Republic of the Philippines
HOUSE OF REPRESENTATIVES,

Quezon City

THIRTEENTH CONGRESS i
First Regular Session

HOUSE BILLNO.__ 148"

Introduced by Akbayan Party-List Reps. Loretta Ann P. Rosales,
Mario Joyo Aguja and Ana Theresia Hontiveros-Baraquel

EXPLANATORY NOTE

Every round of oil price increases always highlights the recurring and almost
perennial problem faced by Filipino working men and women of having to cope with
such price increases as well as those in transportation fares and of basic commodities
that inevitably follow. After every round of oil price increas<s, workers, through their
unions, organizations and groups, demand for an increase in their wages in order that
their real value could catch up with such price increases. This is, in line with their
right to a living wage guaranteed by the Constitution (Article XIII, Section 3)..

R.A. 6727, otherwise known as the "Wage Rationalization Act", was enacted
into law in 1989 in order to address such a situation at the time; as well as similar
situations that may arise since then. It was intended to rationalize the fixing of wages
and the improvement of productivity throughout the country. It created Regional
Tripartite Wage and Productivity Boards with the mandate “to develop plans,
programs and projects relative to wages, incomes and productivity improvement for
their respective regions". These were placed under the supervision df a National Wage
and Productivity Commission mandated "to formulate policies and guidelines on
wages, incomes and productivity improvement at the enterprise, industry and national
levels".

After fifteen years of experience, serious questions have been raised regarding
the effectiveness of these Regional Tripartite Wage and Productivity Boards in
formulating and prescribing fair and equitable wage rates at the regional level. Wage
distortions have emerged in the different regions. Their ability and that of the National
Wage and Productivity Commission itself to quickly respond to changes in the prices
of oil, transport and basic commodities have been put into question. There are now
strong demands to abolish the system instituted by R.A. 6727 for having been
ineffective and a failure, and to replace it with a system of wage-fixing at the national



level that takes into account, among others, industry considerations. Such a system
would do away with the Regional Tripartite Wage and Productivity Boards and vest
the wage-fixing authority in the National Wage and Productivity Commission. This
would rationalize wage-fixing and make it more effective and more efficient.

In view of the foregoing considerations, the early approval of this bill is

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(nish LPs fe F>

REP. LORETTA ANN P. ROS, LES
“Akbayan Party-List Representative

earnestly urged.

Qrthndiboa- axagusle
REP. ANA THERESIA HON’ ,OS-BARAQUEL

Akbayan Party-List Representative


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

THIRTEENTH CONGRESS
First Regular Session

HOUSE BILL NO.__1487

Introduced by Akbayan Party-List Reps. LorettalAnn P, Rosales,
Mario Joyo Aguja and Ana Theresia Hontiveivs-Baraquel

AN ACT |

AMENDING PRESIDENTIAL DECREE NO. 442, AS AMENDED,
OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES, AND
PROVIDING FOR THE RATIONALIZATION OF WAGE LEVELS ON A
NATIONAL OR INDUSTRIAL BASIS. |
Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled: '

SECTION 1. In line with the declared policy of the State to promote the
productivity-improvement and gain-sharing measures to ensue a decent standard of
living for the workers and their families and to guarantee the rights of labor to its just
share in the fruits of production, Article 99 of Presidentic!! Decree No. 442, as
amended, is hereby amended and Articles 121, 122, 123, 124, 126, 127, are hereby
incorporated into Presidential Decree No. 442, as amended to read as follows:

“Art. 99 [Regional] Minimum Wages. - The NATIONAL minimum wage
rates for agricultural and non-agricultural employees and workers [in each and every
region of the country] shall be those prescribed by [Regional ‘Tripartite Wages And
Productivity Boards] THE NATIONAL WAGES AND PRODUCTIVITY
COMMISSION." | :

“Art. 121. Powers and Functions of the Commission! - The Comi
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; 7

"(C) TO DETERMINE AND FIX NATIONAL MINIMUM WAGE RATES
ACCORDING TO INDUSTRIFS AND TO ISSUR THR GORRFSPONDING
WAGE ORDERS: |

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"{©] () To prescribe rules and guidelines for the determination of
appropriate minimum wage and productivity measures at the [regional, ‘provincial orl
industry levels;

"[(@) 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;] i

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"(©) 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 telated information,
including, but not limited to, employment, cost-of-living, labor costs, investments and
returns;

"[() To review plans and programs of the Regional Tripartite Wages and *
Productivity Boards to determine whether these are consistent with national
development plans:]

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

[@)] (To call, from time to time, a national tripartite conference of
Tepresentatives of government, workers and employers for the consideration of
measures to promote wage rationalization and productivity; i"

"[@]_ (g) To exercise such powers and functions as nlay 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 He 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 shall also he p 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 the recommendation of ‘the Secretary of Labor and
Employment.

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"The Executive Director shall have the same rank, salary, benefits ‘and other
emoluments as that of a Department Assistant-Secretary, wh": 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 furlctions in their
respective territorial jurisdiction:

("@) To develop plans, programs and projects relative to wages, incomes and

productivity improvement for their respective regions;

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["(b)_ To determine and fix minimum wage rates apnlicable in their region,
Provinces or industries therein and to isue the correspouding wage orders, subject to
guidelines issued by the Commission; |

["© 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:

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

("© To receive, process and act on applications: for exemption from
prescribed wage rates as may be provided by law or any Wage Order; and

("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 end Eruployment within their
territorial jurisdiction; Provided, however, That the regional Boards shall have



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 the 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 the
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.] i

"Art. 12{3]2. Wage Order. - Whenever conditions in the [region]
COUNTRY so warrant, the [Regional Board] COMMISSION 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 (1) newspaper of general circulation in the region.] TWO (2) NEWSPAPERS
OF GENERAL CIRCULATION.

"In the performance of its wage determining functions, the [Regional Board]
COMMISSION shall conduct public hearings/consultations| ‘giving notices to
employees’ and employers’ groups, provincial, city and municigal officials and other
interested parties.

"Any party aggrieved by the Wage Order issued by the [Regional Board]
COMMISSION may [appeal] SEEK A RECONSIDERATION OF such order [to the
Commission] within ten (10) calendar days from the publication of such order. It
shall be mandatory for the Commission to decide such [appeal] MOTION FOR
RECONSIDERATION within sixty (60) calendar days from the filing thereof.

"The filing of the [appeal] MOTION FOR RECONSIDERATION does not)
stay the order unless the person appealing such order shall file jwith 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
even such order is affirmed.” |

“Art. 12[4]3. Standards/Criteria for Minimum Wage Fixing. -: The [regional]
NATIONAL minimum [wages] WAGE to be established by the [Regional Board]
COMMISSION 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 \ninimum wages, the



[Regional Board] COMMISSION shall, among other relevant factors, consider the
following:

"(a) The demand for living wages;
"(b) Wage adjustment vis-a-vis the consumer price index; |
"(c) The cost of living and changes or increases therein;

"(d) The needs of workers and their families;
"(©) The need to induce industries to invest in the countryside; .

"(Q) Improvements in standards of living;

"(g) The prevailing wage levels: !

"() Fair return ofthe capital invested and capacity to pay of emiployers;

"(i Effects on employment generation and family income; and
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"@) The equitable distribution of income and wealth along the imperatives of
economic and social development. |

"The wag(s) prescribed in accordance with the provisions of the Title shall be
the standard prevailing NATIONAL minimum [wages in every region] WAGE. .
{These wages] THIS shall include wages varying within industries, [provinces or
localities] if in the judgment of the [Regional Board] COMMISSION, 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 [appropria'> Regional Board]
COMMISSION and the National Statistics Office an itemized listing of their labor
component, specifying the names of their workers asd employees below the
managerial Ievel, 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| pursuant to law or
Wage Order issued by [any] THE [Regional Board] COMMISSION 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 ¢ollective bargaining
agreement and, if it remains unresolved, through voluntary arbitration. Unless
otherwise agreed by the parties in writing, such dispute shall! be decilled by the *

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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 Rc'stions 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. i

"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 leamnership 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 aginst any proceedings before the Commission [or the Regidnol Boards)

"Art. 127. Non-diminution of Benefits. - No Wage Ole issued by [any
Regional Board] THE COMMISSION shall provide for wage rates lower then the
statutory minimum wage rates prescribed by Congress.” |

SECTION 2. (a) Exempted from the provisions of this Act are household or
domestic helpers and persons employed in the personal service of another, including
family drivers.

Retailservice establishments regularly employing not njore than ten (10)
workers may be exempted from the applicability of this Act upon application with and
as determined by the Commission. Whenever an application for exemption has been
duly filed with the Commission, action on any complaint for alleged non-compliance



with this Act shall be deferred pending resolution of the applicatidn for exemption by *
the Commission.

In the event that applications for exemptions are not granted, employees shall
receive the appropriate compensation due them as may be granted them pursuant to
this Act plus interest of one percent (1%) pet month retroactive fo the effectivity of
this Act. :

(b) If expressly provided for and agreed upon in the collective bargaining
agreements, all increases in. the daily basic wage rates gran‘ed by the employers three
3) months before the effectivity of this Act shall be credited as compliance with the
increases in the wage rates as may be prescribed pursuant io this'Act, provided that,
where such increases are less than the increases in the wage rates that may be
prescribed pursuant to 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 increases in the wage rates that ‘may be prescribed

pursuant to this Act results in distortions as defined as defiried under existing laws in
the wage structure within an establishment and gives rise to 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 branches of the National Labor Relations Commissions (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) calenda:' Jays from the time
said dispute arising from a wage distortion shall not in any way delay the applicability
of any increase in the wage rates that may be prescribed pursyant to this Act.

SECTION 3. In the case of contracts for consicuction projects and for
security, janitorial and similar services, increases in the wage rates of the workers
shall be borne by the principals or clients of the construction/servicé 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 ¢onstruction/service
contractor shall be jointly and severally liable with his principal or client

SECTION 4. Upon written permission 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 of payment of wages
fixed by Presidential Decree No. 422, as amended, otherwise known as the Labor
Code of the Philippines.


SECTION 5. 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,

SECTION 6. 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 minimum wage rates and other benefits granted by
Jaw 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 or of any interested union in the ~
conduct of the inspection. In non-unionized companies, establishments or businesses,
the inspection should be carried out in the presence of a corker 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 lebor inspector. .

SECTION 7. The Regional Tripartite Wages and Productivity Boards created
under Republic Act no. 6727 are hereby abolished. All. properties, records,
equipment, buildings, facilities, and other assets, liabilities and appropriations of an
‘belonging to the abovementioned offices, as well as other matters pending therein,
shall be transferred to the Commission.

Any official or employee separated from the service as a résult of the abolition
of office 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.

SECTION 8. Any person, corporation, trust, firm, partnefship, association or
‘entity which refuses or fails to pay any 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 ahy person convicted
under this Act shall not be entitled to the benefits provided for tinder 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 te imposed on the
entity's responsible officers, including, but not limited to, the president, vice-
president, chief executive officer, general manager, managizu; director or partner.

SECTION 9. The Secretary of Labor and Employment shall promulgate the
necessary rules and regulations to implement the provisions of this Act.


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SECTION 10. Republic Act No. 6727, otherwise known as the "Wage
Rationalization Act", is hereby expressly repealed. All laws, orders, issuances, rules
and regulations or parts thereof inconsistent with the provisions of this Act are hereby
repealed, amended or modified accordingly. If any provision or part of this Act, ot
application thereof to any person o circumstance, is held invalid or unconstitutional,
the remainder of this Act or the application of such provision or ‘part hereof 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 the
employers.

SECTION 11. 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, |