AN ACT TO RATIONALIZE WAGE POLICY DETERMINATION BY ESTABLISHING THE MECHANISM AND PROPER STANDARDS THEREFOR, AMENDING FOR THE PURPOSE ARTICLE 99 OF, AND INCORPORATING ARTICLES 120, 121, 122, 123, 124, 126 AND 127 INTO, PRESIDENTIAL DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES, FIXING NEW WAGE RATES, PROVIDING WAGE INCENTIVES FOR INDUSTRIAL DISPERSAL TO THE COUNTRYSIDE, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

    Sec. 1. This Act shall be known as the "Wage Rationalization Act."

    Sec. 2. It is hereby declared the policy of the State to rationalize the fixing of minimum wages and to promote productivity-improvement and gain-sharing measures to ensure a decent standard of living for the workers and their families; to guarantee the rights of labor to its just share in the fruits of production; to enhance employment generation in the countryside through industry dispersal; and to allow business and industry reasonable returns on investment, expansion and growth.

    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 socio-economic factors and the national economic and social development plans.

    Sec. 3. In line with the declared policy under this Act, Article 99 of Presidential Decree No. 442, as amended, is hereby amended and Articles 120, 121, 122, 123, 124, 126 and 127 are hereby incorporated into Presidential Decree No. 442, as amended, to read as follows:

    "Art. 99. Regional Minimum Wages. - The minimum wage rates for agricultural and non-agricultural employees and workers in each and every region of the country shall be those prescribed by the Regional Tripartite Wages and Productivity Boards."

    "Art. 120. Creation of the 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."

    "Art. 121. Powers and Functions of the Commission. - The Commission shall have the following powers and functions:

(a) To act as the national consultative and advisory body to the President of the Philippines and Congress on matters relating to wages, incomes and productivity;

(b) To formulate policies and guidelines on wages, incomes and productivity improvement at the enterprise, industry and national levels;

(c) To prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures at the regional, provincial or industry levels;

(d) To review regional wage levels set by the Regional Tripartite Wages and Productivity Boards to determine if these are in accordance with prescribed guidelines and national development plans;

(e) To undertake studies, researches and surveys necessary for the attainment of its functions and objectives, and to collect and compile data and periodically disseminate information on wages and productivity and other related information, including, but not limited to, employment, cost-of-living, labor costs, investments and returns;

(f) To review plans and programs of the Regional Tripartite Wages and Productivity Boards to determine whether these are consistent with national development plans;

(g) To exercise technical and administrative supervision over the Regional Tripartite Wages and Productivity Boards;

(h) To call, from time to time, a national tripartite conference of representatives of government, workers and employers for the consideration of measures to promote wage rationalization and productivity; and

(i) To exercise such powers and functions as may be necessary to implement this Act.

    "The Commission shall be composed of the Secretary of Labor and Employment as ex-officio chairman, the Director-General of the National Economic and Development Authority (NEDA) as ex-officio vice-chairman, and two (2) members each from workers and employers sectors who shall be appointed by the President of the Philippines upon recommendation of the Secretary of Labor and Employment to be made on the basis of the list of nominees submitted by the workers and employers sectors, respectively, and who shall serve for a term of five (5) years. The Executive Director of the Commission Secretariat shall also be a member of the Commission."

    "The Commission shall be assisted by a Secretariat to be headed by an Executive Director and two (2) Deputy Directors, who shall be appointed by the President of the Philippines, upon recommendation of the Secretary of Labor and Employment."

    "The Executive Director shall have the same rank, salary, benefits and other emoluments as that of a Department Assistant Secretary, while the Deputy Directors shall have the same rank, salary, benefits and other emoluments as that of a Bureau Director. The members of the Commission representing labor and management shall have the same rank, emoluments, allowances and other benefits as those prescribed by law for labor and management representatives in the Employees' Compensation Commission."

    "Art. 122. 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.

    "The Regional Boards shall have the following powers and functions in their respective territorial jurisdiction:

(a) To develop plans, programs and projects relative to wages, incomes and productivity improvement for their respective regions;

(b) To determine and fix minimum wage rates applicable in their region, provinces or industries therein and to issue the corresponding wage orders, subject to guidelines issued by the Commission;

(c) To undertake studies, researches, and surveys necessary for the attainment of their functions, objectives and programs, and to collect and compile data on wages, incomes, productivity and other related information and periodically disseminate the same;

(d) To coordinate with the other Regional Boards as may be necessary to attain the policy and intention of this Code;

(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

(f) To exercise such other powers and functions as may be necessary to carry out their mandate under this Code.

    "Implementation of the plans, programs and projects of the Regional Boards referred to in the second paragraph, letter (a) of this Article, shall be through the respective regional offices of the Department of Labor and Employment within their territorial jurisdiction; Provided, however, That the Regional Boards shall have technical supervision over the regional office of the Department of Labor and Employment with respect to the implementation of said plans, programs and projects.

    "Each Regional Board shall be composed of the Regional Director of the Department of Labor and Employment as chairman, the Regional Directors of the National Economic and Development Authority and Department of Trade and Industry as vice-chairmen and two (2) members each from workers and employers sectors who shall be appointed by the President of the Philippines, upon recommendation of the Secretary of Labor and Employment, to be made on the basis of the list of nominees submitted by the workers and employers sectors, respectively, and who shall serve for a term of five (5) years.

"Each Regional Board to be headed by its chairman shall be assisted by a Secretariat."

    "Art. 123. Wage Order. - Whenever conditions in the region so warrant, the Regional Board shall investigate and study all pertinent facts; and, based on the standards and criteria herein prescribed, shall proceed to determine whether a Wage Order should be issued.

    Any such Wage Order shall take effect after fifteen (15) days from its complete publication in at least one (l) newspaper of general circulation in the region.

    "In the performance of its wage-determining functions, the Regional Board shall conduct public hearings/consultations, giving notices to employees' and employers' groups, provincial, city and municipal officials and other interested parties.

    "Any party aggrieved by the Wage Order issued by the Regional Board may appeal such order to the Commission within ten (l0) calendar days from the publication of such order. It shall be mandatory for the Commission to decide such appeal within sixty (60) calendar days from the filing thereof.

    "The filing of the appeal does not operate to stay the order unless the person appealing such order shall file with the Commission an undertaking with a surety or sureties satisfactory to the Commission for the payment to the employees affected by the order of the corresponding increase, in the event such order is affirmed."

    "Art. 124. Standards/Criteria for Minimum Wage Fixing. The regional minimum wages to be established by the Regional Board shall be as nearly adequate as is economically feasible to maintain the minimum standards of living necessary for the health, efficiency and general well-being of the employees within the framework of the national economic and social development program. In the determination of such regional minimum wages, the Regional Board shall, among other relevant factors, consider the following:

(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.

    "The wages prescribed in accordance with the provisions of this Title shall be the standard prevailing minimum wages in every region. These wages shall include wages varying with industries, provinces or localities if in the judgment of the Regional Board conditions make such local differentiation proper and necessary to effectuate the purpose of this Title.

    "Any person, company, corporation, partnership or any other entity engaged in business shall file and register annually with the appropriate Regional Board, Commission and the National Statistics Office an itemized listing of their labor component, specifying the names of their workers and employees below the managerial level, including learners, apprentices and disabled/handicapped workers who were hired under the terms prescribed in the employment contracts, and their corresponding salaries and wages.

    "Where the application of any prescribed wage increase by virtue of a law or Wage Order issued by any Regional Board results in distortions of the wage structure within an establishment, the employer and the union shall negotiate to correct the distortions. Any dispute arising from wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration. Unless otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary arbitrator or panel of voluntary arbitrators within ten (10) calendar days from the time said dispute was referred to voluntary arbitration.

    "In cases where there are no collective agreements or recognized labor unions, the employers and workers shall endeavor to correct such distortions. Any dispute arising therefrom shall be settled through the National Conciliation and Mediation Board and, if it remains unresolved after ten (10) calendar days of conciliation, shall be referred to the appropriate branch of the National Labor Relations Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous hearings and decide the dispute within twenty (20) calendar days from the time said dispute is submitted for compulsory arbitration.

    "The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of any increase in prescribed wage rates pursuant to the provisions of law or Wage Order.

    "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.

    "All workers paid by result, including those who are paid on piecework, takay, pakyaw or task basis, shall receive not less than the prescribed wage rates per eight (8) hours work a day, or a proportion thereof for working less than eight (8) hours.

    "All recognized learnership and apprenticeship agreements shall be considered automatically modified insofar as their wage clauses are concerned to reflect the prescribed wage rates."

    "Art. 126. 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."

    "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."

    Sec. 4. (a) Upon the effectivity of this Act, the statutory minimum wage rates of all workers and employees in the private sector, whether agricultural or non-agricultural, shall be increased by twenty-five pesos (P25.00) per day, except that workers and employees in plantation agricultural enterprises outside of the National Capital Region (NCR) with an annual gross sales of less than five million pesos (P5,000,000.00) in the preceding year shall be paid an increase of twenty pesos (P20.00), and except further that workers and employees of cottage/handicraft industries, non-plantation agricultural enterprises, retail/service establishments regularly employing not more than ten (10) workers, and business enterprises with a capitalization of not more than five hundred thousand pesos (P500,000.00) and employing not more than twenty (20) employees, which are located or operating outside the NCR, shall be paid only an increase of fifteen pesos (P15.00): Provided, That those already receiving above the minimum wage rates up to one hundred pesos (P100.00) shall also receive an increase of twenty-five pesos (P25.00) per day, and except that the workers and employees mentioned in the first exception clause of this section shall also be paid only an increase of twenty-pesos (P20.00), and except further that those employees enumerated in the second exception clause of this Section shall also be paid only an increase of fifteen pesos (P15.00): Provide, further, That the appropriate Regional Board is hereby authorized to grant additional increases to the workers and employees mentioned in the exception clauses of this Section if, on the basis of its determination pursuant to Article 124 of the Labor Code such increases are necessary.

    (b) The increase of twenty-five pesos (P25.00) prescribed under this Section shall apply to all workers and employees entitled to the same in private educational institutions as soon as they have increased or are granted authority to increase their tuition fees during school year 1989-1990. Otherwise, such increase shall be so applicable not later than the opening of the next school year beginning 1990.

    (c) Exempted from the provisions of this Act are household or domestic helpers and persons employed in the personal service of another, including family drivers.

    Retail/service establishments regularly employing not more than ten (10) workers may be exempted from the applicability of this Act upon application with and as determined by the appropriate Regional Board in accordance with the applicable rules and regulations issued by the Commission. Whenever an application for exemption has been duly filed with the appropriate Regional Board, action on any complaint for alleged non-compliance with this Act shall be deferred pending resolution of the application for exemption by the appropriate Regional Board.

    In the event that applications for exemptions are not granted, employees shall receive the appropriate compensation due them as provided for by this Act plus interest of one percent (1%) per month retroactive to the effectivity of this Act.

    (d) If expressly provided for and agreed upon in the collective bargaining agreements, all increases in the daily basic wage rates granted by the employers three (3) months before the effectivity of this Act shall be credited as compliance with the increases in the wage rates prescribed herein, provided that, where such increases are less than the prescribed increases in the wage rates under this Act, the employer shall pay the difference. Such increases shall not include anniversary wage increases, merit wage increases and those resulting from the regularization or promotion of employees.

    Where the application of the increases in the wage rate under this Section results in distortions as defined under existing laws in the wage structure within an establishment and gives rise to a dispute therein, such dispute shall first be settled voluntarily between the parties and in the event of a deadlock, the same shall be finally resolved through compulsory arbitration by the regional arbitration branch of the National Labor Relations Commission (NLRC) having jurisdiction over the workplace.

    It shall be mandatory for the NLRC to conduct continuous hearings and decide any dispute arising under this Section within twenty(20) calendar days from the time said dispute is formally submitted to it for arbitration. The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of the increases in the wage rates prescribed under this Section.

    Sec. 5. Within a period of four (4) years from the effectivity of this Act and without prejudice to collective bargaining negotiations or agreements or other employment contracts between employers and workers, new business enterprises that may be established outside the NCR and export processing zones whose operation or investments need initial assistance as may be determined by the Department of Labor and Employment in consultation with the Department of Trade and Industry or the Department of Agriculture, as the case may be shall be exempt from the application of this Act for not more than three (3) years from the start of their operations: Provided, That such new business enterprises established in Region III (Central Luzon) and Region IV (Southern Tagalog) shall be exempt from such increases only for two (2) years from the start of their operations, except those established in the Provinces of Palawan, Oriental Mindoro, Occidental Mindoro, Marinduque, Romblon, Quezon and Aurora, which shall enjoy such exemption for not more than three (3) years from the start of their operations.

    Sec. 6. In the case of contracts for construction projects and for security, janitorial and similar services, the prescribed increases in the wage rates of the workers shall be borne by the principals or clients of the construction/service contractors and the contract shall be deemed amended accordingly. In the event, however, that the principal or client fails to pay the prescribed wage rates, the construction/service contractor shall be jointly and severally liable with his principal or client.

    Sec. 7. Upon written petition of the majority of the employees or workers concerned, all private establishments, companies, businesses, and other entities with twenty five (25) or more employees and located within one (1) kilometer radius to a commercial, savings or rural bank shall pay the wages and other benefits of their employees through any of said banks and within the period for payment of wages fixed by Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines.

    Sec. 8. Whenever applicable and upon request of a concerned worker or union, the bank shall issue a certification of the record of payment of wages of a particular worker or workers for a particular payroll period.

    Sec. 9. The Department of Labor and Employment shall conduct inspections as often as possible within its manpower constraint of the payroll and other financial records kept by the company or business to determine whether the workers are paid the prescribed wage rates and other benefits granted by law or any Wage Order. In unionized companies, the Department of Labor and Employment inspectors shall always be accompanied by the president or any responsible officer of the recognized bargaining unit of any interested union in the conduct of the inspection. In non-unionized companies, establishments or businesses, the inspection shall be carried out in the presence of a worker representing the workers in the said company. The workers' representative shall have the right to submit his own findings to the Department of Labor and Employment and to testify on the same if he cannot concur with the findings of the labor inspector.

    Sec. 10. The funds necessary to carry out the provisions of this Act shall be taken from the Compensation and Organizational Adjustment Fund, the Contingent Fund, and other savings under Republic Act No. 6688, otherwise known as the General Appropriations Act of 1989, or from any unappropriated funds of the National Treasury: Provided, That the funding requirements necessary to implement this Act shall be included in the annual General Appropriations Act for the succeeding years.

    Sec. 11. The National Wages Council created under Executive Order No. 614 and the National Productivity Commission created under Executive Order No. 615 are hereby abolished. All properties, records, equipment, buildings, facilities, and other assets, liabilities and appropriations of and belonging to the abovementioned offices, as well as other matters pending therein, shall be transferred to the Commission. All personnel of the above abolished offices shall continue to function in a holdover capacity and shall be preferentially considered for appointments to or placement in the Commission.

    Any official or employee separated from the service as a result of the abolition of offices pursuant to this Act shall be entitled to appropriate separation pay and retirement and other benefits accruing to them under existing laws. In lieu thereof, at the option of the employee, he shall be preferentially considered for employment in the government or in any of its subdivisions, instrumentalities, or agencies, including government-owned or controlled corporations and their subsidiaries.

    Sec. 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 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 upon the entity's responsible officers, including, but not limited to, the president, vice president, chief executive officer, general manager, managing director or partner.

    Sec. 13. The Secretary of Labor and Employment shall promulgate the necessary rules and regulations to implement the provisions of this Act.

    Sec. 14. All laws, orders, issuances, rules and regulations or parts thereof inconsistent with the provisions of this Act are hereby repealed, amended or modified accordingly. In any provision or part of this Act, or the application thereof to any person or circumstance, is held invalid or unconstitutional, the remainder of this Act or the application of such provision or part thereof to other persons or circumstances shall not be affected thereby.

    Nothing in this Act shall be construed to reduce any existing wage rates, allowances and benefits of any form under existing laws, decrees, issuances, executive orders, and/or under any contract or agreement between the workers and employers.

    Sec. 15. This Act shall take effect fifteen (15) days after its complete publication in the Official Gazette or in at least two (2) national newspapers of general circulation, whichever comes earlier.

Approved,

This Act which is a consolidation of Senate Bill No. 1084 and House Bill No. 23227 was finally passed by both the Senate and the House of Representatives on June 5, 1989.

     Pursuant to the authority granted to the Secretary of Labor and Employment under Section 13 of Republic Act No. 6727, otherwise known as the Wage Rationalization Act, the following rules are hereby issued for guidance and compliance by all concerned:

     Definition of Terms. As used in this Rules -

     a) "Act" means Republic Act No. 6727;

     b) "Commission" means the National Wages and Productivity Commission;

     c) "Board" means the Regional Tripartite Wages and Productivity Board;

     d) "Agriculture" refers to farming in all its branches and among others, includes the cultivation and          tillage of the soil, production, cultivation, growing and harvesting of any agricultural or          horticultural commodities, dairying, raising of livestock or poultry, the culture of fish and other          aquatic products in farms or ponds, and any activities performed by a farmer or on a farm as an          incident to or in conjunction with such farming operations, but does not include the          manufacturing and/or processing of sugar, coconut, abaca, tobacco, pineapple, aquatic or other farm products;

     e) "Plantation Agricultural Enterprise" is one engaged in agriculture with an area of more than 24           hectares in a locality or which employs at least 20 workers. Any other agricultural enterprise           shall be considered as "Non-Plantation Agricultural Enterprise";

     f) "Retail Establishment" is one principally engaged in the sale of goods to end-users for personal          or household use;

     g) "Service Establishment" is one principally engaged in the sale of service to individuals for their           own or household use and is generally recognized as such;

     h) "Cottage/Handicraft Establishment" is one engaged in an economic endeavor in which the           products are primarily done in the home or such other places for profit which requires manual           dexterity and craftsmanship and whose capitalization does not exceed P500,000, regardless           of previous registration with the defunct NACJDA;

     i) "National Capital Region" covers the cities of Kalookan, Manila, Pasay and Quezon and the          municipalities of Las Pinas, Makati, Malabon, Mandaluyong, Marikina, Muntinlupa, Navotas,          Paranaque, Pasig, Pateros, San Juan, Taguig and Valenzuela;

     j) "Region III" covers the provinces of Bataan, Bulacan, Nueva Ecija, Pampanga, Tarlac, and          Zambales and the Cities of AngelesiCabanatuan, Olongapo, Palayan and San Jose;

     k) "Region IV" covers the provinces of Aurora, Batangas, Cavite, Laguna, Marinduque, Occidental          Mindoro, Oriental Mindoro, Palawan, Quezon, Rizal and Romblon and the cities of Batangas,          Cavite, Lipa, Lucena, Puerto Princesa, San Pablo, Tagaytay, and Trece Martires;

     1) "Department" refers to the Department of Labor and Employment;

     m) "Secretary" means the Secretary of Labor and Employment;

     n) "Basic Wage" means all remuneration or earnings paid by an employer to a worker for services           rendered on normal working days and hours but does not include cost-of-living allowances,           profit sharing payments, premium payments, 13th month pay or other monetary benefits which           are not considered as part of or integrated into the regular salary of the workers on the dale the           Act became effective.

     o) "Statutory -Minimum Wage" is the lowest wage rate fixed by law that an employer can pay his           workers;

     p)"Wage Distortion" means 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;

     q) "Capitalization" means paid-up capital, in the case of a corporation, and total invested capital,           in the case of a partnership or single proprietorship.

     Section 1. - Coverage. The wage increase prescribed under the Act shall apply to all workers and employees in the private sector regardless of their position, designation or status, and irrespective of the method by which their wages are paid, except

     a) Household or domestic helpers, including family drivers and workers in the personal service of          another;

     b) Workers and employees in retail/service establishments regularly employing not more than 10          workers, when exempted from compliance with the Act, for a period fixed by the          Commission/Boards in accordance with Section 4(c) of the Act and Section 15, Chapter I of  this Rules;

     c) Workers and employees in new business enterprises outside the National Capital Region and         export processing zones for a period of not more than two or three years, as the case may be,         from the start of operations when exempted in accordance with Section 5 of the Act and         Section 15, Chapter I of this Rules;

     d) Workers and employees receiving a basic wage of more than P100.00 pesos per day.

     Section 2. Effectivity. - The Act takes effect on July 1,1989,15 days following its complete publication in two newspapers of general circulation on June15, 1989 pursuant to Section 15 there of;

     Section 3. Amount of Minimum Wage Increase. - Effective July 1,1989, the daily statutory minimum wage rates of covered workers and employees shall be increased as follows:

          a) P25.00 for those in the National Capital Region
          b) P25.00 for those outside the National Capital Region, except for the following:

• P20.00 for those in plantation agricultural enterprises with an annual gross sales of less than P5 million in the fiscal year immediately preceding the effectivity of the Act
• P15.00 for those in the following enterprises:

                           1) Non-plantation agriculture
                           2) Cottage/handicraft
                           3) Retail/Service regularly employing not more than 10 workers.
                           4) Business enterprises with a capitalization of not more than P500,000 and
                             employing not more than 20 workers.

     Section 4. When Wage Increase Due Other Workers. -

     a) All workers and employees who, prior to July 1, 1989, were already receiving a basic wage         above the statutory minimum wage rates provided under Republic Act No. 6640 but not over         P100.00 per day shall receive a wage increase equivalent to that provided in the preceding         Section.
                                                                                                                               
     b) Those receiving not more than the following monthly basic wage rates prior to July 1, 1989 shall          be deemed covered by the preceding subsection:

          (I) P3,257.50 - where the workers and employees work everyday, including premium,               payments for Sundays or rest days, special days and regular holidays.

          (ii) P3,041.6 - where the workers and employees do not work but considered paid on test               days, special days and regular holidays.

          (iii) P2,616.67 - where the workers and employees do not work and are not considered paid on                Sundays or rest days.

          (iv) P2,183.33 - where the workers and employees do not work and are not considered paid on                Saturdays and Sundays or rest days.

     c) Workers and employees who, prior to July 1, t989. were receiving a b4sic wage of more than          P100.00 per day or its monthly e~juiva1ent, are not by law entitled to the wage increase          provided under the Act They may, however, receive wage increases through the correction of          wage distortions in accordance with Section 16, Chapter I of this rules.

     Section 5. Daily Statutory Minimum Wage Rates. - The daily statutory minimum wage rates of workers and employees shall be as follows:

 1/ May be exempted from the wage increase under the Act upon application with the appropriate Board.
     2/ Workers of establishments whose present capitalization is more than P500,000, regardless of previous registration with the defunct NACIDA, are entitled to a minimum wage increase of P25.00 per day.                                             
      3/ May be exempted from the wage increase under the Act upon application with the appropriate Board.                   

     Section 6. Suggested Formula in Determining the Equivalent Monthly Statutory Minimum Wage Rates. -Without prejudice to existing company practices, agreements or policies, the following formula may be used as guides in determining the equivalent monthly statutory minimum wage rates:

a) For those who are required to work everyday including Sundays or rest days, special     days and regular holidays:
                                                                                                                     a/
     Equivalent Monthly Rate (EMR) =   Applicable daily wage rate (ADR) x 390.90 days
                                                                                     12

b) For those who do not work but considered paid on rest days, special days and regular     holidays:

      EMR = ADR x 365 days
                          12

c) For those who do not work and are not considered paid on Sundays or rest days:

      EMR = ADR x 314 days
                         12

d) For those who do not work and are not considered paid on Saturdays and Sundays or     rest days:

        EMR = ADR x 262 days
                            12

a/ Includes premium for holidays, special days and rest days.
b/ November 1 and December 31 under Executive Order No. 203 dated June 30, 1987.

Section 7. Basis of Minimum Wage Rates. - The statutory minimum wage rates prescribed under the Act shall be for the normal working hours, which shall not exceed eight hours worka day.

     Section 8. Creditable Wage Increase. -

a) No wage increase shall be credited as compliance with the increases prescribed     under the Act unless expressly provided under collective bargaining agreements; and,     such wage increase was granted not earlier than April 1,1989 but not later than July     1,1989. Where the wage increase granted is less than the prescribed increase under     the Act, the employer shall pay the difference.

b) Anniversary wage increase provided in collective agreements, merit wage increase,     and those resulting from the regularization or promotion of employees shall not be     credited as compliance thereto.

     Section 9. Workers Paid by Results. -

a) All workers paid by results, including those who are paid on piecework, takay,     pakyaw, or task. basis, shall receive not less than the applicable statutory minimum     wage rates prescribed under the Act for the normal working hours which shall not     exceed eight hours work a day, or a proportion thereof for work of less than the     normal working hours.

    The adjusted minimum wage rates for workers paid by results shall be computed in accordance with the following steps:

    1) Amount of increase in AMW /Previous AMW x 100 =% increase;

    2) Existing rate/piece x %increase = Increase in rate/piece;

    3) Existing rate/piece + Increase in rate/piece Adjusted rate/piece.

               * Where AMW is the applicable minimum wage rate.

b) The wage rates of workers who are paid by results shall continue to be established in     accordance with Article 101 of the Labor Code, as amended and its implementing     regulations.

     Section 10. Wages of Special Groups of Workers. - Wages of apprentices, learners and handicapped workers shall in no case be less than 75 percent of the applicable statutory minimum wage rates.

     All recognized learnership and apprenticeship agreements entered into before July 1, 1989 shall be considered as automatically modified insofar as their wage clauses are concerned to reflect the increases prescribed under the Act

     Section II. Application to Contractors. - In the case of contracts for construction projects and for security, janitorial and similar services, the prescribed wage increases shall be borne by the principals or clients of the construction/service contractors and the contract shall be deemed amended accordingly. In the event, however, that the principal or client fails to pay the prescribed wage rates, the construction/service contractor shall be jointly and severally liable with his principal or client

     Section 12. Application to Private Educational Institutions. - Private educational institutions which increased tuition fees beginning school year 1989-1990 shall comply with the P25.00 per day wage increase prescribed under the Act effective as follows:

a. In cases where the tuition fee increased was effected before the effectivity of the Act,     the wage increase shall take effect on July 1,1989.

b. In cases where the tuition fee increase was effected on or after the effectivity of the     Act, the wage increase shall take effect not later that the date the school actually     increased tuition fees but in the latter case such wage increase may not be made     retroactive to July 1,1989.

     Beginning school year 1990-1991, all schools shall implement the wage increase regardless of whether or not they have actually increased tuition fees.

     Section 13. Mobile and Branch Workers. - The statutory minimum wage rates of workers, who by the nature of their work have to travel, shall be those applicable in the domicile or head office of the employer.

     The minimum wage rates of workers working in branches or agencies of establishments in or outside the National Capital Region shall be those applicable in the place where they are stationed.

     Section 14. Transfer of Personnel - The transfer of personnel to areas outside the National Capital Region shall not be a valid ground for the reduction of the wage rates being enjoyed by the workers prior to such transfer. The workers transferred to the National Capital Region shall be entitled to the minimum wage rate applicable therein.

     Section 15. Exemption. -

a) The following establishments may be exempted from compliance with the wage     increase prescribed under the Act

    1) Retail/Service establishments regularly employing not more than 10 workers upon         application with and as determined by the appropriate Board in accordance with         applicable guidelines to be issued by the Commission.

    2) New business enterprises that may be established outside the National Capital         Region and export processing zones from July 1,1989 to June 30,1993, whose         operation or investments need initial assistance may be exempted for not more         than three years from start of operations, subject to guidelines to be

     Issued by the Secretary in consultation with the Department of Trade and Industry and the Department of Agriculture.

     New business enterprises in Region III (Central Luzon) and Region IV (Southern Tagalog) may be exempted for two years only from start of operations, except those that may be established in the province of Palawan, Oriental Mindoro, Occidental Mindoro, Marinduque, Romblon, Quezon and Aurora, which may also be exempted for not more than three years from the start of operations.

b) Whenever an application for exemption has been duly filed with the appropriate office     in the Department/Board, action by the Regional Office of the Department on any     complaint for alleged non compliance with the Act shall be deferred pending     resolution of the application for exemption.

c) In the event that the application for exemption is not granted, the workers and     employees shall receive the appropriate compensation due them as provided     for under the Act plus interest of one percent per month retroactive to July 1,1989 or     the start of operations whichever is applicable

     Section 16. Effects on Existing Wage Structure. - Where the application of the wage increase prescribed herein results in distortions in the wage structure within an establishment which gives rise to a dispute therein, such dispute shall first be settled voluntarily between the parties. In the event of a deadlock, such dispute shall be finally resolved through compulsory arbitration by the region~1 arbitration branch of the National Labor Relations Commission (NLRC) having jurisdiction over the work place.

     The NLRC shall conduct continuous hearings and decide any dispute arising from wage distortion within 20 calendar days from the time said dispute is formally submitted to it for arbitration The tendency of a dispute arising from a wage distortion shall not in any way delay the applicability of the increases in the wage rates prescribed under the Act

     Any issue involving wage distortion shall not be a ground for a strike/lockout

     Section 17. Complaints for Non-Compliance. - Complaints for non-compliance with the wage increases prescribed under the Act shall be filed with the Regional Offices of the Department having jurisdiction over the workplace and shall be the subject of enforcement proceedings under Articles 128 and 129 of the Labor Code as amended.

     Section 18. Conduct of Inspection by the Department. - The Department shall conduct inspections of establishments, as often as necessary, to determine whether the workers are paid the prescribed wage rates and other benefits granted by law or any Wage Order. In the conduct of inspection in unionized companies, Department inspectors shall always be accompanied by the president or other responsible officer of the recognized bargaining unit or of any interested union. In the case of non-unionized establishments, a worker representing the workers in the said company shall accompany the inspector.

     The workers' representative shall have the right to submit his own findings to the Department and to testify on the same if he does not concur with the findings of the labor inspector.

     Section 19. Payment of Wages. - Upon written petition of the majority of the workers and employees concerned, all private establishments, companies, businesses and other entities with at least twenty-five workers and located within one kilometer radius to a commercial savings or rural bank, shall pay the wages and other benefits of their workers through any of said banks, within the period and in the manner and form prescribed under the Labor Code as amended.

     Section 20. Duty of Bank. - Whenever applicable and upon request of a concerned worker or union, the bank through which wages and other benefits are paid shall issue a certification of the record of payment of said wages and benefits of a particular worker or workers for a particular payroll period.

         Pursuant to Section 8 of RA No. 9178 and Section 2 of DOLE Department Order No. 45-03, Series of 2003, the following guidelines are hereby adopted for the proper guidance and information of all concerned.

         Section 1. Rationale. RA No. 9178, known as the Barangay Micro Business Enterprises (BMBEs) Act of 2002, aims to hasten the country's economic development and alleviate poverty by encouraging the formation and growth of BMBEs through the rationalization of bureaucratic requirements, the active support and assistance of government, and the granting of incentives and benefits to generate employment.

         One of the incentives granted to registered BMBEs is exemption from the coverage of the Minimum Wage Law. The Constitution and the Labor Code, however, mandate the State to regulate relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth. Guided by this Constitutional provision, the workers and owners of BMBEs are encouraged to set mutually acceptable wage rates in their respective enterprises.

          This Guidelines is intended to guide the Regional Tripartite Wages and Productivity Boards (RTWPBs) in the issuance of Wage Advisories for BMBEs that can assist workers and owners when they set mutually acceptable wage levels and foster industrial peace and harmony.

          Section 2. Definition of Terms. As used in this Guidelines:

1. Barangay Micro Business Enterprise - hereinafter referred to as 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 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) subject to review and upward adjustment by the SMED Council. A BMBE shall include any individual owning such business entity/enterprise, partnership, cooperative, corporation, association or other entity incorporated and/or organized and existing under Philippine laws, and registered with the office of the treasurer of a city or municipality in accordance with RA 9178.
   
   "Services" shall exclude those rendered by anyone, who is duly licensed by the government after having passed a government licensure examination, in connection with the exercise of one's profession.
   
   
2. Acceptable Wage Rates - refer to the reasonable and agreed wage rates set by BMBE workers and owners taking into consideration the Wage Advisories issued by the RTWPBs.
   
   
3. Certificate of Authority - refers to the certificate issued to an applicant authorizing the same to operate as a BMBE and to be entitled to the benefits and privileges accorded to a registered BMBE.

           Section 3. Guidelines.

           A. Wage Advisories

1. Nature. The wage rates to be proposed in the Wage Advisories shall be advisory and not mandatory in nature. They are intended to exert a persuasive effect on BMBE owners and provide a benchmark for workers. Nothing in this Guidelines or in the Wage Advisories to be issued by the RTWPBs shall prevent workers and employers of BMBEs from bargaining or negotiating for higher wages and other benefits.
   
   
2. Compliance with Labor Laws and Regulations. The Wage Advisories shall contain an express provision that, except for the Minimum Wage, BMBE workers shall continue to be covered by all other pertinent labor laws and regulations, including the non-diminution of wages and the rights of workers to social security and health care benefits.
   
   
3. Criteria. In the determination of advisory wage rates for BMBEs, the RTWPBs may consider factors which may significantly affect BMBE workers and enterprises.
   
   
4. Applicable Wage Rate. To facilitate information dissemination and awareness of concerned workers and employers, the RTWPBs may propose a single wage rate applicable to all BMBEs in the entire region.

           B. Procedure in Setting Wage Advisories

1. The RTWPBs shall conduct studies of social and economic factors that may affect  BMBEs. In coordination with the DTI Regional Offices, the RTWPBs shall maintain a data base of BMBEs with valid Certificates of Authority.
   
   
2. The RTWPBs may enlist the assistance and cooperation of any government agency or private person or organization to furnish information in aid of its wage advisory function.
   
   
3. The RTWPBs shall conduct consultations / dialogues with affected sectors, after which they shall decide on the merits of issuing a Wage Advisory for BMBEs, and where appropriate, issue such Wage Advisory within a reasonable period of time.
   
   
4. The RTWPBs shall disseminate to workers and owners of registered BMBEs in their respective regions copies of their Wage Advisories.
   

            Section 4. Submission of Wage Advisories to the Commission. The RTWPBs shall furnish the Commission copies of their Wage Advisories for information and review.

             Section 5. Counseling Assistance. Any issue that may arise in the determination of acceptable wage rates in concerned BMBEs may be brought by the workers and owners to the appropriate RTWPB for counseling assistance.

             Section 6. Effectivity. This Guidelines shall take effect 15 days after its publication in a newspaper of general circulation.

Manila, Philippines, ____________________ 2003.

     Pursuant to Section 3, Article 121 b of RA 6727 and Section 1, Rule VIII of the Revised Rules of Procedure on Minimum Wage Fixing, the following rules on exemption are hereby issued for strict compliance by all concerned:

SECTION 1. DEFINITION OF TERMS

1. Commission - refers to the National Wages and Productivity Commission.
2. Board - refers to the Regional Tripartite Wages and Productivity Board.
3. Order - refers to the Wage Order promulgated by the Board pursuant to its  wage- fixing authority.
4. Establishment - refers to an economic unit which engages in one or predominantly one kind of economic activity at a single fixed location.
   
        For purposes of determining eligibility for exemption, establishments under the same owner/s but separately registered with the Securities and Exchange Commission (SEC), Department of Trade and Industry (DTI) or Cooperative Development Authority (CDA) as the case may be, irrespective of their location, shall be treated as individual and distinct establishments.
   
   
5. Retail Establishment - refers to one principally engaged in the sale of goods to end users for personal or household use.
   
        A retail establishment that regularly engages in wholesale activities loses its retail      character.
   
   
6. Service Establishment - refers to one principally engaged in the sale of services to individuals for their own or household use and is generally recognized as such.
7. Distressed Establishment - refers to an establishment which meets the criteria enumerated in Section 3 A of this Guidelines.
8. Capital - refers to paid-up capital at the end of the last full accounting period, in the case of corporations or total invested capital at the beginning of the period under review, in the case of partnerships and single proprietorships.
9. Full Accounting Period - refers to a period of twelve (12) months or one year of business operations.
10. Deficit - refers to the negative balance of the retained earnings account of a corporation. Retained earnings represent the cumulative balance of periodic earnings, dividend distributions, prior period adjustments and other capital adjustments.
11. Stock Corporation - refers to one organized for profit and issues shares of stock to its members.
12. Non-stock Non-profit Organization - refers to one organized principally for public purposes such as charitable, educational, cultural or similar purposes and does not issue shares of stock to its members.
13. Partnership - refers to an association of two or more persons who bind themselves to contribute money, property or industry to a common fund with the intention of dividing the profits among themselves or for the exercise of a profession.
14. Single Proprietorship - refers to a business unit owned and controlled by only one      person.
15. Cooperative - refers to a duly registered association of persons who voluntarily join together to form a business establishment which they themselves own, control and patronize and which may fall under any of the following types: credit, consumers, producers, marketing, service or multi-purpose.
16. New Business Enterprises - refer to establishments, including non-profit institutions, established within two (2) years from effectivity of the Wage Order based on the      latest registration with the appropriate government agency such as SEC, DTI, CDA andMayor's Office.
17. Quasi-banks - refer to institutions such as investment houses and financing companies performing quasi-banking functions as defined by the Bangko Sentral ng Pilipinas.

SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS

     Exemption of establishments from compliance with the wage increases and cost of living allowances prescribed by the Boards may be granted in order to (1) assist establishments experiencing temporary difficulties due to losses maintain the financial viability of their businesses and continued employment of their workers; (2) encourage the establishment of new businesses and the creation of more jobs, particularly in areas outside the National Capital Region and Export Processing Zones, in line with the policy on industry dispersal; and (3) ease the burden of micro establishments, particularly in the retail and service sector, that have a limited capacity to pay.

     Pursuant to the above, the following categories of establishments may be exempted upon application with and as determined by the Board, in accordance with applicable criteria on exemption as provided in this Guidelines; provided further that such categories are expressly specified in the Order.

1. Distressed establishments

2. New business enterprises (NBEs)

3. Retail/Service establishments employing not more than ten (10) workers

4. Establishments adversely affected by natural calamities

     Exemptible categories outside of the abovementioned list may be allowed only if they are in accord with the rationale for exemption reflected in the first paragraph of this section. The concerned Regional Board shall submit strong and justifiable reason/s for the inclusion of such categories which shall be subject to review/approval by the Commission.

SECTION 3. CRITERIA FOR EXEMPTION

     The following criteria shall be used to determine whether the applicant-establishment is qualified for exemption:

SECTION 4. DOCUMENTS REQUIRED

The following supporting documents shall be submitted together with the application:

For All Categories of Exemption

     Proof of notice of filing of the application to the President of the union/contracting party if one is organized in the establishment, or if there is no union, a copy of a circular giving general notice of the filing of the application to all the workers in the establishment. The proof of notice, which may be translated in the vernacular, shall state that the workers' representative was furnished a copy of the application with all the supporting documents. The notice shall be posted in a conspicuous place in the establishment.

A. For Distressed Establishments

         1. For corporations, cooperatives, single proprietorships, partnerships, non-stock non-profit               organizations.

1. Audited financial statements (together with the Auditor's opinion and the notes thereto) for the last two (2) full accounting periods preceding the effectivity of the Order filed with and stamped "received" by the appropriate government agency.
   
   
2. Audited interim quarterly financial statements (together with the Auditor's opinion and the notes thereto) for the period immediately preceding the effectivity of the Order.
   
   Submission of audited interim financial statements shall be in accordance with the following schedule:

SECTION 5. ACTION ON APPLICATION FOR EXEMPTION

                  Upon receipt of an application with complete documents, the Board shall take the            following steps:

a. Notify the DOLE Regional Office having jurisdiction over the workplace of the pendency of the application requesting that action on any complaint for  non-compliance with the Order be deferred pending resolution of the application by  the Board.

b. Request the DOLE Regional Office to conduct ocular inspection, if necessary, of establishments applying for exemption to verify number of workers, nature of business and other relevant information.

c. Act and decide on the application for exemption with complete documents, as much as practicable, within 45 days from the date of filing. In case of contested application, the Board may conduct conciliation or call hearings thereon.

d. Transmit the decision of the Board to the applicant establishment, the workers or president of the union, if any, and the Commission, for their information; and the DOLE Regional Office concerned, for their implementation/enforcement.

     The Board may create a Special Committee with one representative from each sector to expedite processing of applications for exemption.

SECTION 6. APPLICATION FOR PROJECTS/BRANCHES/DIVISIONS

     Where the exemption being sought is for a particular project/branch/division not separately registered and licensed, the consolidated audited financial statements of the establishment shall be used as basis for determining its distressed condition.

SECTION 7. DISTRESSED PRINCIPAL

     Exemption granted to a distressed principal shall not extend to its contractor in case of contract(s) for construction, security, janitorial and/or similar services with respect to the employees of the latter assigned to the former.

SECTION 8. EXTENT AND DURATION OF EXEMPTION

     A full exemption of one (1) year shall be granted to all categories of establishments that meet the applicable criteria for exemption under Section 3 of this Guidelines.

     However, a partial exemption of 50% with respect to the amount or period of exemption shall be granted only in the case of distressed establishments as follows:

      a. For corporations/cooperatives

     When deficit as of the last full accounting period or interim period, if any, immediately preceding the effectivity of the Order amounts to less than 20% of the paid-up capital of the same period.

       b. For single proprietorships/partnerships

     When the net accumulated losses for the period under review amounts to at least 15% but less than 20% of the total invested capital at the beginning of the period under review.

       c. Non-stock non-profit organizations

     When the net accumulated losses for the period under review preceding the effectivity of the Order amounts to at least 15% but less than 20% of the fund balance/members' contribution at the beginning of the period under review.

SECTION 9. PROCEDURES ON EXEMPTION

A.      For Filing of Application

1. An application, in three (3) legible copies may be filed with the     appropriate Board by the owner/manager or duly authorized     representative of an establishment, in person or by registered mail.

    The date of mailing shall be deemed as the date of filing.

2. Applications for all categories shall be filed not later than sixty     (60) days from publication of the approved implementing rules of the     Order.

    In the case of NBEs, applications shall be filed not later than sixty    (60) days from date of registration.

3. The application shall be under oath and accompanied by complete     supporting documents as enumerated under Section 4 of this     Guidelines.     In the case of an application with incomplete     supporting documents, the     applicant shall be notified to complete     the same within ten (10) days from     receipt of the notice;     otherwise, the application shall be dismissed.

B.      For Filing of Opposition

     Any worker or, if unionized, the union in the applicant establishment, may file with the appropriate Board within fifteen (15) days from receipt of the notice of the filing of the application, an opposition to the application for exemption stating the reasons why the same should not be approved, furnishing the applicant a copy thereof. The fifteen (15) day period shall run only upon receipt of complete supporting documents. The opposition shall be in three (3) legible copies, under oath and accompanied by pertinent documents, if any.

C.      For Filing of Motion for Reconsideration

     The aggrieved party may file with the Board a motion for reconsideration of the decision on the application for exemption within ten (10) days from its receipt and shall state the particular grounds upon which the motion is based, copy furnished the other party and the DOLE Regional Office concerned.

     No second motion for reconsideration shall be entertained in any case. The decision of the Board shall be final and executory unless appealed to the Commission.

D.      For Filing of Appeal to the Commission

1. Appeal - Any party aggrieved by the decision of the Board may file an appeal to the Commission, through the Board, in two (2) legible copies, not later than ten (10) days from date of receipt of the decision.

The appeal, with proof of service to the other party, shall be accompanied with a memorandum of appeal which shall state the date appellant received the decision, the grounds relied upon and the arguments in support thereof.

The appeal shall not be deemed perfected if it is filed with any office or entity other than the Board.

2. Grounds for Appeal - An appeal may be filed on the following grounds:

a. Non-conformity with the prescribed guidelines and/or     procedures on exemption;

b. Prima facie evidence of grave abuse of discretion on the     part of the Board; or

c. Questions of law.

3. Opposition - The appellee may file with the Board his reply or opposition to the appeal within ten (10) days from receipt of the appeal. Failure of the appellee to file his reply or opposition shall be construed as waiver on his part to file the same.

4. Transmittal of records - Within five (5) days upon receipt of the reply or opposition of the appellee or after the expiration of the period to file the same, the entire records of the case which shall be consecutively numbered, shall be transmitted by the Board to the Commission.

SECTION 10. QUORUM AND VOTES REQUIRED

     Four (4) members of the Commission or Board shall constitute a quorum to decide on the applications for or on appeals on exemption, provided each sector is represented. The Commission or Board may dispense with the latter proviso if the two (2) representatives of any sector fail to attend two (2) consecutive scheduled meetings with proper notice. The affirmative vote of the majority of the members constituting a quorum shall be necessary to carry a decision.

SECTION 11. EFFECT OF DISAPPROVED APPLICATION FOR EXEMPTION

     In the event that the application for exemption is not approved, covered workers shall be paid the mandated wage increase/allowance as provided for under the Order retroactive to the date of effectivity of the Order plus simple interest of one percent (1%) per month.

SECTION 12. NON-DIMINUTION OF BENEFITS

     Exemption granted under this Guidelines shall not be construed to reduce existing wages and other benefits enjoyed by the workers under existing laws, decrees, issuances or under any contract of agreement between the workers and employees.

SECTION 13. SUPPLEMENTARY GUIDELINES ON EXEMPTION

     The Board may issue supplementary guidelines for exemption in accordance with this Guidelines, subject to review/approval by the Commission.

SECTION 14. EFFECTIVITY

     This Guidelines shall take effect fifteen (15) days after publication in a newspaper of general circulation.

SECTION 15. REPEAL

     All Commission Guidelines previously adopted and inconsistent herewith are hereby repealed.

Manila, Philippines, 18 November 1996.

 

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     Pursuant to Article 121(c) of the Labor Code as amended by Section 3 of R.A. 6727, the National Wages and Productivity Commission hereby adopts and promulgates the following revised rules of procedure governing the proceedings in the Commission and the Regional Tripartite Wages and Productivity Boards in the fixing of minimum wage rates by region, province, or industry.

     Section 1. Title. This Rules shall be known as the Revised Rules of Procedure on Minimum Wage Fixing.

     Section 2. Construction. This Rules shall be liberally construed to carry out the objectives of R.A. 6727.

     Section 3. Scope. This Rules shall govern proceedings in the National Wages and Productivity Commission and the Regional Tripartite Wages and Productivity Boards in the fixing of minimum wage rates.

     Section 4. Definition of Terms. As used in this Rules:

(a) "Act means Republic No. 6727;

(b) "Board" means the Regional Tripartite Wages and Productivity Board;

(c) "Commission" means the National Wages and Productivity Commission;

(d) "Chairman" means Chairman of the Commission;

(e) "Member" refers to the members of the Commission or Board, including its      Chairman;

(f) "Regional Chairman" means the Chairman of the Board;

(g) "Party" means any legitimate organization of workers or employers with substantial interest in the region, province or industry therein as determined by the Board, and  who stands to be directly affected by the Commission/Board proceedings, order, decision or resolutions;

(h) "Industry" refers to a trade, business or a sector thereof, or group of businesses in similar or allied activities in which individuals are gainfully employed;

(i) "Locality" refers to a geographical area smaller than a province and includes industrial estates/export processing zones;

(j) "Region" refers to a geographical area composed of a group provinces and/or cities as defined under Presidential Decree No. 1, as amended, including those that may be subsequently established by law;

(k) "Regional Minimum Wage Rates" refer to the lowest basic wage rates that an employer can pay his workers, as fixed by the Board which shall not be lower than the applicable statutory minimum wage rates;

(l) "Statutory Minimum Wages" refer to the lowest basic wages as provided by law;

(m) "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;

(n) "Wage Order" refers to the Order promulgated by the Board pursuant to its wage
     fixing authority.

     Section 1. Conduct of Wage and Productivity Studies. The Board shall, subject to guidelines issued by the Commission, conduct continuing studies of wage rates, productivity and other conditions in the region, provinces or industries therein. The Board shall investigate and study all pertinent facts, and based on standards and criteria prescribed under Section 2 of this Rule, shall determine whether a wage order should be issued.

     Section 2. Standards/Criteria for Minimum Wage Fixing. The minimum wage rates to be established by the Board shall be as nearly adequate as is economically feasible to maintain the minimum standards of living necessary for the health, efficiency and general well-being of the workers within the framework of national economic and social development goals. In the determination of regional minimum wages, the Board shall, among other relevant factors, consider the following:

(b) By Virtue of a Petition Filed

           1) Form and Content of Petition.

   (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 proprio 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.

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.          

     Section 1. Public Hearings. Prior to the issuance of a wage order, public hearings shall be conducted giving notices to employees' and employers' groups, provincial, city and municipal officials and other interested parties.

     Section 2. Who May Conduct. Hearings may be conducted by the Board en banc or by a duly authorized committee thereof wherein each sector shall be represented. The presence of the Regional Chairman or any of the Vice Chairmen shall be required. If unable to attend, Board Members may send observers. The Board shall determine the date/s, place/s, and time of the hearings which shall open to the public except as otherwise requested by a party and so determined by the Board.

     Section 3. Order of Hearing. As much as practicable, the petitioner/s shall present his/their evidence first, followed by the oppositor/s. The Board may then call on other persons to present their views and submit position papers and other supporting documents.

     Section 4. Manner and Duration of Hearings. Public hearings shall be conducted in a manner that shall ensure that all sectors and parties who stand to be directly affected by the decisions and orders of the Board are given the widest opportunity to be heard. Pursuant to this, the hearings shall be conducted in each province in the region as far as practicable.

     Hearings shall be conducted within forty five (45) days from the date of initial hearing except when conditions in the region warrant otherwise.

     Section 5. Records of Proceedings. The Board Secretariat shall keep records/minutes of all Board proceedings, duly noted by the Members of the Board.

     Section 6. Non-applicability of Technical Rules. The Board shall not be bound strictly by technical rules evidence and procedures.

     Section 7. Prohibition Against Injunction. No preliminary or permanent injunction or temporary restraining order may be issued by any court, tribunal or any other entity against any proceeding before the Commission or Board.

     Section 1. Issuance of Wage Order. Within thirty (30) days after conclusion of the last hearing, the Board shall decide on the merits of the petition, and where appropriate, issue a wage order establishing the regional minimum wage rates to be paid by employers which shall in no case be lower than the applicable statutory minimum wage rates. The Wage Order may include wages by industry, province or locality as may be deemed necessary by the Board provided, however, that such wage rates shall not be lower than the regional minimum wage rates unless expressly specified in the Wage Order.

     The Board shall furnish the Commission a copy of the decision on the petition or the Wage Order.

     Section 2. Contents of Wage Order. A Wage Order shall specify the region, province, or industry to which the minimum wage rates prescribed under the Order shall apply and provide exemptions, if any, subject to guidelines issued by the Commission.

     Section 3. Frequency of Wage Order. Any Wage Order issued by the Board may not be disturbed for a period of twelve (12) months from its effectivity, and no petition for wage increase shall be entertained within the said period. In the event, however, that supervening conditions, such as extraordinary increase in prices of petroleum products and basic goods/services, demand a review of the minimum wage rates as determined by the Board and confirmed by the Commission, the Board shall proceed to exercise its wage fixing function even before the expiration of the said period.

     Section 4. Effectivity. A Wage Order shall take effect fifteen (15) days after its publication in at least one (1) newspaper of general circulation in the region.

     Section 5. Implementing Rules/ Regulations. The Board shall prepare, for approval of the Secretary of Labor and Employment upon recommendation of the Commission, the necessary Implementing Rules and Regulations not later than ten (10) days from the issuance of a Wage Order.

     The Secretary of Labor and Employment shall act on the Implementing Rules within a period of twenty (20) days from receipt of the said Implementing Rules by the Commission. Once approved, the Board shall cause the publication of the Implementing Rules and Regulations in at least one (1) newspaper of general circulation in the region.

     Section 6. Review of Wage Order. The Commission may review the Wage Order issued by the Board motu propio or upon appeal.

     Section 7. Correction of Error. The Board may, motu propio or upon manifestation of any party, proceed to correct any patent error, errors in computation or typographical errors in any Wage Order.

     Section 8. Amendments to Wage Order. In case of substantive changes in the Wage Order, the Board must comply with the required procedures provided under Section 1 of Rule II and Section 4 of Rule IV.

     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 reglementary 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:

     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.

     Section 1. Quorum. Four (4) members of the Commission or Board shall constitute a quorum to transact business, provided that the Chairman or the Vice Chairman is present and each sector is represented. The Commission or Board may dispense with the proviso requiring sectoral representation if the two (2) representatives of any sector fail to attend, without justifiable reason, two (2) consecutive scheduled meetings with proper notice.

     Section 2. Votes Required. Any decision of the Commission or Board shall require the affirmative of not less than four (4) of its members.

     Section 1. Correction of Wage Distortion. Where the application of any prescribed wage increase by virtue of a Wage Order issued by the Board results in distortions of the wage structure within an establishment, the employer and the union shall negotiate to correct the distortions. Any dispute arising from wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration. Unless otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary arbitrator or panel of voluntary arbitrators within ten (10) days from the time said dispute was referred to voluntary arbitration.

     In cases where there are no collective agreements or recognized labor unions, the employers and workers shall endeavor to correct such distortions. Any dispute arising therefrom shall be settled through the National Conciliation and Mediation Board and, if it remains unresolved after ten (10) days of conciliation, shall be referred to the appropriate branch of the National Labor Relations Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous hearings and decide the dispute within twenty (20) days from the time said dispute is submitted for compulsory arbitration.

     The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of any increase in prescribed wage rates pursuant to the provisions of the Wage Order.

Section 1. Application for Exemption. Whenever a wage order provides for exemption, applications for exemption shall be filed with the appropriate Board which shall process these applications, subject to guidelines issued by the Commission.

     Section 1. Enforcement of Wage Orders. Compliance with the Wage Order issued by the Board shall be enforced by the appropriate Regional Office of the Department of Labor and Employment in accordance with enforcement procedures under Articles 128 and 129 of the Labor Code as amended.

     Section 1. Disposition of Pending Matters. The Commission/Board shall exert all efforts to dispose of all matters pending before it within the shortest possible time.

     Section 1. Commission/Board Records. All official records of the Commission/Board may be made available to interested parties, upon request, except those considered confidential and which cannot be divulged without violating a private right or prejudicing the public interest.

     Section 2. Custody of Records and Other Documents. The Executive Director of the Commission Secretariat and the Head of the Board Secretariat shall be responsible for the safekeeping of all official records of the Commission and Board, respectively.

     Section 1. Repeal and Separability. All existing rules, regulations or orders or any part thereof inconsistent with this Revised Rules are hereby repealed, amended or modified accordingly. If any part or provision of this Revised Rules is declared unconstitutional or illegal, the other parts or provisions shall remain valid.

     Section 1. Effectivity. This Revised Rules shall take effect fifteen (15) days after its publication in one (1) newspaper of general circulation.

Manila, Philippines, November 29, 1995.

     Notice is hereby given of the filing of a Petition for a Minimum Wage Increase with the Regional Tripartite Wages and Productivity Board - Region ____, Docketed as Case No. ____ by:

Name and Address of Petitioner                       Amount of Wage Increase Sought:
___________________________                               _______________________________
___________________________
___________________________

The Board has set the initial hearing of petition on _________________ at _______ a.m./p.m. at _______________________________. All interested parties who might wish to oppose the aforesaid petition should file their oppositions with the Board on or before the scheduled date of hearing. Such parties may request that, before the date of hearing, they be furnished with copies of petition. Likewise, any interested party may examine the petition and other pertinent records filed with the Board during the usual business hours.

                                                                              ________________________________
                                                                              REGIONAL BOARD CHAIRMAN

    FACTS: The Regional Tripartite Wages and Productivity Board (Board) Region XI, formulated and then issued Wage Order No. RTWPB-XI-04 modifying Wage Order No. RTWPB XI-03 granting a P15.00 wage increase to the prevailing minimum wage rates in the region. Thereafter, an appeal to the National Wages and Productivity Commission (Commission) relative to Wage Order No. RTWPB No. XI-04 was filed by a group of labor federations and independent unions.

    Appellants alleged, among others, that the reduction of the COLA under Wage Order No. RTWPB-XI-03 from P25.00 to P15.00 and integrating the P15.00 to the workers' basic wages has no basis in fact and in law; that the assailed Wage Order was issued without conforming with the prescribed guidelines set by Congress and the National Wages and Productivity Commission and that the Board committed grave abuse of discretion amounting to lack of jurisdiction.

    ISSUES: The appellants raised the following grounds:

    1. The reduction of the COLA will definitely erode the purchasing power of the workers in light of the continuing spiralling of prices of basic commodities;
   
    2. The exclusion from the coverage of the assailed Wage Order of all organized or unionized es-tablishments is unfair, or discriminatory and a ploy to bust the union;

    3. The reduction of the P25.00 COLA is violative of Rule VII, Section 8 of the Rules and Regulations Implementing RA 6727, Section 9 of the assailed Wage Order and Article 100 of the Labor Code, and;

    4. The power of the Board to legislate and/or fix wages and provide for exemption is specifically defined and limited under Section 3, Article 121 (b) of RA 6727, in relation to Section 1, Rule VIII of the Rules of Procedure on Minimum Wage Fixing.

   HELD: The Commission held that the contentions of the appellants are not impressed with merit.

   As to the first issue, the Commission recognized the authority of the Board to modify Wage Order No. RTWPB-XI-03 to provide workers and their families, immediate relief measures to enable them to cope with the rising cost of living without impairing the viability of business and industry at the same time controlling unemployment within tolerable limits considering the varying economic and living conditions in the region and creating a favorable investment climate.

    In granting the P15.00 minimum wage increase, the Board took the necessary steps to provide workers with increased purchasing power to cope with increasing prices of goods and services.

    Such determination by the Board in the absence of any compelling justification to alter the same is accorded respect by the Commission. It is only upon clear showing of grave abuse of discretion and patent disregard of the prescribed guidelines that the Commission will set aside the findings of the Board.

    With respect to the second issue, the Commission held that the Board, in consonance with its authority to fix the minimum wage under RA 6727, merely set a floor wage that employers should comply with and below which a wage rate cannot be allowed to fall. The objective of the assailed Wage Order is to enhance protection for workers belonging to the low income bracket, most of whom are not unionized and therefore less capable of protecting themselves from undue exploitation. For workers receiving wage rates above this floor wage, wage adjustments can be properly pursued through collective bargaining or wage negotiations between labor and management.

    As to the third issue, the Commission clarified that the intention of the Board in granting the P25.00 COLA in Wage Order No. RTWPB-XI-03, is for the same to be merely temporary and conditional, such that it can be modified or even allowed to expire at any time after the one (1) year period. Unlike past wage issuances whereby COLAs were integrated into the basic pay of the workers, the applicability of the assailed Wage Order is for a definite period of time. Undeniably, the expected expiration of the effectivity of the P25.00 COLA had been known from the outset to both labor and management. It is ironic that the labor sector is now impugning the repeal of the P25.00 COLA. Simply put, the P25.00 COLA under Wage Order No. RTWPB-XI-03 was never reduced. It merely lapsed on its expiration date.

    Finally, the claim of appellants that the Board has no authority to grant exemption to certain categories of establishments deserve scant consideration for the reason that the power to grant exemption is inherent in the Board's wage fixing function and is thus left to its sound discretion.

    Brillantes (Chairman), Habito (Vice Chairman), Floro, Rondain (Commissioners) and Pineda (NWPC Executive Director), voted to deny the appeal.

    Bagtas and Bate (Commissioners), dissented. (1) The withdrawal of the P25.00 COLA would actually result in the diminution of take home pay of the workers.

    Appeal denied; Assailed Wage Order affirmed.

Non-conformity with prescribed guidelines cases (NWPC Case No. W.O. 97-012. January 14, 1998)

IN RE: APPEAL FROM WAGE ORDER NO. RTWPB-XI-05-B

ASSOCIATED LABOR UNION - TRADE UNION CONGRESS OF THE PHILIPPINES (ALU-TUCP), petitioner vs.
PILIPINO BANANA GROWERS AND EXPORTERS ASSOCIATION AND PHILIPPINE PINEAPPLE GROWER ASSOCIATIONS, oppositors

     FACTS: The Regional Tripartite Wages and Productivity Board (Board), Region XI, issued Wage Order NO. RTWPB-XI-05 on December 16, 1996 mandating a P16.00 wage increase to be paid as follows: P10.00 to be given on January 1, 1997 and another P6.00 to be given on June 1, 1997.

     The agro-export industries (banana, pineapple and asparagus exporters) filed their petitions on January 6, 1997 to defer implementation of said Wage Order to prevent their imminent collapse and to protect the workers and their families. After due publication of notice, public hearings were conducted.

     Thereafter, Wage Order No. RTWPB-XI-05-B was issued deferring the implementation of Wage Order No. RTWPB-XI-05 with respect to the agro-export industries.

     The appellant Associated Labor Union-Trade Union Congress of the Philippines appealed to nullify the assailed Wage Order contending that it is illegal and issued with grave abuse of discretion amounting to lack of jurisdiction. Article 122 of R.A. 6727 does not confer authority to the Boards to defer implementation of a wage order, and therefore, it is ultra-vires.

    The growers and exporters opposed the said appeal.

     ISSUE: Whether or not the Regional Boards have no power to defer implementation of a Wage Order in a particular industry which in effect grants automatic exemption to all firms in that industry.

     HELD: Article 122 of the Labor Code, as amended by R.A. 6727 provides:

     "x x x The Regional Boards shall have the following powers and functions x x x"

      "(e) To receive, process and act on applications for exemption from prescribed wage rate x x x"

      The Board is equipped with broad powers, including the power to grant exemption from compliance with the Wage Order to a particular category of employers. It is attached or inherent to the Board's wage fixing functions. The grant of deferment from compliance with the prescribed minimum wage is akin to wage exemption. But the policy requires firms to file individual applications for exemption to be acted upon by the Board based on a set of criteria. It does not contemplate industry-wide automatic deferment or exemption without considering the varying conditions and absorptive capacity of individual firms within the industry.

     Therefore, the Board must formulate the necessary procedures and criteria which will be the basis of deferment for individual application of members of the agro-export industries.

     Quisumbing (Chairman), Floro (Commissioner) and Lagunzad III (NWPC Executive Director) voted to deny the appeal.

     Bagtas and Cruz (Commissioners) in the effect.

     Rondain (Commissioner) voted to affirm the denial but did not accept further requirement that companies individually must apply.

     Appeal denied for lack of merit. Wage Order should be amended.