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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH (18) CONGRESS
First Regular Session

HOUSE BILL No._54!

Introduced by MAGSASAKA Party-List Representative
ARGEL JOSEPH T. CABATBAT

AN ACT AMENDING PRESIDENTIAL DECREE NO. 442, OTHERWISE KNOWN
AS THE LABOR CODE OF THE PHILIPPINES, AND PROVIDING FOR THE
RATIONALIZATION OF WAGE LEVELS ON A NATIONAL OR INDUSTRIAL
BASIS.

EXPLANATORY NOTE

“The right to a job without a right to a living wage is just as weak as the
right to a living wage without a job. Both rights must remain intact and
linked together.”

-- William P. Quigley

“We have come to a clear realization that true individual freedom cannot
exist without economic security and that, “necessitous men are not free
men”. People who are hungry and out of a job are the stuff of which
dictatorships are made. In our day these economic truths have become
self-evident. We have accepted, so to speak, a Second Bill of Rights of
economic security. Among these are: ... the right to earn enough to
provide adequate food, clothing and recreation.”

Franklin Delano Roosevelt, in his proposal for a Second Bill of Rights in
his State of the Union Message (1944).

The Act Amending Presidential Decree 442 and Providing for the Rationalization of
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Wage Levels on a National or Industrial Basis has been initially filed by Hon. Tomasito
S. Villarin of Akbayan Partylist, in light of the inflationary effects of the recent Tax
Reform Acceleration and Inclusion (TRAIN) Law.

Article XV, Section 3, paragraph (3) of the 1987 Constitution guarantees the right of
the family to a family living wage and income. Living wage has been roughly defined
as a wage that is high enough to maintain a normal standard of living. In our
jurisdiction, this non self-executing constitutional provision was supposedly given life
by the enactment of Republic Act 6727, or the Wage Rationalization Act of 1989. This
law has created a factual absurdity, whereas laborers with the same job but situated
in different provinces have different take home pays.

Living wage has a long and distinguished pedigree. A recent book traces living wage
back to Plato and Aristotle in ancient Greece, St. Thomas Aquinas in the 13th century,
Adam Smith in the 18th century, and Popes since 1890 (Stabile, 2008). The United
Nations’ Universal Declaration of Human Rights (UN, 1948) recognizes the need for
workers to earn a living wage as does the ILO Constitution (ILO, 1919). According to
the ILO Committee of Experts (1992), the —ultimate objective [of ILO minimum wage
Conventions] is to ensure to workers a minimum wage that will provide a satisfactory
standard of living to them and their families.

For thirty (30) years, the promises of the law, and the problems it sought to solve,
have remained elusive. The 1987 Constitution’s dream of a living wage for all Filipino
workers has remained a dream. Filipino workers are still suffering from starvation
wages, despite increase in productivity. In a recent study by the Department of
Finance, for the years 2001 to 2016, labor productivity in the country has increased
fifty percent (50%), while real wages remained stagnant. Its goal to attract investment
to the countryside is also a resounding failure, as investors’ primary concern is
infrastructure and lower taxes, rather than wages. This is bolstered by the fact that
investment in the countryside is almost exclusively seen inside economic and industrial
zones who offer lower taxes and better infrastructure.

Further, agricultural workers are the most discriminated class under the old law, which
prescribes an even lower minimum wage than industrial workers. In 2015, farmers
and fishermen consistently posted as having the highest incidence of poverty with
34.3% and 34%, respectively, among the nine (9) basic sectors; as they did in 2006,
2009 and 2012. Indubitably, the Wage Rationalization Act added to the continued
misery and poverty of the agricultural sector.

This piece of legislation also seeks to institutionalize the time-honored jurisprudential
principle of “equal pay for equal work,” which means “persons who work with
substantially equal qualification, skill, effort and responsibility, under similar

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conditions, should be paid similar salaries”. This can be implemented either on a
national basis, or along industry lines, to better address the specific needs and
situations of the workers.

In view of the foregoing reasons, the approval of this bill is earnestly sought.

JOSEPH T. CABATBAT
Representative, MAGSASAKA Partylist

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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGTHEENTH (18%) CONGRESS
First Regular Session

341

Introduced by MAGSASAKA Party-List Representative
Argel Joseph T. Cabatbat

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. Jn line with the declared policy of the State to promote
the 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, Article 99 of Presidential Decree No.
442, as amended, is hereby amended and Articles 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 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 the [ Regional
Tripartite Wages and Productivity Boards] NATIONAL WAGES AND
PRODUCTIVITY COMMISSION.”

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

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(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;

(© TO DETERMINE AND FIX NATIONAL MINIMUM WAGES RATES ACCORDING
TO INDUSTRIES AND TO ISSUE THE CORRESPONDING WAGE ORDERS;

[(©)] (D) 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)] (f) 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;

[())] (g) 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 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 the recommendation of the Secretary of Labor and Employment.

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Sem wauaune

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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, 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 and 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 the 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 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 Wage 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

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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. 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, 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] MOTION FOR RECONSIDERATION 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. 12[4]3. Standards/Criteria for Minimum Wage Fixing. - The [regional] NATIONAL
minimum wage[s] 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] minimum wage, 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;

[(e) The need to induce industries to invest in the countryside; ]
[(A)] (E) Improvements in standards of living;

[(g) The prevailing wage levels;]

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

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

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

The wage[s] prescribed in accordance with the provisions of this 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 judgement 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] PHILIPPINE STATISTICS
AUTHORITY 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 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 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

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ene

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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 by 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] THE COMMISSION shall provide for wage rates lower than the statutory
minimum wage rates prescribed by Congress.”

SECTION 2. (a) &

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 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 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 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 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 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,

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the same shall be finally resolved through compulsory arbitration by the regional
branches 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 arising from wage distortion shall not in any way delay the applicability
of any increase in the wage rates that may be prescribed pursuant 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 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 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 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
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,
building, facilities, and other assets, liabilities and appropriations belonging to the
above-mentioned 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 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

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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, 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 in the amount
double of the amount of wage denied to workers but in every case at least one
hundred fifty thousand pesos (Php 150,000.00) 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) newspapers of general
circulation, whichever comes earlier.

Approved,

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