TOPIC 6: ART.

112-119 OF THE LABOR CODE  In this case, the employer is authorized

- Under Chapter 4, entitled provisions regarding to deduct from the wages of the union
Wages. members in a certain amount
corresponding to union dues. The law
NON-INTERFEARANCE IN THE DISPOSAL OF says, that if the deduction is recognized
WAGES by the employer, as in the case, where
- The law recognizes that the wages are property there exists a collective bargaining
of the workers. If the person owns the wages, no agreement.
person shall limit or interfere on how the workers  In the absence of the check provision or
will use the wages. a CBA, the deduction may also be law
- If the worker is using his wage and decides to lawful if the worker has given his consent
buy, the employer is prohibited from interfering to such a deduction, authorizing an
from the decision of the worker. employer to deduct in his monthly wages
- The worker being the holder of his wages. corresponding to union dues.
Prohibition against compulsory patronage
- Employer is prohibited from forcing, compelling, RECAP:
or obliging his employees to purchase Lawful:
merchandise, commodities, or other property 1. With agreement in the CBA
from any other person or otherwise make use of 2. With the consent of employee to deduct
any store or services of such employer or any JMM: You will appreciate this because the policy of the
other person. state is to promote unionism, and in promoting
- KEYWORDS: forcing, compelling, obliging unionism, the state encourages the workers to exercise
o The presence of these elements would the right to self-organization, and that means they are
deshape(?) of the free and lawful encourage to form, join or resist information of a labor
consent of the worker. union. By allowing such, it would ensure the
o Ex. If the establishment is operating a maintenance and continued survival of the union. Just
fast food restaurant and employs like any other organization, membership dues is very
workers. The establishment cannot common for the survival of the organization.
force, compel, or oblige, the workers
to dine in or purchase their own products 3. Where it is authorized by the Secretary of Labor
against their will. and Employment thru appropriate regulations.
4. DO 195, S. 2018
WAGE DEDUCTION
General rule: Employer is not allowed to deduct D.O 195, S. 2018
anything from his worker’s wages. Amended the omnibus rules of wage deduction. DOLE
- So when the worker renders labor, he’s entitled added one exception:
to his wage and the employer must not deduct - Deduction is authorized by the employee
anything from the employee’s wages. himself for a payment to the EMPLOYER or
Exceptions: payment to a THIRD PERSON, and employer
1. By virtue of a contract between the parties. agrees to do so, provided, that the employer
 Cases: Worker is insured with his consent does not provide any pecuniary benefit derived
by the employer and the purpose of the from the transaction whether directly or
deduction for his wage is to recompense indirectly.
the employer for the amount paid by him
as premium on the insurance. Ex#1 If I am an employee and I get an authorization
 Lawful deduction because there is from my employer to pay my utility bills.
consent. Free and lawful consent given - Utility bills is a third person, and the employer
by the employer. Afterwards, the worker agrees to do that. And the employer does not
will benefit from that insurance coverage. derive any pecuniary benefit from that
2. Deduction from union dues. arrangement whether directly or indirectly is a
 Case wherein the establishment is valid deduction of wages.
organized. There is a certified and Ex#2 I obtain a loan from the employer, and authorized
recognized bargaining union. In the my employer in writing to deduct from my salary a
collective bargaining unit, there could be certain amount.
a stipulation on the check-off provision. - Also considered as a valid deduction under this
 CBA – is valid and binding between the 2018 department order.
employer and the certified organized
bargaining union. SHS PERFERATED MARTERIALS (2010 CASE)
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SC said: while the employer has the management This principle in the Linea Jewelry Manufacturing case
prerogative, it does not have the right to withhold the was reiterated in the 2014 case of Bluer than Blue
wages without the consent of the employee. Any Join Venture Company. In this case, the company was
withholding of wages will only be allowed in a form of into a retail business and they wanted to come up with
wage deductions under Art. 113 of the Labor Code. As this practice of deducting from the wages of their sales
you all know, wage deductions is not the same as clerk the negative variants the company had in their sales.
withholding of the employees wage.
The issue: was there an existing rule and regulation
where the Sec. allows this kind of arrangement? There
WITHHOLDING OF WAGES
General rule: Withholding of wages – Art. 116 of the was none. Is there any proof in this retail business
Labor Code – the employer is not allowed to withhold the requiring a deposit from the sales clerk to answer for
employee’s wage. negative variants is a recognized one? The SC found
Exceptions: none. It disallowed this kind of practice in the company.
1. Among the deductions allowed by law. What is the importance of that? If it is not allowed, then
2. Consent on the part of the employee that deposit that was required by the company must be
3. Wages that are due and demandable (found in remanded to the employee. If there is any deduction
Civil Code) already made by the employer from such cash deposit,
then the employee has the right to recover it from the
ART 114 AND ART 115 – DEPOSITS FOR LOSS AND employer and the employer’s obligation to return it to the
DAMAGES
employee.
(See: Five day taxi and Jardin Case)
In 2014, the Dept. of Labor came up with Labor
General rule: Employee is not required to make a Advisory 11 Series of 2014 reiterating the provisions
deposit, to answer for the loss and damage of the tools of the Labor Code on non-interference of disposal of
and equipment supplied by the employer to its wages and allowable deductions. In that advisory, it will
employees.
summarize the rule that there should be no interference
by the employer in the disposal of the worker’s wages and
Exception: Employer is engage in trade, occupation or
industry where the practice of making deposit is a the exception to the rule on non-wage deduction. Under
recognized one, or considered as necessary or desirable this Labor Advisory, it expressly recognizes in the Security
by the Secretary of DOLE thru appropriate regulations. industry the right of the Security Agency to require their
- This was initiated in a 2012 case of Nina Jewelry security guards to make a deposit to answer for loss or
Manufacturing of Metal Arts damage to the tools and equipment supplied by the
agency to their security guards. This is a good example of
NINA JEWELRY MANUFACTURING (2012 CASE) a regulation by DOLE that it finds it necessary and
States that the employer’s policy of requiring a deposit to desirable to allow the security agencies to require their
answer for the loss and damage of the tools and security guards and personnel to make a deposit.
equipment supplied by the employer to its employee, this
policy (1) MUST be authorized by law or regulations In this particular advisory, it is even a cash deposit. The
issued by the Sec of DOLE, (2) MUST be proved to be a Sec. of Labor provided for certain limitations. The amount
recognized practice in the jewelry manufacturing business of cash deposit that may be required the maximum
or the Sec of DOLE has come up with the appropriate amount shall not exceed the 1 month basic salary of the
rules that such policy is necessary or desirable. worker and in case there will be deduction to answer for
loss or damage, the maximum amount of deduction must
In the jewelry manufacturing, the company is into jewelry
not exceed 20% of the employee’s wage rate. In case
business and the employee who is given the task to take
the security guard is separated from his employment, the
care of this jewelry was required to make a deposit. In
advisory of the DOLE requires the employer to remand or
case of loss or damage of the jewelry, the employer can
return the cash deposit to the employee within 10 days
recover it from the employee. So, was it a valid policy?
separation from the service. The DOLE was also quite
The SC in that case said that it is not a valid policy
emphatic in saying that no other wage deductions, cash
because there is no proof that in a jewelry business, it is
deposit, or cash bond, shall be required without the
a recognized practice to require such a deposit to answer
express authorization of the Sec. of DOLE to appropriate
for such loss or damage. There is no existing rules and
advisory or guidelines.
regulations allowed by the Sec. of Labor that finds it
necessary and desirable for that type of establishment to We just have to google whether the DOLE website there
require their workers to make a deposit to answer for loss are existing advisories, rules and regulations that the Sec.
or damage to the jewelry. of Labor has issued allowing deduction to answer for loss
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or damage for these tools, equipment, materials supplied rank and file employee is entitled to 13th month pay as
by the employer. If there is none, then do not allow that soon as he has rendered at least 1 month of service within
kind of deposit and deduction. In fact, the advisory gives the calendar year. Under the law when you speak of 13th
examples of what are considered deductions which are month, it focuses on the basic salary. The basic salary
not authorized such as deduction for company uniforms, there is exclusive or excluding the overtime pay, premium
cash deposit for loss or damage unless it is authorized by pay, and other allowances which are not an integral part
the Sec., for PPE you cannot deduct from the workers’ in a worker’s wage. In that particular case, the company
wages, capital share, capital build-up in service included in the computation of the 13th month pay the
cooperatives, for training fees, and other deductions not allowances and wage related benefits. It has been done
included or authorized. for a long period of time consistently and deliberately.
One day the company realized there was a mistake in
Under the occupational safety and health standards
interpreting the law. They tried to correct and reduce
promulgated by the Bureau of Working Conditions with
benefits by adopting the right way of computing the 13th
regard to PPE, in case of loss or damage, there is a
month pay. When the issue was raised before the SC, the
provision there which expressly allows deduction if the
principle against diminution of benefits was applied and
same is due to the negligence or fault of the employee. If
the SC disallowed the employer to change the manner of
there is such a deduction, it should follow the maximum
his computation because the employee already acquired
amount allowable deduction. You cannot deduct the
the vested right. There was no excusable mistake in the
whole value of the company property from the employees’ manner of which the employer did.
wages. Otherwise, the worker would not take home any
salary at all and that would be detrimental to his interest Manila Bank case in 1997 where it suffered financial
and welfare. difficulties but historically the bank has been providing
their workers with gas and uniform allowance. When they
It is also very common in some establishments that the
tried to take it away unilaterally, the SC applied the
employees have formed their cooperative. If they do so provision against the diminution of benefits.
and this cooperative is specially registered with the
Cooperative Development Authority, you can apply the Same holds true in the 1991 case of Nestle. Nestle has
Philippine Cooperative Code of 2008 wherein a been giving their workers vacation and sick leave. They
member of the cooperative may in an instrument can no longer remove these leave benefits without
authorize his employer to deduct his wage and remit to violating the principle against diminution of benefits.
the cooperative for the payment of his unpaid obligation.
In the 2005 case of Honda Philippines, Honda
That is expressly found in the Labor Code because the
Philippines is an organized establishment, recognized and
purpose of the law is to strengthen the creation and
certified by the union. At one time the workers went on
existence of this cooperatives because they are really
strike, when you go on strike it is a no work no pay
intended to benefit the cooperative members. If there is
such a written authorization from the employee to his arrangement, there is an occasion for the computation of
the 13th month pay. The employer said that since you
employer to deduct his wage and remit to the cooperative
went on strike that the failure to render work, we will not
for the payment of his unpaid obligation, the law says the
include that in the computation of the 13th month pay.
obligation of the employer is mandatory. Otherwise, the
employer cannot refuse to effect that kind of deduction. However, the SC disputed the claim of the employer
saying that under your existing collective bargaining
Another important principle is the non-diminution of agreement of the 13th month pay, you wrote there is
benefits or the principle against the diminution of equivalent to your 1 month basic salary. You cannot
benefits and supplements that is found in Art. 100 change that provision because the employer has acquired
and 127 of the Labor Code. a right to such entitlement. Otherwise, to do would be
violating the principle of non-diminution of benefit.
The rule is that the employer for benefits and
supplements provided to their workers, the employer is In the 2007 case of Manila Jockey Club, it is a horse race
prohibited from unilaterally withdrawing, eliminating, club company, originally their work schedule under their
reducing, or diminishing, these benefits or supplements. CBA is from 9AM to 5PM, work rendered beyond 5PM
If you do it unilaterally, without the consent of the worker, workers are entitled overtime pay. Change in the program
then you violate the principle of non-diminution of of horse races, the company decided to have another
benefits. schedule. Instead of 9AM to 5PM, they made it to 1PM to
8PM. The workers complained, and “you have unjustly
As early as the case of Davao Fruits in 1993 involving
depriving us of entitlement to overtime because that were
the 13th month pay law. Under the 13th month pay law, a
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your schedule, our overtime will be after 8PM.” The SC subject to certain guidelines (take note of these
said that overtime is not a benefit. The overtime is guidelines). The rule is that a check is not a legal tender.
given only if there is rendition of additional services. The It only produces payment when it has been encashed or
overtime pay was not given consistently, when through the fault of debtor, it has been impaired.
deliberately and unconditionally but as
Art.104. Place of payment
compensation for additional services rendered.
There was no violation of the principle of Where? The Labor code says that you have to pay, at or
diminution of benefit. near the place of undertaking.
A similar ruling was rendered in 2007 case of San Miguel If the construction company principal office is in Cebu City
Corporation where the Supreme Court was quite emphatic but he project is in Lapu-Lapu where the workers are. The
that saying that overtime pay is not a benefit. Why? To place of undertaking is in Lapu-Lapu, that is where the
be entitled to an overtime pay, the employee has to wages must be paid, not elsewhere. However, there are
render additional service. The overtime pay is not freely certain instances under the law where the employer is
given. The requirement of rendering additional allowed to pay the workers in a place other than the place
service differentiates overtime pay form benefits of undertaking (take note of these instances). Ex. Such as
such as 13th month pay or yearly merit increases. that there is force majeure, you cannot expect an
employer to go to the flooded area just to pay your
There’s a funny case in 2011 involving the University of
wages.
the East. To illustrate, if the company has been deducting
form the worker’s wage the cost of the uniform and the Art. 103. Time/frequency of payment
company has been doing that for several years. The
company cannot invoke the principle against diminution Wages shall be paid at least once every two weeks,
of benefit saying that since we have been deducting from or intervals not exceeding 16 days. There may also
your salary the cost of the uniform, we have the right to be instances where wages will have to be paid at least
continue with that practice. The SC said that it is a wrong once a month.
application of the principle against diminution of benefit.
In USC, they pay their faculty members only once a month
The principle against diminution of benefit is
but the payment is already advanced. There is really
applicable only if the grant or benefit is founded on
nothing wrong with the frequency of payment because
express policy or has ripened into a practice over
we are paid in advance.
a long period of time which is consistent and
deliberate. The rule in company practice is generally Take note when the worker is paid based on task and if
used with respect to the grant of additional benefits to the task is not yet finished. There’s a specific provision on
employees, not to issues involving diminution of benefits. how frequent the employer pay the worker. There are
certain guidelines provided under Art. 103.

With regard to the payee, to whom should the employer

PAYMENT OF WAGES
pay the worker’s wages? Of course, to the employee
Art 102. Form of payment of wages. himself. Because he is the one who worked for it, he was
the one who earned it. Of course there are exceptions to
Rule: Wages must be paid in legal tender. You the rule. In case the employee is dead, under the Labor
cannot pay your employees in the form of promissory code, you can pay the wages through his heirs and there
notes, vouchers, tokens, chips or any object other than is no need for a testate/intestate proceeding. What is
legal tender even if the employee has expressly requested needed is only an Affidavit of heirship from the surviving
the same. Why? Because it is contrary to public policy. heirs of the employee. You authorize somebody else to
Not all agreement is valid. Under your civil code, a receive payment of your wages and the employer agrees,
stipulation to be valid must not be contrary to law, public this is also a payment to a person other than the
policy or public morals. In this case, even if the employee employee himself. The significance of that in the Civil
has agreed to accept payment of wages in the form of Code is that payment to a wrong person will not
promissory note, that is not allowed by law, it is extinguish the obligation. Ex. You cannot just pay the
considered a void arrangement. girlfriend of the worker, it will not extinguish the
Can employer pay their workers in the form of check? obligation of the employer to the worker, you can be
made to pay again. So just pay to the worker himself.
The implementing rules allow certain instances where
Take note on DO-18A series of 2001.
payment of wages in the form of check is allowed. This is
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There is a provision of the time interval of payment of
wages in a subcontracting or a contracting arrangement.
If the company engages in a security agency, janitorial
agency, maintenance agency in a tri-lateral relationship.
It is very common that the actual workers are not paid at
the right time. DOLE came up with this DO and provides
that in case of contracting or subcontracting
arrangement, the payroll cut-off date should not exceed
15 days from the first day of work and the payroll
processing time must not be more than 10 days form the
cut-off date. And on the day following the lapse of the 10-
day payroll processing time, the wages must be paid in
proportion to the work rendered or completed. As regards
interval of time of payment, it must be done twice a
month or intervals not exceeding 16 days

There is a SC case applying Civil law to a Labor case. Look

at the 2006 case of Business services of the future today.

The SC applied the principle of unjust enrichment.

Where the workers’ advances exceeded their unpaid

salaries. The overpaid amount paid by the employer
should be paid back to the latter to avoid unjust
enrichment. There is an obligation to return to the
employer in case there is an excess payment. It is very
common because some companies change their payroll
system from time to time. In the course of doing that,
there can be overpayment made to the worker. The
common question is that can the employer recover it from
the employees. If the payment obviously was done
by mistake, the employer may recover the amount
form the employee which was paid by mistake.

What caught my interest right now is the question of the

client about the 105 days of maternity leave.

The employer overpaid the maternity leave benefits, can

he recover the overpaid leave benefits? YES. Even though
it involves employment relation, they can also apply the
Civil code provision against unjust enrichment.

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