Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

- [-& ae
House sino, 2912

Introduced by AKBAYAN Representatives Walden F. Bello and Kaka J. Bag-a0

EXPLANATORY NOTE

Every round of price increases always highlights the recurring and almost perennial
problem faced by Filipino working men and women of having to cope with such
increases as well as those in transportation fares and of basic commodities that
inevitably follow. As a result of the last round of price increases, workers have, through
their unions, organizations and groups, demanded for an increase in their wages ranging
from P85 to P125 in order that the real value of their wages 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
Wages and Productivity Boards, developed plans, programs and projects relative to
wages, incomes and productivity improvement for their respective regions". These were
placed under the supervision of a National Wages and Productivity Commission
mandated "to formulate policies and guidelines on wages, incomes and productivity
improvement at the enterprise, industry and national levels"

After more than eighteen years of experience, serious questions have been raised
regarding the effectiveness of these Regional Tripartite Wages and Productivity Boards
in formulating and prescribing fair and equitable wage rates at the regional level. Wage
distortions have emerged across and in the different regions. Their ability and that of
the National Wages 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 Wages and Productivity Boards and vest the
wage-fixing authority in the National Wages and Productivity Commission. This would
rationalize wage-fixing along national and industrial lines and make it more effective
and more efficient.

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

LK

WALDEN F. BELLO



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

25

HOUSE BILL NO.

Introduced by AKBAYAN Representatives Walden F. Bello and Kaka J. Bag-a0

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

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-FIXING ALONG NATIONAL AND
INDUSTRIAL LINES

Congress assembled:

Section 1. In line with the declared policy of the State to promote productivity-
improvement and gain-sharing measures to ensure 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, Articles 99, 121, 122, 123, 124, 126 and 127 of Presidential Decree

No. 442, as amended, are hereby 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
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 DETERMINE AND FIX THE NATIONAL AND INDUSTRY
MINIMUM WAGES RATES AND ISSUE THE CORRESPONDING WAGE
ORDERS;

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


(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 ESTABLISH INDUSTRY TRIPARTITE WAGES AND
PRODUCTIVITY BOARDS IN INDUSTRIES WHERE IT DEEMS APPROPRIATE
TO DO SO;

“{(e)] (F) 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)] (G) To review plans and programs of the [Regional]
INDUSTRY 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 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 shall 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 the 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] INDUSTRY Tripartite Wages and
Productivity Boards. — [There is hereby created Regional] THE
COMMISSION SHALL ESTABLISH INDUSTRY Tripartite Wages and
Productivity Boards, hereinafter referred to as [Regional] INDUSTRY
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} IN INDUSTRIES
WHERE IT DEEMS APPROPRIATE TO DO SO.

“The [Regional] INDUSTRY Boards shall have the following powers
and functions in their respective [territorial] INDUSTRY jurisdictions:

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

“(b) To determine and fix minimum wage rates applicable in their
{regions, 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] INDUSTRY Boards as
may be necessary to attain the policy and intention of this [Code] ACT;

“(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] ACT.

“[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] INDUSTRY Board shall be composed of the
[Regional Director] Secretary of the Department of Labor and
Employment as chairman, the [Regional Directors] SECRETARIES 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] INDUSTRY Board to be headed by its chairman
shall be assisted by a Secretariat.”

“ART.123. 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 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 municipal 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 does not 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] 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] WORKERS within the framework of the national economic
and social development program. In the determination of such [regional]
NATIONAL minimum [wages] WAGE, the [Regional Board] COMMISSION
shall, among other relevant factors, consider the following

“(a) The demand for CURRENT LEVEL 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;

“{(e) The need to induce industries to invest in the countryside;]

“[(f)] (E) Improvements in standards of living:

“[(g) The prevailing wage levels;]


“{(h)] (F) Fair return of the capital invested and capacity to pay of
employers; AND

“{(i) Effects on employment generation and family income; and]

“{()] (G) The equitable distribution of income and wealth along
with the imperatives of economic and social development.

“The [wages] WAGE 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
{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 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 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 of 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] THE COMMISSION shall provide for wage rates
lower than 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.

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 Commission. Whenever an applicant 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 application 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%) per month retroactive to 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 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 as may be prescribed pursuant to 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 regularization or promotion of employees.

Where the application of the increases in the wage rates that may be prescribed
pursuant to this Act 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 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) calendar days from the time
said dispute was submitted for resolution. Any 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 pursuant to this Act.

Section 3. In the case of contracts for construction 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/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 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. 442, as amended, otherwise known as the Labor Code of the
Philippines.

Section 5. Whenever applicable and upon the request of a concerned worker or
union, the bank shall issue a certificate 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 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 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 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.

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 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 result of the abolition of
any 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 employees, he/she shall be preferentially considered for employment
in the Industry Wage Boards that the Commission may establish or in any of the
government's subdivisions, instrumentalities, or agencies, including government-owned
or controlled corporations and their subsidiaries.

Section 8. Any person, corporation, trust, firm, partnership, 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 fifty
‘thousand pesos (P50,000.00) and/or imprisonment of not less than one (1) year nor
more than two (2) years. Provided, that any person convicted under this Act shall not be
entitled to the benefits provided for under the Probation Law.

If the violation is committed by a corporation, trust or firm, partnership,
association or any other entity, the penalty of imprisonment shall be imposed on the
entity's responsible officers, including, but not limited to, the president, vice-president,
chief executive officer, general manager, managing director or partner.

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

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, or
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 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,