Bar Q Salaries Part 2

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Labor Law Review

1st S, 2021-22

Atty. Paciano F. Fallar Jr.


SSCR-CoL

Salaries and Hours of Work

Part 2

Q16 Tarcisio was employed as operations manager and received a monthly salary of
₱25,000.00 through his payroll account with DB Bank. He obtained a loan from Roberto
to purchase a car. Tarcisio failed to pay Roberto when the loan fell due. Roberto filed a
complaint for collection of sum of money with prayer for writ of attachment, specifically
seeking the garnishment of Tarciso's salaries. The latter vigorously objected and
argued that salaries were exempt from garnishment. Is Tarcisio correct? Explain
your answer

ANSWER: Yes, Tarcisio is correct. Under Article 1708 of the Civil Code, "(t) he
laborer's wages shall not be subject to execution or attachment, for debts incurred for
food, shelter, clothing and medical attendance." The indebtedness of Tarcisio was due
to a purchase of a car which is one of the exceptions under the said law.

Q17.Gil Bates, a computer analyst and programmer of Hard Drive Company, work eight
hours a day for five days a week at the main office providing customers information
technology assistance. On Saturdays, however, the company requires him to keep his
cellular phone open from 8:00 A.M. to 5:00 P.M. so that the Management could contact
him in case of heavy work load or emergency problems needing his expertise.

May said hours on Saturdays be considered compensable working hours “while on


call”?

ANSWER: Said hours on Saturdays should be considered as compensable working


hours "while on call". In accordance with the Rules and Regulations Implementing the
Labor Code, an employee who is not required to leave word at his home or with
company officials as to where he may be reached is not working while on call. But in
the question, Gil Bates was required to keep his cell phone open from 8:00 A.M. to
5:00 P.M. Therefore, Bates should be considered as working while on call if he cannot
use effectively and gainfully for his own purpose the time from 8:00A.M. to 5:00 P.M.
on Saturdays when he is required to keep his cellphone open. The compensation
received by Bates for working while on call on Saturdays should be reported to the
Social Security System because under the Social Security Law, compensation means
"all actual remuneration for employment."

Q18.Which of the following is not compensable as hours worked?

a. Travel away from home;


b. Travel from home to work;
c. Working while on call;
d. Travel that is all in a day's work.

ANSWER: B

Q19. The meal time (lunch break) for the dining crew in Glorious Restaurant is either
from 10 a.m. to 11 a.m. or from 1:30 p.m. to 2:30 p.m., with pay. But the management
wants to change the mealtime to 11 a.m. to 12 noon or 12:30 p.m. to 1:30 p.m., without
pay. Will the change be legal?

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ANSWER: Yes, absent an agreement to the contrary, the management determines
work hours and, by law, meal break is without pay.

Q20. Under what conditions may a "compressed work week" schedule be legally authorized as
an exception to the "eight-hour a day" requirement under the Labor Code?

ANSWER: A "compressed work week" schedule may be authorized under the following
conditions: 1) The employee voluntarily agrees to it. 2) There is no diminution in their weekly or
monthly take home pay or fringe benefits. 3) The benefits are more than or at least
commensurate or equal to what is due the employees without the compressed work week. 4)
Overtime pay will be due and demandable when they are required to work on those days which
should have ceased to be working days because of the compressed work week schedule. 5) No
strenuous physical exertion or that they are given adequate rest periods. 6) It must be for a
temporary duration as determined by the Department of Labor.

Q21.In computing for 13th month pay, Balagtas Company used as basis both the
employee’s regular base pay and the cash value of his unused vacation and sick
leaves. After two and a half (2 ½) years, it announced that it had made a mistake and
was discontinuing such practice. Is the management action legally justified?

(a) Yes, since 13th month pay should only be one-twelfth of the regular pay.
(b) No, since the erroneous computation has ripened into an established,non-
withdrawable practice.
(c) Yes, an error is not a deliberate decision, hence may be rectified.
(d) No, employment benefits can be withdrawn only through a CBA negotiation.

ANSWER: B

Q22. D, one of the sales representatives of OP, Inc., was receiving a basic pay of
P50,000.00 a month, plus a 1% overriding commission on his actual sales transactions.
Later on, and without any formal memo, he was given monthly gas allowance of
P5,000.00.

Three (3) months thereafter, D approached his manager and asked for his gas and
transportation allowance for the month. The manager declined his request, saying that
the company had decided to discontinue the aforementioned allowance considering the
increased costs of its overhead expenses. In response, D argued that OP, Inc.’s
removal of the gas and transportation allowance amounted to a violation of the rule on
non-diminution of benefits.

Is the argument of D tenable? Explain.

ANSWER: YES. Under the general rule in Article 100 of the Labor Code, nothing in the
Labor Code shall be construed to eliminate or in any way diminish supplements, or
other employee benefits being enjoyed at the time of promulgation of the Labor Code.
Benefits being given to employees shall not be taken back or reduced unilaterally by the
employer because the benefit has become part of the employment contract, written or
unwritten. The exception is to correct an error, otherwise, if the error is left uncorrected
for a reasonable period of time, it ripens into a company policy and employees can
demand for it as a matter of right.

Here, it clearly appears that all the elements of the applicability of the general rule on
Article 100 is applicable. It does not show that the recantation of the allowance by the
management was merely to correct an error as they argued that it was due to increased
costs of overhead expenses. Thus, D’s contention is tenable.

Q23.X Company’s CBA grants each employee a 14th month year-end bonus. Because
the company is in financial difficulty, its head wants to negotiate the discontinuance of
such bonus. Would such proposal violate the “non-diminution rule” in the Labor Code?
ANSWER: NO. Under jurisprudence, generally, a bonus is not a demandable and
enforceable obligation. For a bonus to be enforceable, it must have been promised by

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the employer and expressly agreed upon by the parties. Given that the bonus in this
case is integrated in the CBA, the same partakes the nature of a demandable
obligation. Verily, by virtue of its incorporation in the CBA, the bonus due to respondent
Association has become more than just an act of generosity on the part of the petitioner
but a contractual obligation it has undertaken.

Thus, although the company’s CBA provides for the grant of 14 th month year-end bonus,
the same is not legally demandable and does not violate the non-diminution rule in the
Labor Code.

Q24. Lito was anticipating the bonus he would receive for 2013. Aside from the 13th
month pay, the company has been awarding him and his other co-employees a two to
three months bonus for the last 10 years. However, because of poor over-all sales
performance for the year, the company unilaterally decided to pay only a one-month
bonus in 2013.Is Lito’s employer legally allowed to reduce the bonus?

ANSWER: NO. Under jurisprudence, if a company practice has been left uncorrected
for a reasonable period of time, the same ripens into practice. Although bonuses are
generally not legally demandable, it may be otherwise once it ripens into practice as one
of the exceptions.

Thus, Lito’s employer cannot reduce the bonus since the same has already been
promoted for the last 10 years. Therefore, it has already ripened into practice and the
same can be legally demanded by Lito.

Q25.Far East Bank (FEB) is one of the leading banks in the country. Its compensation
and bonus packages are top of the industry. For the last 6 years, FEB had been
providing the following bonuses across-the-board to all its employees: a. 13th month
pay; b. 14th to 18th month pay; c. Christmas basket worth P6,000; d. Gift check worth
P4,000; and e. Productivity-based incentive ranging from a 20% to 40% increase in
gross monthly salary for all employees who would receive an evaluation of "Excellent"
for 3 straight quarters in the same year. Because of its poor performance over-all, FEB
decided to cut back on the bonuses this year and limited itself to the following:

a. 13th month pay;


b. 14th month pay;
c. Christmas basket worth P4,000; and
d. Gift check worth: P2,000

Katrina, an employee of FEB, who had gotten a rating of "Excellent" for the last 3
quarters, was looking forward to the bonuses plus the productivity incentive bonus. After
learning that FEB had modified the bonus scheme, she objected. Is Katrina's objection
justified? Explain.

ANSWER: YES. As a general rule, jurisprudence states that a bonus is not demandable
as a matter of right. It is a management prerogative, given in addition to what is
ordinarily received by or strictly due to the recipient. There are two exceptions; to wit, (1)
(1) When it was promised to be given without any conditions imposed for its payment in
which case it is deemed part of the wage; and, (2) When it has ripened into practice.

Further, jurisprudence also states that a policy may ripen into practice if the same has
been done for a reasonably long period of time.

Here, it has already ripened into company practice for being observed for the last six
years. Thus, the same may be demanded by Katrina.

Q26. Upon review of the wage rate and structure pertaining to its regular rank and file
employees, K Corporation found it necessary to increase its hiring rates for belonging to
the different job classification levels to make their salary rates more competitive in the
labor market.

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After the implementation of the new hiring salary, Union X, the exclusive bargaining
agent of the rank and file employees, demanded a similar salary adjustment for the old
employees. It argued that the increase in hiring rates resulted in wage distortion since it
erased the wage gap between the new and old employees. In other words, new
employees would enjoy almost the same salary rates as K Corporation’s old employees.

(a) What is wage distortion?

ANSWER: Under Article 124 of the Labor Code, wage distortion is 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 basis of differentiation.

(b) Did a wage distortion arise under the circumstances which legally obligated K
Corporation to rectify the wages of its old employees? Explain.

ANSWER: YES. Under jurisprudence, the elements of wage distortion are as


follows: (1) An existing hierarchy of positions with corresponding salary rates; (2)
A significant change in the salary rate of a lower pay class without a concomitant
increase in the salary rate of a higher one; (3) The elimination of the distinction
between the two levels; and, (4) The existence of the distortion in the same
region of the country. NO WAGE DISTORTION KASI WALANG MINIMUM
WAGE ORDER NA NAGBAGO NUNG WAGE RATES

Here, there is an existing hierarchy between the positions of old and new
employees; there is a significant change in the salary rate of newly hired
employees without any increase in the salary rate of old employees; there is an
elimination of the distinction between the new and old employees; and there is a
distortion within the same region of the country. Thus, wage distortion arose
which legally obligated K Corp. to rectify the wages of old employees.

Q27. A, a driver for a bus company, sued his employer for non-payment of commutable
service incentive leave credits upon his resignation after five years of employment. The
bus company argued that A was not entitled to service incentive leave since he was
considered a field personnel and was paid on commission basis and that, in any event,
his claim had prescribed. If you were the Labor Arbiter, how would you rule? Explain.

ANSWER: I would rule in favor of the Bus Company. Under jurisprudence, the
benefit applies to all employees except field personnel whose time and performance are
unsupervised by the employer. Further, field personnel are those who regularly perform
their duties away from the principal place of business or branch office of the employer
and whose actual hours of work in the field cannot be determined with reasonable
certainty.

Jurisprudence also gives us that the cause of action of an entitled employee to claim his
service incentive leave pay accrues from the moment the employer refuses to
remunerate its monetary equivalent if the employee did not make use of said leave
credits but instead chose to avail of its commutation.

Here, A is considered as a field personnel for having performed duties away from the
employer and whose actual work hours in the field cannot be determined with
reasonable certainty, A being a bus driver. Thus, he is not covered by the benefit of SIL.
This, notwithstanding, the claim has not yet prescribed.

Q28 .Lawyer Antonio Martin recently formed a law partnership with five other lawyer-
friends of his. They hired two office secretaries, an accounting clerk-cashier, one
bookkeeper, and two messengers. You are among three associate attorneys. The

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workweek is Monday to Friday. There is no vacation leave but sick leave is 15 days for
every year of continuous and satisfactory service. Managing partner Martin is preparing
a set of personnel policies in terms and conditions of employment for the staff and has
asked you to give him a brief memo on the questions listed. Is the law firm required to
grant to its employees holiday pay and service incentive leave?

ASNWER: YES. Under the Labor Code, every employee who has rendered at least 1
year of service shall be entitled to a yearly service incentive leave of 5 days with pay.
Furthermore, all employees who perform work on regular workdays are entitled to
receive holiday pay as mandated by the government.

Here, the office secretaries, accounting clerk-cashier, bookkeeper and messengers do


not fall under any of the exceptions on the mandatory grant of SIL and Holiday Pay.
Thus, the law firm is required to grant them the same.

Q29. Dennis was a taxi driver who was being paid on the "boundary" system basis. He
worked tirelessly for Cabrera Transport Inc. for fourteen (14) years until he was eligible
for retirement. He was entitled to retirement benefits. During the entire duration of his
service, Dennis was not given his 13th month pay or his service incentive leave pay. Is
Dennis entitled to 13th month pay and service leave incentive pay? Explain.

ANSWER: NO. Under the Labor Code, all employees are entitled to SIL. However,
exempted to this are those field personnel who work away from the employer and
whose work hours cannot be determined with reasonable certainty. Furthermore, 13 th
month pay is also not mandatory upon employees who are paid on a boundary basis
irrespective of the time consumed in the performance thereof.

Here, Dennis was a taxi driver considered a field personnel. He is also paid on a
boundary basis. Thus, he is not entitled to 13 th month pay or SIL.

Q30. LKG Garments Inc. makes baby clothes for export. As part of its measures to
meet its orders, LKG requires its employees to work beyond eight (8) hours every day,
from Monday to Saturday. It pays its employees an additional 35% of their regular
hourly wage for work rendered in excess of eight (8) hours per day. Because of
additional orders, LKG now requires two (2) shifts of workers with both shifts working
beyond eight (8) hours but only up to a maximum of four (4) hours. Carding is an
employee who used to render up to six (6) hours of overtime work before the change in
schedule. He complains that the change adversely affected him because now he can
only earn up to a maximum of four (4) hours' worth of overtime pay. Does Carding have
a cause of action against the company?PFFALLARJROCT2021

ANSWER: NONE. A change in work schedule is a management prerogative of LKG.


Thus, Carding has no cause of action against LKG if, as a result of its change to two (2)
shifts, he now can only expect a maximum of four (4) hours overtime work. Besides, Art.
97 of the Labor Code does not guarantee Carding a certain number of hours of overtime
work. Settled in jurisprudence is the fact that the basis of overtime claim is an
employee’s having been “permitted to work”. Otherwise, as in this case, such is not
demandable.

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