta, Arbitration of Labor
be submitted to voluntary arbitration (voluntary
Management Disputes, American Management Association,
arbitrators or panel of voluntary arbitrators)
New York, 1974, p. 73.]
d) If still unresolved or parties are unsatisfied, an
appeal may be made to the appropriate branch of  Voluntary arbitration, indeed, is a private judicial system.
the NLRC.
 The judge is called a VOLUNTARY ARBITRATOR.
Unorganized Establishment

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Page 14 of 28
 SUN TZU NOTES
Al L. Beronque
 The power of voluntary arbitrator to try and
decide the case is the same as that of a Labor
Arbiter.
 The parties can agree to select a Labor Arbiter as
a voluntary arbitrator because it is as to the
agreement of the parties.
 Arbitration may be initiated either by 1) a
Submission Agreement or 2) by a Demand or
Notice invoking a collective agreement
arbitration clause. Sometimes both instruments
are used in a case.
 Although the contract may establish the
breadth of the arbitrator's power and the limits of
his authority, his power may be more sharply
defined in the submission agreement.
 In Philippine context, the "judge" in voluntary
arbitration is called arbitrator, while that in
compulsory arbitration is labor arbiter.
Voluntary Arbitrator
 Any person accredited by the Board as such; or
 Any person named or designated in the CBA by
the parties to act as their voluntary arbitrator; or
 One chosen, with or without the assistance of the
NCMB, pursuant to selection procedure agreed
upon in the CBA; or
 Any official that may be authorized by the Sec of
Labor to act as voluntary arbitrator upon the
written request and agreement or the parties to a
labor dispute.
2. Compulsory Arbitration
 Process of settlement of labor disputes by a
government agency [or by other means provided
by the government] which has the authority to
investigate and to make award which is binding
on all the parties.
 Parties are compelled to forgo their right to strike
 A disinterested person or party is usually
appointed by the state.
 It is compulsory because the law declares the
dispute subject to arbitration, regardless of the
consent of the parties.
 Done by the Regional Arbitration Branch of NLRC
[refer to Art 217]
 It is an adversarial proceeding initiated by a
complaint [usually by a union] for wage distortion
before the Labor Arbiter. The other party is
required to answer.
ART. 217. Jurisdiction of the Labor Arbiters and
the Commission. –
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every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
Page 15 of 28
(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
non-agricultural:
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.
(b) The Commission shall have exclusive appellate jurisdiction
over all cases decided by Labor Arbiters.
(c) 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 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).
Compulsory Arbitration
 In labor cases compulsory arbitration is the process of
settlement of labor disputes by a government agency that
has the authority to investigate and make an award which is
binding on all the parties.
 It is the Labor Arbiter who is clothed with the original and
exclusive authority to conduct compulsory arbitration under
Art. 217.
 Proceedings after a labor arbiter's decision is brought up to
the National Labor Relations Commission cannot be
considered as part of the arbitration proceedings. This is
because in the appeal stage, the Commission merely re-
views the Labor Arbiter's decision for errors of fact or law. It
does not duplicate the proceedings held at the Labor
Arbiter's level. Thus, the clause "pending final resolution of
 SUN TZU NOTES
Al L. Beronque
the case by arbitration" should be understood to
be limited only to the proceedings before the Labor
Arbiter, so that when the latter rendered his
decision, the case could be considered finally
resolved by arbitration. [See Philippine Airlines, Inc.
vs. National Labor Relations Commission, G.R. No.
55159, Dec. 22, 1989.]
 The Commission itself, through any of its divisions,
also conducts compulsory arbitration, but only in
"national interest cases" certified or referred to it by
the DOLE secretary under Art. 263(g).
Labor Arbiter's Jurisdiction
 This Article enumerates the cases falling under
"original and exclusive" jurisdiction of labor arbiters.
This gives the impression that none but a labor
arbiter can hear and decide the six categories of
cases listed. But this is not really so. Any or all of
these cases can, by agreement of the parties, be
presented to and decided with finality by a
voluntary arbitrator or panel of voluntary
arbitrators. (See Articles 261 and 262.)
 The law prefers or gives primacy to voluntary
arbitration (Art. 211) instead of compulsory
arbitration. And this, in turn, is the reason the
law (Art. 261, last paragraph, and Art. 217 [c])
forbids a labor arbiter from entertaining a
dispute properly belonging to the jurisdiction of a
voluntary arbitrator.
 The cases a labor arbiter can hear and decide
are employment-related. One unifying element
runs through all the cases and disputes
enumerated in Art. 217. That element is
employment connection. But, additionally, as
regards money claims, the law applicable to
grant the relief sought should likewise be
considered. If the principal relief sought will be
resolved by applying the Labor Code or other
labor relations statute or a collective bargaining
agreement, then the case belongs to the labor
arbiter. But if the applicable law is the general
civil law, the jurisdiction over the dispute
belongs to the regular courts, such as the
regional trial court. (See San Miguel Corf. vs.
NLRC, G.R. No. 80774, May 31,1988.)
Appeal Procedure
 Rules of Civil Procedure [pili lang Rule 43, 45 or
65]
5. VIOALTION OF WAGE ORDERS
RA 6727 [amended by RA 8188]
Sec. 12. Any person, corporation, trust, firm,
partnership, association or entity which refuses or
fails to pay any of the prescribed increases or
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Page 16 of 28
adjustments in the wage rates made in accordance with this
Act shall be punished by a fine not exceeding Twenty-five
thousand pesos [P25,000.00] and/or imprisonment of not less
than one [1] year nor more than two [2] years: Provided,
That any person convicted under this Act shall not be entitled
to the benefits provided for under the Probation Law.
If the violation is committed by a corporation, trust or firm,
partnership, association or any other entity, the penalty of
imprisonment shall be imposed on the entity's responsible
officers, including, but not limited to, the president, vice-
president, chief executive officer, general manager, managing
director or partner.
RA 8188
 an act increasing the penalty and increasing double
indemnity for violation of the prescribed increases or
adjustment in the wage rates, amending for the purpose
section twelve of republic act numbered sixty-seven
hundred twenty-seven, otherwise known as the wage
rationalization act
SECTION 1. Section 12 of Republic Act Numbered Sixty-
seven hundred twenty-seven is hereby amended to read to as
follows:
Section 12. Any person, corporation, trust, firm,
partnership, association or entity which refuses or fails to pay
any of the prescribed increases or adjustments in the wage
rates 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
amount 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, vice-president, chief executive officer, general
manager, managing director or partner."
 Failure or refusal to pay mandatory wage increase is
considered a criminal offense under Republic Act No.
8188, approved on June 11, 1996. The violator may be
sentenced to imprisonment of not less than two (2) years
nor more than four (4) years. He may also be punished by
a fine of P25,000 to PIOO.OOO.OO. Moreover, he shall be
ordered to pay an amount equivalent to double the
unpaid benefits owing to the employee.

Penalty for Violation of the Prescribed Increase
or Adjustment in the Wage Rate (RA 8188):
1. Payment of a fine of not less than P25,000
nor more than P100,000; or
2. Imprisonment for not less than 2 years nor
more than 4 years, the imprisonment being
non-probationable. (The case should
therefore be filed with the MTC pursuant to
BP 129 as amended by RA 7691); or
3. Both imprisonment and fine, at
discretion of the Court.
4. Paying double the unpaid benefits/amounts
owing the employees, provided that the
Payment of Indemnity shall not absolve the
employer from criminal liability imposable
under the Labor Code.
 Aside from the penal provision provided under RA
6727, there are provisions in the Labor Code on
the enforcement and recovery of minimum wage
provisions. There are general two provisions for
the enforcement and recovery of minimum wage
provisions – Articles 128 and 129. Remember
that the minimum wage is fixed by a wage order
and there is a built-in mechanism in the Labor
Code which provides the so-called enforcement
tools for the recovery of wages, particularly the
minimum wage provisions.
 Article 128 – enforcement machinery in aid of the
visitorial power of the Secretary of Labor. This is
described as inquisitorial. Why? Because the
SOLE inquires – ask for documents, investigate,
etc.
 Article 129 – machinery of wage recovery via the
administrative process initiated by a complaint.
This is described as adversarial. Why? Because it
requires a complaint for its initiation.
JURISDICTION
Regular Courts
RA 7691
 see separate page
Regional Director
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
If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for
every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
SUN TZU NOTES
Al L. Beronque
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 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).
[* The phrase after the word “issues”, was an amendment by
RA 7730 to delete the clause “which cannot be resolved
without considering evidentiary matters that are not verifiable
in the normal course of inspection.”]
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 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.
(d) 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
Page 17 of 28
 SUN TZU NOTES
Al L. Beronque
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.
 This Article is the nucleus of administrative
enforcement of Philippine labor laws. The job is
lodged with the Secretary of Labor and
Employment, the regional directors and other
duly authorized representatives. The
enforcement function is broad. It covers "any
fact, condition or matter which may be necessary
to determine violations or which may aid in the
enforcement" of the Code and any labor law,
wage order or regulations.
 Law enforcement includes inspection of
establishments, but every inspection should be
supported by an authorization duly issued. Where
violations are found, appropriate report will be
submitted. Subsequently, a "compliance order"
may issue which is a command to rectify the viola-
tion found and proven.
 The issuance of a Compliance Order must
observe the "cardinal primary requirements" of
due process in administrative proceedings.
The requirements are:
(1) The alleged violator (employer or anyone
else) must first be heard and given adequate
opportunity to present evidence on his
behalf;
(2) The evidence presented must be duly
considered before any decision is reached;
(3) The decision should be based on
substantial evidence which means evidence
adequate for a reasonable mind to support a
conclusion;
(4) the decision is based on evidence
presented in the hearing, or at least con-
tained in the record and disclosed to the
parties;
(5) The decision is that of the decision-
making authority and not mere views of
subordinates; and (6) the decision should
explain the issues involved and the
reasons for the decision rendered.
 It should be noted that the authority under
Art. 128 may be exercised regardless of
monetary value involved, unlike in Art 129
which fixes a maximum of P5,000.00 per
claimant. R.A. No. 7730 (June 2, 1994)
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every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
Page 18 of 28
changed Art. 128(b) to its present wording so as to
free it from the jurisdictional limitations found in Art.
129 and 217.
 In the exercise of his power under this Article the
Secretary of Labor and Employment may even order
the stoppage of work or suspension of operations of
the inspected establishment or parts of it. The
employer, if at fault, may be ordered to pay the
employees' wages during the work stoppage or
suspension of operations. But, again, due process of
law must be observed.
 A regional director of DOLE has the power to order
rectification of a labor standards violation even if such
violation is not mentioned in the employee's
complaint. (See Aboitiz Shipping Corp. vs. De la Sema,
etc.,G.R. No. 88538, April 25, 1990.)
 The regional director, in cases where employer-
employee relationship still exists, has the power to
order and administer, after due notice and hearing,
compliance with the labor standards provisions of
the Labor Code and other legislation based on the
findings of labor regulation officers or industrial
safety engineers made in the course of inspection. He
may also issue writs of execution to the appropriate
authority for the enforcement of his orders in line
with the provisions of Article 128 in relation to
Article 289 and 290 of the Labor Code.
 However, in those cases 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 must endorse the
case to the appropriate arbitration branch (labor-
arbiter) of the NLRC for adjudication (Sec. 1, Rule X,
Book III, Omnibus Rules Implementing the Labor Code).
 The visitorial enforcement power is thorough and
piercing; it extends even to issues not formally
included in the complaint.
Labor Arbiter
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
non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
 SUN TZU NOTES
Al L. Beronque
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.
(b) The Commission shall have exclusive appellate
jurisdiction over all cases decided by Labor Arbiters.
(c) 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 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).
Labor Arbiter's Jurisdiction
 This Article enumerates the cases falling under
"original and exclusive" jurisdiction of labor arbiters.
This gives the impression that none but a labor
arbiter can hear and decide the six categories of
cases listed. But this is not really so. Any or all of
these cases can, by agreement of the parties, be
presented to and decided with finality by a
voluntary arbitrator or panel of voluntary
arbitrators. (See Articles 261 and 262.)
 The law prefers or gives primacy to voluntary
arbitration (Art. 211) instead of compulsory
arbitration. And this, in turn, is the reason the
law (Art. 261, last paragraph, and Art. 217 [c])
forbids a labor arbiter from entertaining a
dispute properly belonging to the jurisdiction of a
voluntary arbitrator.
 The cases a labor arbiter can hear and decide
are employment-related. One unifying element
runs through all the cases and disputes
enumerated in Art. 217. That element is
employment connection. But, additionally, as
regards money claims, the law applicable to
If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for
every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
Page 19 of 28
grant the relief sought should likewise be considered. If
the principal relief sought will be resolved by applying
the Labor Code or other labor relations statute or a
collective bargaining agreement, then the case belongs
to the labor arbiter. But if the applicable law is the
general civil law, the jurisdiction over the dispute
belongs to the regular courts, such as the regional trial
court. (See San Miguel Corf. vs. NLRC, G.R. No. 80774,
May 31,1988.)
6. WAGE ENFORCEMENT AND RECOVERY
Enforcement Process
(a) There is a report on the non-compliance of the
employer with the minimum wage law.
(b) Upon receipt of the Regional Director of this
information, there will be an ORDER OF INSPECTION.
 The SOLE or the Regional Director.
 The order of inspection will simply state that this
person is authorized to conduct an inspection on
this date, place and time.
(c) This inspection authority will then be implemented by a
Labor and Employment Officer of the DOLE. And this
person will visit the employer’s premises and then
conduct an inspection.
 He will inspect the payroll to determine if indeed
there was underpayment of wages, inspect the
employer’s premises, interview and ask the
employees themselves if they are indeed paid such
amount of wages, compare the payment records
and confer with the employees.
(d) If the inspector finds that there is a violation or
underpayment of wages, he will make an INSPECTION
REPORT
 Usually embodied in a NOTICE OF INSPECTION
RESULTS.
 All violations that the Labor Employment Officer will
find in the employer’s premises will be enumerated
and be put as his findings in the notice.
(e) The employer is first informed of the results of the
inspection.
(f) The employer is given the opportunity to comply within
7 days or
(g) The employer may contest the notice of inspection
results and raise issues which cannot be resolved
without considering evidentiary matters that are not
verifiable in the normal course of inspection.
 HOW SOON? The employer shall raise such
objections during the hearing of the case or at any
time after the receipt of the notice of inspection
results.
(h) If on the other hand, the employer does not or fails to
contest the notice of inspection result, as well as fails to
comply with such notice.
 The Regional Director will issue an ORDER OF
COMPLIANCE.
 The order of compliance will basically be based on
the notice of inspection results, so if the inspection
says that you are underpaying 10 workers or just
paying them P100, the RD will issue an order of
 SUN TZU NOTES
Al L. Beronque
compliance ordering this time the
employer to pay the following workers the
following sums of money.
(i) Remedy of the employer from the order of
compliance.
 The order of compliance can be questioned
within 10 calendar days.
 Then the employer will file a motion for
reconsideration with the RD within 7
calendar days.
 If the employer files it beyond 7 days but
not beyond 10 days, that will be
considered an appeal from the RD to the
SOLE.
(j) If the employer will not file a motion for
reconsideration, what will happen to the order
of compliance? It becomes final and executory.
 The SOLE or RD can issue a WRIT OF
EXECUTION, then it will levy.
 Pursuant to Rule 39 in Civil Procedure, the
final judgment can be subject of execution
and the RD can levy on the properties of
the employer to satisfy the judgment or
the order of compliance.
 Note: that this is if there is no obedience
to the order of compliance or there is no
contesting done or no motion for
reconsideration resorted to by the
employer in that regard.
(k) On the other hand, if the employer validly
contests by raising issues supported by
documentary proofs which were not
considered in the course of inspection – what
will happen?
 Can the RD still proceed with the case?
NO.
 The RD will endorse the case to the
appropriate Arbitration Branch of the
NLRC.
 Why? It is no longer a summary
proceeding. It now becomes an adversarial
proceeding which the RD is not equipped
to handle. RD has no other recourse but to
endorse it to the Arbitration Branch of the
NLRC.
Note: It is very important that you be able to
contest the notice of inspection results within the
time frame authorized by the RULES ON
DISPOSITION OF LABOR STANDARDS CASES.
Because if you fail or if you contest but the wrong
way, or you fail to contest it at all, then the RD will
have no recourse but to issue an order of
compliance. And then your remedy therefore is no
longer to contest but to a motion for reconsideration
or probably an appeal to the SOLE. In case you still
fail to do that, then that order of compliance will
become final and executory for which the SOLE or
the Rd for that matter is now authorized to issue a
writ of execution. Then that is the end of the case.
Visitorial and Enforcement Power
Article 128. Visitorial and Enforcement Power-
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every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
Page 20 of 28
(a) The Secretary of Labor 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 the issues supported by documentary
proofs which were not considered in the course of
inspection. ]-EXCEPTION CLAUSE
An order issued by the duly authorized representative
of the Secretary of Labor and Employment [Regional
Director] 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
SOLE in the amount equivalent to the monetary award
in the order appealed from.
(c) The SOLE 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
24 hours, a hearing shall be conducted to determine
whether an order for stoppage of work or suspension of
operations shall be lifted or not. In case the violation is
attributable to the employer, he shall pay the
employees concerned their salaries or wages during
the period of such stoppage or work or suspension of
operation. ]- CROSS REFER TO ARTICLE 286 ON
CONSEQUENCE OF SUSPENSION OF OPERATIONS
(d) It shall be unlawful for any person or entity to

obstruct, impede, delay or otherwise render
ineffective the orders of the SOLE 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 SOLE 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.
Scope of the Visitorial Power of the Secretary
of Labor
Under the visitorial power, the SOLE or his duly
authorized representative is given the right to:
(1) inspect and copy pertinent records
documents,
(2) interview any employee and
(3) investigate any fact, condition or matters at
the premises of an employer, at any time of the
day or night, whenever work is undertaken
therein, for the purpose of determining whether
an employer is complying with labor standards.
Q: Does the Labor Code confer this Visitorial
Power to be exercised by the Regional
Director?
A: YES. The Regional Director is the duly authorized
representative of the SOLE.
Enforcement Power on Health/Safety of
Workers
Article 128. Visitorial and enforcement power.
– interfered with by the courts?
(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 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
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SUN TZU NOTES
Al L. Beronque
during the period of such stoppage of work or suspension of
operation.
 This provision does not refer to violation of minimum
wage laws. It refers to the instance that when the 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, the SOLE
can issue an order for the stoppage of work or the
suspension of operations of any unit or department in an
establishment.
Illustration:
When there is a leak in a chemical plant, there is hazard
to the employees. The SOLE can order suspension of
operation.
Q: Is the power of SOLE to order suspension of operation
similar to Article 286 on bona fide suspension of operations?
A: NO. They are different. In Article 286, it is the employer
who suspends the operations while on the other hand, Article
128 speaks of suspension by the Secretary of Labor.
Example, for causes attributable to the employer and in the
interest of health and safety of the workers, the Regional
Director orders the suspension of the company’s operation.
The logical question there is – What is the consequence of
that? Will the employees be paid their wages?
In Article 286, for example, if the employer decides to
suspend his operations unilaterally, will the employees be
and entitled to their daily wages?
 What is being inquired in Article 128 is whether or not the
employer complies with labor standards laws, rules and
regulations, as well as social legislations. The power to
visit the employer’s premises is so broad enough as to
enable the SOLE or his duly authorized representative to
make a finding after making such inspection. Since what
will be involved would be inquiring on violations of labor
standard laws as well as wage orders, it would be
important for us to know the step-by-step procedure in
the conduct of inspection under Article 128. And since
what is involved would be labor standard provisions such
as the minimum wages laws or rules – is the employer
obliged to maintain a payroll? YES. The employer is
obliged to maintain a payroll pursuant to the power of the
SOLE under Article 128 (f) to issue such rules and
regulations pertinent thereto. Under implementing rules,
see Section 6, Rule X, Book III.
Q: In the exercise of the visitorial power, can the SOLE be
A: NO. This is pursuant to Article 128 (d). If the SOLE or the
Regional Director, for that matter, decides to inspect the
employer’s premises, then no entity can lawfully interfere,
obstruct or delay the exercise of that authority; otherwise
they would be penalized under that provision of the LC. That
is how
comprehensive and that is how strong the visitorial and
enforcement power of the SOLE is.
Bona fide Suspension of Operations
Page 21 of 28
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Al L. Beronque

ART. 286. When employment not deemed
terminated. - The bona-fide suspension of the
operation of a business or undertaking for a period
not exceeding six (6) months, or the fulfillment by
the employee of a military or civic duty shall not
terminate employment. In all such cases, the
employer shall reinstate the employee to his former
position without loss of seniority rights if he indicates
his desire to resume his work not later than one (1)
month from the resumption of operations of his
employer or from his relief from the military or civic
duty.
 Article 283 speaks of a permanent retrenchment
as opposed to a temporary lay-off. There is no
specific provision of law which treats of a
temporary retrenchment or lay-off. To remedy
this situation or fill the hiatus, Article 286 may be
applied but only by analogy to set a specific
period that employees may remain temporarily
laid-off or in floating status. Six months is the
period set by law that the operation of a busi-
ness or undertaking may be suspended thereby
suspending the employment of the employees
concerned. The temporary lay-off wherein the
employees likewise cease to work should also not
last longer than six months. After six months,
the employees should either be recalled to work
or permanently retrenched following the
requirements of the law. Failing to comply with
this would be tantamount to dismissing the em-
ployees and the employer would thus be liable
for such dismissal. (Sebuguero,et al. vs. NLRC,
G.T.I. Sportswear Corp., etal, G.R. No. 115394,
September 27, 1995.)
 When the "floating status" of the employees lasts
more than six (6) months, they may be
considered to have been constructively dis-
missed from the service. Thus, they are entitled
to the corresponding benefits for their separation.
(Agro Commercial Security Services Agency, Inc.
vs. National Labor Relations Commission, G.R.
Nos. 82823-24, July 31, 1989.)
Disposition of Labor Standard Cases
 A Labor Standard Case is processed
administratively under Articles 128 and 129 of
the LC, as amended.
Labor Standards refer to the minimum
requirements prescribed by existing laws, rules
arid regulations relating to wages, hours of work,
cost-of-living allowance and other monetary
and welfare benefits including occupational,
safety, and health standards.
 Under the present rules, a Regional Director
exercises both visitoria! and enforcement
power over labor standard cases, and is,
therefore, empowered to adjudicate money
claims, provided there still exists an
employer-employee relationship, and the
findings of the regional office are not contested by the
employer concerned. (Maternity Children's Hospital vs.
Secretary of Labor and Regional Director oj Labor, G.R.
No. 78909, June 30, 1989.)
 Pursuant to the provisions of Article 5, in relation to
Article 128[b] of the Labor Code, the Secretary of
Labor and Employment issued on September 16, 1987
the Rules on the Disposition of Labor Standards Cases in
the Regional Offices to govern the enforcement of labor
standards at the regional level. After the issuance of
those Rules, Article 12$[b] was amended by Republic
Act No. 7730 on June 2, !9U1 whose >-ions are now
reflected in the present Article 128,
Revised Rules on Disposition of Labor Standard Cases
1987 series
 See FOZ page 513 for full text
 See diagram in separate page
Department Order No. 7-A series of 1995
 Wa pa kit i!
DOLE Memo Circular No. 02-A series of 1992
 See FOZ
Appeal Procedure
 An order issued under this Article is appealable to the
DOLE secretary, the administrative superior of the regional
director.
 Following the rationale of St. Martin ruling, decisions of
the Secretary of Labor, such as those in Articles 128, 239,
259, and 263 maybe elevated initially to the CA through
certiorari. [National Federation of Labor vs. Laguesma]
Anti-injunction
ART. 128. Visitorial and enforcement power. –
(d) 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.
Maintenance of Employment Records
ART. 128. Visitorial and enforcement power. –
(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.
Simple Money Claims and jurisdiction

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 SUN TZU NOTES
Al L. Beronque

ART. 129. Recovery of wages, simple money affected by the Labor claims and benefits
claims and other benefits. - Upon complaint of Code or any labor law
any interested party, the Regional Director of the Jurisdictional limits in Art The regional director's
Department of Labor and Employment or any of the 129 do not apply to the authority under Art.
duly authorized hearing officers of the Department is exercise of powers under 129 is subject to four
empowered, through summary proceeding and after Art 128. Par B of Art requisites
due notice, to hear and decide any matter involving 128 was changed to its
the recovery of wages and other monetary claims present wording by RA
and benefits, including legal interest, owing to an 7730 purposely to
employee or person employed in domestic or strengthen the visitorial
household service or househelper under this Code, enforcement power by
arising from employer-employee relations: Provided, freeing it from the
That such complaint does not include a claim for limitations of Art 129.
reinstatement: Provided further, That the aggregate A decision under Article A decision rendered
money claims of each employee or househelper does 128, on the other hand, under this Article, being
not exceed Five thousand pesos (P5,000.00). The is administrative and adjudicatory in nature, is
Regional Director or hearing officer shall decide or therefore appealable to appealable to the National
resolve the complaint within thirty (30) calendar the Secretary of Labor Labor Relations
days from the date of the filing of the same. Any who is the administrative Commission (NLRC)
sum thus recovered on behalf of any employee or superior of all regional
househelper pursuant to this Article shall be held in a directors of the
special deposit account by, and shall be paid on Department.
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  Read page 319 azucena for elaborated explanations of the
the employee or househelper because he cannot be distinctions
located after diligent and reasonable effort to locate
him within a period of three (3) years, shall be held The regional director's authority under Art. 129 is
as a special fund of the Department of Labor and subject to four requisites, namely:
Employment to be used exclusively for the
amelioration and benefit of workers.
1. The claim is presented by an employee or a person
employed in domestic or household service, or a
Any decision or resolution of the Regional Director or househelper.
hearing officer pursuant to this provision may be 2. The claim arises from employer-employee relations.
appealed on the same grounds provided in Article 3. The claimant does not seek reinstatement.
223 of this Code, within five (5) calendar days from
receipt of a copy of said decision or resolution, to the
4. The aggregate money claim of each employee or
National Labor Relations Commission which shall househelper does not exceed P5,000.00.
resolve the appeal within ten (10) calendar days
from the submission of the last pleading required or  If there is question of reinstatement or if the claimant's
allowed under its rules. demand exceeds P5,000.00, the labor arbiter has
jurisdiction over the case, pursuant to Art. 217, paragraph
The Secretary of Labor and Employment or his duly 6, except claims for employees' compensation, social
authorized representative may supervise the security, Medicare (Philhealth) and maternity benefits.
payment of unpaid wages and other monetary claims Even as regards labor arbiter, however, employer-
and benefits, including legal interest, found owing to employee relation is a prerequisite as basis of the claim.
any employee or househelper under this Code. (As
amended by Section 2, Republic Act No. 6715, March  Articles 128 and 129 are operative only in the context of
21, 1989). employment relationship. A regular court , not DOLE or
NLRC, has jurisdiction over claim of an independent
 This is the second method of the enforcement contractor ot adjust contractual fee.
and recovery of minimum wage provisions, which
refers to simple money claims. Procedure under Article 129:

Articles 128 and 129 compared
 Art. 129 is more limited in scope than Art. 128
Art 128
empowers the Secretary
of Labor or any "duly
authorized representative
covers all matters
a. The employee files a pro-forma complaint with the
Regional Director.
b. The Regional Director dockets the complaint as simple
money claim.
Art 129 c. The Regional Director issues summons served upon
empowers only the employer (respondent), together with the copy of the
regional director or compliant, and sends a copy of the same to the
authorized hearing respondent.
officers
refers only to money

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 SUN TZU NOTES
Al L. Beronque

d. The employer-respondent is given 5 calendar

days to answer the complaint. The employer
can either admit the allegations or deny it.
e. After receiving the answer, the Regional
Director calls for a summary hearing and
decides on the matter within 30 calendar days
from the date of filing of the complaint.
f. If the decision is adverse, the employer may
appeal the decision to the NLRC within 5
calendar days from the receipt of the copy of
said decision or resolution. The appeal must
conform to the requirements provided for under
Article 217 and the NLRC Rules. To perfect the
appeal, the employer must post a cash or
surety bond.
 Dispute resolution through compromise is a pervading
philosophy of Philippine labor laws. This is emphasized in
this Article 227 and it conforms with the statement of
basic policy in Art. 211 (a) and the second paragraph of
Art. 221.
 The law looks with disfavor upon quitclaims and releases
by employees who are inveigled or pressured into signing
them by unscrupulous employers seeking to evade their
legal responsibilities. On the other hand, there are
legitimate waivers that represent a voluntary settlement
of a laborer's claims that should be respected by the
courts as the law between the parties.

 In the appeal from the RD decision to the NLRC,

the aggrieved party has 5 calendar days, while in
the appeal from LA decision to the NLRC, the
aggrieved party has 10 days.
g. From the adverse decision of the NLRC, the
employer can then file a motion for
reconsideration.
h. If said motion is denied, the employer may still
file a Special Civil Action for Certiorari with the
Court of Appeals under Rule 65 of the Rules of
Court within a period of 60 days from receipt of
the decision.
 Not all waivers and quitclaims are invalid as against public
policy. If the agreement was voluntarily entered into and
represents a reasonable settlement, it is binding on the
parties and may not later be disowned simply because of
a change of mind.
 A judgment rendered in accordance with a compromise
agreement is not appealable and is immediately executory,
unless a motion is filed to set aside the agreement on the
ground of fraud, mistake, or duress, in which case an
appeal may be taken against the order denying the
motion. (Master Tours and Travel Corp. vs. CA, 219 SCRA
321; United Housing Corp. vs. Dayrit, 181 SCRA 285.)

 The Regional Tripartite Wages and Productivity

Board (RTWPB) do not have the power to
 A compromise agreement by union officers must be
authorized by the union members. The authority must be
promulgate rules providing who is exempted from
produced in evidence. Each laborer must authorize the
minimum wage. It is the National Wages and
union officers to enter into a compromise before the
Productivity Board (NWPC) that has the rule-
laborer's right may be affected. (Kaisahan ng mga
making power to promulgate rules on exemption
Manggagawa sa La Campana vs. Sarmiento, 133 SCRA 220
and minimum wage fixing, and not the RTWPB.
[1984].) See further discussion under Art. 242.
Art 217. Jurisdiction of the Labor Arbiters and
the Commission. –
Art 2028 CC. A compromise is a contract where the parties,
 Already discussed under violation of wage orders by making reciprocal concessions, avoid a litigation or put an
end to one already commenced.

Compromise of Labor Standard Cases
ART. 227. Compromise agreements. - Any
compromise settlement, including those involving
labor standard laws, voluntarily agreed upon by the
parties with the assistance of the Bureau or the
regional office of the Department of Labor, shall be
final and binding upon the parties. The National
Labor Relations Commission or any court, shall not
assume jurisdiction over issues involved therein
except in case of non-compliance thereof or if there
is prima facie evidence that the settlement was
obtained through fraud, misrepresentation, or
coercion.
Appeal Procedure
ART. 223. Appeal. - Decisions, awards, or orders of the
Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar
days from receipt of such decisions, awards, or orders. Such
appeal may be entertained only on any of the following
grounds:
(a) If there is prima facie evidence of abuse of discretion on
the part of the Labor Arbiter;
(b) If the decision, order or award was secured through fraud
or coercion, including graft and corruption;

(c) If made purely on questions of law; and

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 SUN TZU NOTES
Al L. Beronque
(d) If serious errors in the findings of facts are raised
which would cause grave or irreparable damage or
injury to the appellant.
In case of a judgment involving 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
Commission in the amount equivalent to the
monetary award in the judgment appealed from.
In any event, the decision of the Labor Arbiter
reinstating a dismissed or separated employee,
insofar as the reinstatement aspect is concerned,
shall immediately be executory, even pending
appeal. The employee shall either be admitted back
to work under the same terms and conditions
prevailing prior to his dismissal or separation or, at
the option of the employer, merely reinstated in the
payroll. The posting of a bond by the employer shall
not stay the execution for reinstatement provided
herein.
To discourage frivolous or dilatory appeals, the
Commission or the Labor Arbiter shall impose
reasonable penalty, including fines or censures, upon
the erring parties.
In all cases, the appellant shall furnish a copy of the
memorandum of appeal to the other party who shall
file an answer not later than ten (10) calendar days
from receipt thereof.
The Commission shall decide all cases within twenty
(20) calendar days from receipt of the answer of the
appellee. The decision of the Commission shall be
final and executory after ten (10) calendar days from
receipt thereof by the parties.
Any law enforcement agency may be deputized by
the Secretary of Labor and Employment or the
Commission in the enforcement of decisions, awards
or orders. (As amended by Section 12, Republic Act
No. 6715, March 21, 1989).
 Appeal means the elevation by an aggrieved
party of any decision, order or award of a lower
body to a higher body, by means of a pleading
which includes the assignment of errors,
arguments in support thereof, and the reliefs
prated for. A. mere notice of appeal, therefore,
does not constitute the appeal as herein
defined and understood, and shall not stop the
running of the period for perfecting an appeal.
(Implementing Rules, Book V, Rule I, Sec. 1)
 “Perfection of an Appeal" includes the filing,
within the prescribed period, of the memorandum
of appeal containing, among others, the
assignment of error/s, arguments in support
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Page 25 of 28
thereof, the relief sought and, in appropriate cases,
posting of an appeal bond.
PERIODS
 The 10-day period provided in Article 223 refers to ten
calendar days, not working days. This means that
Saturdays, Sundays and Legal Holidays are not to be
excluded, but included, in counting the 10-day period.
Where the 10th day is a Sunday or Legal Holiday, the
appeal can be filed on the next business day. (SM Agri and
General Machineries vs. National Labor Relations
Commission, G.R. No. 748906, January 9, 1989.)
 If the tenth day to perfect an appeal from the decision of
the Labor Arbiter to the NLRC falls on a Saturday, the
appeal shall be made on the next working day. (Aquino vs.
NLRC and Robktt Industrial Construction, Inc., G.R. No.
98101, September 3, 1993.)
 There is a clear distinction between the filing of an appeal
within the reglementary period and its perfection. The
appeal from the Labor Arbiter to the Commission must
be filed within the reglementary period. But the appeal
may be perfected after that period. (Star Angel Handicraft
vs. NLRC and Spouses FribaMas, G.R. No. 108914,
September 20, 1994.)
 The payment of the appeal fee is by no means a mere
technicality but is an essential requirement in the
perfection of an appeal. However, where the fee had been
paid belatedly, the broader interest of justice and the
desired objective in deciding the case on the merits
demand that the appeal be given due course. (C.W. Tan
Mfg. vs. National Labor Relations Commission, G.R. No.
79596, February 10, 1989.)
 Rules of technicality must yield to the broader interests of
substantial justice. The dismissal of an appeal on purely
technical grounds is frowned upon. (Modem Fishing Gear
Labor Union vs. NLRC, G.R. No. 53907, Ma-y 6, 1988.)
ISSUES ON APPEAL; REMEDIES
 Under Section 5 (c) of the Rules of Procedure of the National
Labor Relations Commission, the Commission shall, in
cases of perfected appeals, limit itself to reviewing those
issues which are raised on appeal. Those which are not
raised shall be final and executory. The issues raised on
appeal, however, shall be open for review and any
actions taken thereon by the Commission are within the
parameters of its jurisdiction. (Roche Philippines vs.
National Labor Relations Commission, G.R. No. 83335,
October 5, 1989.)
 A party who failed to appeal on time from the decision of
Labor Arbiter may still file a motion for reconsideration of
the NLRC decision. (Sodol vs. Filipinos Koo, Inc., Requito
Vega, Belen Gomez, Arturo Gomez, NLRC, G.R. No.
87530, June 13, 1990.)
 SUN TZU NOTES
Al L. Beronque
 The decision of the Commission shall be final and
executory after ten calendar days from receipt by
the parties.
 The losing party, however, is not without recourse.
Under the New Rules of the National Labor
Relations Commission, a party is allowed to file a
motion for reconsideration of any order,
resolution or decision of the Commission based
on palpable or patent errors, provided that the
motion is under oath and filed within ten (10)
calendar days from receipt of the order,
resolution or decision. (Pure Foods Corporation
vs. National Labor Relations Commission, G.R. No.
78591, March 21,1989.)
 In addition, the party may also seasonably avail
of the special civil action for certiorari under Rule
65 of the Rules of Court. The action is allowed if
the tribunal, board or officer exercising judicial
functions has acted without or in excess of its
jurisdiction, or with grave abuse of discretion.
When and Where to File Petition
Under the 1997 Rules of Civil Procedure,
effective July 1, 1997, the petition for certiorari
may be filed not later than sixty (60) days from
notice of the judgment, order of resolution sought
to be assailed in the Supreme Court x x x. It may
also be filed in the Court of Appeals whether or
not the same is in aid of its appellate jurisdiction,
or in the Sandiganbayan if it is in aid of its
jurisdiction. (Sec. 4, Rule 65, Rules of Court.)
But the same Section and Rule provide that
"if [the petition] involves the acts or omissions of a
quasi-judicial agency, and unless otherwise
provided by law or [the] Rules, the petition shall
be filed and cognizable only by the Court of
Appeals."
Solidly buttressing the CA's jurisdiction is
the Supreme Court ruling in the St. Martin case.
After a discreet analysis of the legislative intent in
delineating judicial jurisdictions, the Court
(through Mr. Justice Regalado) declared that both
the Supreme Court and the Court of Appeals have
the power to review NLRC decisions. However, the
peti-tion by certiorari should initially be filed with
the Court of Appeals, in line with the principle of
hierarchy of courts. J$t. Martin Funeral Homes vs.
NLRC, G.R. No. 130866, September 16, 1998.)
Furthermore, in National Federation of Labor
(NFL) vs. Laguesma, G.R. No. 123426, March 10,
1999, the Supreme Court held that challenges
against rulings of the labor secretary and those
acting on his behalf, like the director of labor
relations, shall be acted upon by the Court of
Appeals, which has concurrent jurisdiction with
the Supreme Court over petitions for certiorari.
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every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
Page 26 of 28
FINDINGS OF FACTS, FINAL
Quasi-judicial agencies like the National Labor
Relations Commission have acquired expertise because
their jurisdiction is confined to specific matters. Hence,
their findings of facts are generally accorded not only
respect but at times even finality if such findings are
supported by substantial evidence. (Manila Mandarin
Employees Union vs. National Labor Relations Commission,
G.R. No. 76989, September 21, 1987.)
Exceptions
However, the Supreme Court has never hesitated to
exercise its corrective powers and to reverse administrative
decisions in the following cases:
(1) the conclusion is a finding grounded on speculations, sur-
mises and conjectures;
(2) the inferences made are manifestly mistaken, absurd or
impossible;
(3) there is a grave abuse of discretion;
(4) there is a misapprehension of facts;
(5) the court [or quasi-judicial body] in arriving at its findings
went beyond the issues of the case and the same are contrary
to the admissions of the parties or the evidence presented;
(6) where respondent commission has sustained irregular
procedures and through the invocation of summary methods,
including rules on appeal, has affirmed an order which
tolerates a violation of due process; and
(7) where the rights of a party were prejudiced because the
administrative findings, conclusions or decisions were in
violation of constitutional provisions, in excess of statutory
authority, or jurisdiction, made upon irregular procedure,
vitiated by fraud, imposition or mistake, not supported by
substantial evidence adduced at the hearing or contained in
the records or disclosed to the parties, or arbitrary, or
capricious. (Industrial Timber Corp. vs. NLRC, Concordia Dos
Pueblos, et al., G.R. No. 83616, January 20, 1989.)
Regarding compromise agreements and quitclaims the
provisions of and the notes to Art. 227 are pertinent.
Legal Remedies
Special Civil Action (Rule 65, 1997 Rules of Civil
Procedure)
 See on separate page
Petition for Review (Rule 43 and Rule 45, 1997 Rules of
Civil Procedure)
 See on separate page
7. PROHIBITIONS REGARDING WAGES
Valid Deductions
 wa pa kit i!
 SUN TZU NOTES
Al L. Beronque

the wages of a worker or induce him to give up any part of his

Non-interference in disposal of wages
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.
Wage Deduction
wages by force, stealth, intimidation, threat or by any other
means whatsoever without the worker’s consent.
Deduction to ensure employment
ART. 117. 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.

ART. 113. Wage deduction. - No employer, in his

Retaliatory Measures
own behalf or in behalf of any person, shall make
any deduction from the wages of his employees,
except: ART. 118. 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
(a) In cases where the worker is insured with his
employee who has filed any complaint or instituted any
consent by the employer, and the deduction is to
proceeding under this Title or has testified or is about to
recompense the employer for the amount paid by
testify in such proceedings.
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 Secretary of Labor and
Employment.
False Reporting
ART. 119. False reporting. - It shall be unlawful for any
person to make any statement, report, or record filed or kept
pursuant to the provisions of this Code knowing such
statement, report or record to be false in any material
respect.

ART. 114. Deposits for loss or damage. - No Withholding of Wages

employer 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,
except when the employer 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.
 1705-1709 cc wa pa kit i!
Principle of Non-diminution of benefits
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.

Deposits for Loss/Damage

ART. 115. Limitations. - No deduction from the
deposits of an employee for the actual amount of the
loss or damage shall be made unless the employee
has been heard thereon, and his responsibility has
been clearly shown.
 it essentially means that benefits being given to
employees cannot be taken back or reduced unilaterally
by the employer because the benefit has become part of
the employment contract, written or unwritten.
The rule against diminution of supplements or benefits
is applicable if it is shown that:

Withholding/Kickbacks
ART. 116. Withholding of wages and kickbacks
prohibited. - It shall be unlawful for any person,
directly or indirectly, to withhold any amount from
1. The grant of the benefit is based on an express policy
or has ripened into a practice over a long period of time;
2. The practice is consistent and deliberate.
3. The practice is not due to error in the construction or
application of a doubtful or difficult question of law.

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for
every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
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 SUN TZU NOTES
Al L. Beronque

4. The diminution or discontinuance isdone

unilaterally by the employer.

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. (As amended by
Republic Act No. 6727, June 9, 1989).

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for
every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle – SUN TZU
Page 28 of 28