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Wednesday, September 9, 2009

Prohibitions Regarding Wages: Wage Deductions

The Labor Code of the Philippines, in requiring written authorization as a pre-requisite to wage deductions, seeks to protect the employee against unwarranted practices that would diminish his compensation without his knowledge and consent.

Nonetheless, service fee collected by the Union does not run counter to the express mandate of the law since the same are not unwarranted.  Also, the deductions for the union service fee are authorized by law and do not require individual check-off authorizations.  [Radio Communications of the Philippines, Inc. vs. Secretary of Labor, G.R. No. 77950, Jan. 9, 1989]

In one case, the question is whether the non-payment of stock subscriptions can be offset against a money claim of an employee against the employer.

The corporation admitted that there was due to the employee the amount of P17,060,07, but this was applied to the unpaid balance of his subscription in the amount of P95,439.93.  The employee questioned the set-off alleging that there was no call or notice for the payment of the unpaid subscription and that, accordingly, the alleged obligation was not enforceable.

The Court ruled that the set-off was without lawful basis, if not premature.  As there was no notice or call for the payment of unpaid subscriptions, the same is not yet due and payable.  Assuming that there was a call for payment of the unpaid subscription, the NLRC cannot validly set it off against the wages and other benefits due the petitioner.

Article 113 of the Labor Code allows such a deduction from the wages of the employees by the employer, only in three instances, to wit:  

(a)  in cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance;

(b)  for union dues, in cases where the right of the workers or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and

(c)  in cases where the employer is authorized by law or regulations issued by the Secretary of Labor.  [Apodaca vs. National Labor Relations Commission, et al., G.R. No. 80039, April 18, 1989]

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