Republic of the Philippines
Department of Labor and Employment
National Wages and Productivity Commission
NWPC GUIDELINES NO. 01
Series of 1996
RULES ON EXEMPTION FROM
COMPLIANCE WITH THE PRESCRIBED
WAGE INCREASES/COST OF LIVING ALLOWANCES GRANTED BY
THE REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARDS
Pursuant to Section 3, Article 121 b of RA 6727 and
Section 1, Rule VIII of the Revised Rules of Procedure on Minimum Wage
Fixing, the following rules on exemption are hereby issued for strict
compliance by all concerned:
SECTION 1. DEFINITION
OF TERMS
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Commission -
refers to the National Wages and Productivity Commission.
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Board -
refers to the Regional Tripartite Wages and Productivity Board.
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Order - refers to the
Wage Order promulgated by the Board pursuant to its
wage- fixing authority.
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Establishment - refers to
an economic unit which engages in one or predominantly one kind of
economic activity at a single fixed location.
For
purposes of determining eligibility for exemption, establishments under
the same owner/s but separately registered with the Securities and
Exchange Commission (SEC), Department of Trade and Industry (DTI) or
Cooperative Development Authority (CDA) as the case may be,
irrespective of their location, shall be treated as individual and
distinct establishments.
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Retail Establishment -
refers to one principally engaged in the sale of goods to
end users for personal or household use.
A retail
establishment that regularly engages in wholesale activities loses its
retail character.
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Service Establishment -
refers to one principally engaged in the sale of services to
individuals for their own or household use and is generally recognized
as such.
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Distressed Establishment -
refers to an establishment which meets the criteria enumerated in
Section 3 A of this Guidelines.
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Capital - refers to
paid-up capital at the end of the last full accounting period, in the
case of corporations or total invested capital at the beginning of the
period under review, in the case of partnerships and single
proprietorships.
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Full Accounting Period -
refers to a period of twelve (12) months or one year of business
operations.
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Deficit
- refers to the negative balance of the retained earnings account of a
corporation. Retained earnings represent the cumulative balance of
periodic earnings, dividend distributions, prior period
adjustments and
other capital adjustments.
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Stock Corporation -
refers to one organized for profit and issues shares of stock to its
members.
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Non-stock Non-profit
Organization - refers to one organized principally for public purposes
such as charitable, educational, cultural or similar purposes and does
not issue shares of stock to its members.
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Partnership - refers to
an association of two or more persons who bind themselves to contribute
money, property or industry to a common fund with the intention of
dividing the profits among themselves or for the exercise of a
profession.
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Single Proprietorship -
refers to a business unit owned and controlled by only one
person.
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Cooperative - refers to a
duly registered association of persons who voluntarily join together to
form a business establishment which they themselves own, control and
patronize and which may fall under any of the following types: credit,
consumers, producers, marketing, service or multi-purpose.
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New Business Enterprises
- refer to establishments, including non-profit institutions,
established within two (2) years from effectivity of the Wage Order
based on the latest registration with the
appropriate government agency such as SEC, DTI, CDA andMayor's
Office.
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Quasi-banks - refer to
institutions such as investment houses and financing companies
performing quasi-banking functions as defined by the Bangko Sentral ng
Pilipinas.
SECTION 2. CATEGORIES
OF EXEMPTIBLE ESTABLISHMENTS
Exemption of
establishments from compliance with the wage increases and cost of
living allowances prescribed by the Boards may be granted in order to
(1) assist establishments experiencing temporary difficulties due to
losses maintain the financial viability of their businesses and
continued employment of their workers; (2) encourage the establishment
of new businesses and the creation of more jobs, particularly in areas
outside the National Capital Region and Export Processing Zones, in
line with the policy on industry dispersal; and (3) ease the burden of
micro establishments, particularly in the retail and service sector,
that have a limited capacity to pay.
Pursuant to the above,
the following categories of establishments may be exempted upon
application with and as determined by the Board, in accordance with
applicable criteria on exemption as provided in this Guidelines;
provided further that such categories are expressly specified in the
Order.
1. Distressed
establishments
2. New business enterprises (NBEs)
3. Retail/Service establishments employing not more than ten (10)
workers
4. Establishments adversely affected by natural calamities
Exemptible categories
outside of the abovementioned list may be allowed only if they are in
accord with the rationale for exemption reflected in the first
paragraph of this section. The concerned Regional Board shall submit
strong and justifiable reason/s for the inclusion of such categories
which shall be subject to review/approval by the Commission.
SECTION 3. CRITERIA
FOR EXEMPTION
The following criteria
shall be used to determine whether the applicant-establishment is
qualified for exemption:
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Distressed
Establishments
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1.
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For Stock
Corporations/Cooperatives
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a.
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When deficit as of
the last full accounting period or interim period, if any, immediately
preceding the effectivity of the Order amounts to 20% or more of the
paid-up capital for the same period; or
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b.
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When an
establishment registers capital deficiency i.e., negative stockholders'
equity as of the last full accounting period or interim period, if any,
immediately preceding the effectivity of the Order.
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2.
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For Single
Proprietorships/Partnerships
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a.
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Single
proprietorships/partnerships operating for at least two (2) years may
be granted exemption:
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a.1
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When the net
accumulated losses for the last two (2) full accounting periods
and interim period, if any, preceding the effectivity of the Order
amounts to 20% or more of the total invested capital at the beginning
of the period under review; or
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a.2
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When an
establishment registers capital deficiency i.e., negative net worth as
of the last full accounting period or interim period, if any,
immediately preceding the effectivity of the Order.
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b.
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Single
proprietorships/partnerships operating for less than two (2) years may
be granted exemption when the net accumulated losses for the
period immediately preceding the effectivity of the Order amounts to
20% or more of the total invested capital at the beginning of the
period under review.
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3.
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For Non-stock
Non-profit Organizations
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a.
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Non-stock
Non-profit organizations operating for at least two (2) years may be
granted exemption:
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a.1
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When the net
accumulated losses for the last two (2) full accounting periods and
interim period, if any, immediately preceding the effectivity of the
Order amounts to 20% or more of the fund balance/members' contribution
at the beginning of the period under review; or
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a.2
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When an
establishment registers capital deficiency i.e.,negative fund
balance/members' contribution as of the last full accounting
period or interim period, if any, immediately preceding the
effectivity of the Order.
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b.
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Non-stock
non-profit organizations operating for less than two (2) years may be
granted exemption when the net accumulated losses for the period
immediately preceding the effectivity of the Order amounts to 20%
or more of the fund balance/members' contribution at the beginning of
the period under review.
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4.
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For Banks and
Quasi-banks
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a.
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Under
receivership/liquidation
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Exemption
may be granted to a bank or quasi-bank under receivership or
liquidation when there is a certification from the Bangko Sentral ng
Pilipinas that it is under receivership or liquidation as provided
in Section 30 of RA 7653, otherwise known as the New Central Bank Act.
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b.
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Under
controllership/conservatorship
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A bank or quasi-bank
under controllership/conservatorship may apply for exemption as a
distressed establishment under Section 3 A of this Guidelines.
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| B.
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New Business
Enterprises
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Exemption may be
granted to New Business Enterprises established outside the National
Capital Region (NCR) and Export Processing Zones within two (2) years
from effectivity of the Order, classified under any of the following:
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1.
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Agricultural
establishments whether plantation or
non-plantation.
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2.
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Establishments
with total assets after financing of
five million pesos (P5,000,000.00) and below.
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Retail/Service
Establishments
Regularly Employing Not More Than Ten (10) Workers
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Exemption may be
granted to a retail/service
establishment when:
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1.
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It is engaged in
tye retail sale of goods and/or services to end users for personal or
household use; and
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2. It is regularly
employing not more than ten (10) workers regardless of status,
except the owner/s, for at least six (6) months in any calendar
year.
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Establishments
Adversely Affected by
Natural Calamities
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1.
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The establishment
must be located in an area declared by a competent authority as under a
state of calamity.
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2.
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The natural
calamities, such as earthquakes, lahar flow, typhoons, volcanic
eruptions, fire, floods and similar occurrences, must have occurred
within 6 months prior to the effectivity of the Wage Order.
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3.
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Losses suffered by
the establishment as a result of the calamity that
exceed the insurance coverage should amount to
20% or more of the stockholders' equity as of the last full
accounting period in the case of corporations and
cooperatives, total invested capital in the case of partnerships
and single proprietorships and fund balance/members'
contribution in the case of non-stock
non-profit organizations.
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Only losses or
damage to properties directly resulting from the calamity and not
incurred as a result of normal business operations shall be considered.
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4.
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Where necessary,
the Board or its duly-authorized representative shall conduct an ocular
inspection of the establishment or engage the services of experts to
validate the extent of damages suffered.
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SECTION 4. DOCUMENTS REQUIRED
The following supporting documents
shall be submitted together with the application:
For All Categories
of Exemption
Proof of notice of filing
of the application to the President of the union/contracting party if
one is organized in the establishment, or if there is no union, a copy
of a circular giving general notice of the filing of the application to
all the workers in the establishment. The proof of notice, which may be
translated in the vernacular, shall state that the workers'
representative was furnished a copy of the application with all the
supporting documents. The notice shall be posted in a conspicuous place
in the establishment.
A. For
Distressed Establishments
1.
For corporations, cooperatives, single proprietorships, partnerships,
non-stock non-profit
organizations.
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Audited financial statements (together with the
Auditor's opinion and the notes thereto) for the last two (2) full
accounting periods preceding the effectivity of the Order filed with
and stamped "received" by the appropriate government agency.
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Audited interim quarterly financial statements
(together with the Auditor's opinion and the notes thereto) for the
period immediately preceding the effectivity of the Order.
Submission of audited interim financial
statements shall be in accordance with the following schedule:
EFFECTIVITY DATE OF
WAGE ORDER
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INTERIM STATEMENTS
REQUIRED
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| First quarter of year
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No
interim statements required; only the audited
statement for the last two full accounting periods
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Second
quarter of year
Month
1
Month 2
Month 3
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None;
same as first quarter
None; same as first quarter
First quarter audited statement
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Third quarter of year
Month
1
Month 2
Month 3
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First quarter audited statement
First quarter audited statement
First & second quarters audited statements
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Fourth quarter of year
Month
1
Month 2
Month 3
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Second quarter audited statement
Second quarter audited statement
First, second & third quarters audited statements |
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2.
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For Banks and
Quasi-banks
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a.
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Certification
from Bangko Sentral ng Pilipinas that it
is under receivership/liquidation.
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For New Business
Enterprises
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1.
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Affidavit from
employer regarding the following:
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a.
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Principal economic activity
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b.
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Date of registration with
appropriate government agency
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c.
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Amount
of total assets
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2.
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Certificate of
registration from the appropriate government agency.
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For
Retail/Service Establishments Employing not more
than Ten (10) Workers:
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1.
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Affidavit from
employer stating the following:
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a.
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It is a retail/service
establishment.
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b.
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It is regularly employing
not more than ten (10) workers for at least
six months in any calendar year.
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2.
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Business
Permit for the current year from the appropriate government agency.
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For
Establishments Adversely Affected by Natural Calamities
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1.
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Affidavit from
the General Manager or Chief Executive Officer of the establishment
regarding the following:
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a.
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Date and type of calamity
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b.
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Amount of losses/damages
suffered as a direct result of the calamity
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c.
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List of properties
damaged/lost together with estimated valuation
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d.
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For properties that are not
insured, a statement that the same are not
covered by insurance.
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2.
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Copies of
insurance policy contracts covering the properties damaged, if any.
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3.
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Adjuster's
report for insured properties.
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4.
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Audited
financial statements for the last full accounting period preceding the
effectivity of the Order stamped received by the appropriate government
agency.
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The
Board may require the submission of other pertinent documents to
support the application for exemption.
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SECTION 5. ACTION
ON APPLICATION FOR EXEMPTION
Upon
receipt of an application with complete documents, the Board shall take
the following
steps:
a. Notify the DOLE Regional Office having jurisdiction
over the workplace of the pendency of the application requesting that
action on any complaint for non-compliance with the Order be
deferred pending resolution of the application by the Board.
b. Request the DOLE Regional Office to conduct ocular
inspection, if necessary, of establishments applying for exemption to
verify number of workers, nature of business and other relevant
information.
c. Act and decide on the application for exemption with
complete documents, as much as practicable, within 45 days from the
date of filing. In case of contested application, the Board may conduct
conciliation or call hearings thereon.
d. Transmit the decision of the Board to the applicant
establishment, the workers or president of the union, if any, and the
Commission, for their information; and the DOLE Regional Office
concerned, for their implementation/enforcement.
The Board may create a
Special Committee with one representative from each sector to expedite
processing of applications for exemption.
SECTION 6. APPLICATION
FOR PROJECTS/BRANCHES/DIVISIONS
Where the exemption being
sought is for a particular project/branch/division not separately
registered and licensed, the consolidated audited financial statements
of the establishment shall be used as basis for determining its
distressed condition.
SECTION 7. DISTRESSED
PRINCIPAL
Exemption granted to a
distressed principal shall not extend to its contractor in case of
contract(s) for construction, security, janitorial and/or similar
services with respect to the employees of the latter assigned to the
former.
SECTION 8. EXTENT
AND DURATION OF EXEMPTION
A full exemption of one
(1) year shall be granted to all categories of establishments that meet
the applicable criteria for exemption under Section 3 of this
Guidelines.
However, a partial
exemption of 50% with respect to the amount or period of exemption
shall be granted only in the case of distressed establishments as
follows:
a.
For corporations/cooperatives
When deficit as of the
last full accounting period or interim period, if any, immediately
preceding the effectivity of the Order amounts to less than 20% of the
paid-up capital of the same period.
b. For single
proprietorships/partnerships
When the net accumulated
losses for the period under review amounts to at least 15% but less
than 20% of the total invested capital at the beginning of the period
under review.
c.
Non-stock non-profit organizations
When the net accumulated
losses for the period under review preceding the effectivity of the
Order amounts to at least 15% but less than 20% of the fund
balance/members' contribution at the beginning of the period under
review.
SECTION 9. PROCEDURES
ON EXEMPTION
A.
For Filing of Application
1. An application, in three (3) legible copies may be
filed with the appropriate Board by the
owner/manager or duly authorized representative
of an establishment, in person or by registered mail.
The date of mailing shall be
deemed as the date of filing.
2. Applications for all categories shall be filed not
later than sixty (60) days from
publication of the approved implementing rules of the Order.
In the
case of NBEs, applications shall be filed not later than sixty
(60) days from date of registration.
3. The application shall be under oath and accompanied
by complete supporting documents as enumerated
under Section 4 of this Guidelines. In the case of an application with
incomplete supporting documents, the applicant shall be notified to
complete the same within ten (10) days from receipt of the notice;
otherwise, the application shall be dismissed.
B.
For Filing of Opposition
Any worker or, if
unionized, the union in the applicant establishment, may file with the
appropriate Board within fifteen (15) days from receipt of the notice
of the filing of the application, an opposition to the application for
exemption stating the reasons why the same should not be approved,
furnishing the applicant a copy thereof. The fifteen (15) day period
shall run only upon receipt of complete supporting documents. The
opposition shall be in three (3) legible copies, under oath and
accompanied by pertinent documents, if any.
C.
For Filing of Motion for Reconsideration
The aggrieved party may
file with the Board a motion for reconsideration of the decision on the
application for exemption within ten (10) days from its receipt and
shall state the particular grounds upon which the motion is based, copy
furnished the other party and the DOLE Regional Office concerned.
No second motion for
reconsideration shall be entertained in any case. The decision of the
Board shall be final and executory unless appealed to the Commission.
D.
For Filing of Appeal to the Commission
1. Appeal - Any party aggrieved by the decision of the
Board may file an appeal to the Commission, through the Board, in two
(2) legible copies, not later than ten (10) days from date of receipt
of the decision.
The appeal, with proof of service to the other party,
shall be accompanied with a memorandum of appeal which shall state the
date appellant received the decision, the grounds relied upon and the
arguments in support thereof.
The appeal shall not be deemed
perfected if it is filed with any office or entity other than the Board.
2. Grounds for Appeal - An
appeal may be filed on the following grounds:
a. Non-conformity with the
prescribed guidelines and/or procedures on
exemption;chanroblesvirtualawlibrary
b. Prima facie evidence of grave abuse of discretion on the
part of the Board; or
c. Questions of law.
3. Opposition - The appellee may file with the Board
his reply or opposition to the appeal within ten (10) days from receipt
of the appeal. Failure of the appellee to file his reply or opposition
shall be construed as waiver on his part to file the same.
4. Transmittal of records - Within five (5) days upon
receipt of the reply or opposition of the appellee or after the
expiration of the period to file the same, the entire records of
the case which shall be consecutively numbered, shall be transmitted by
the Board to the Commission.
SECTION 10. QUORUM
AND VOTES REQUIRED
Four (4) members of the
Commission or Board shall constitute a quorum to decide on the
applications for or on appeals on exemption, provided each sector is
represented. The Commission or Board may dispense with the latter
proviso if the two (2) representatives of any sector fail to attend two
(2) consecutive scheduled meetings with proper notice. The affirmative
vote of the majority of the members constituting a quorum shall be
necessary to carry a decision.
SECTION 11. EFFECT
OF DISAPPROVED APPLICATION FOR EXEMPTION
In the event that the
application for exemption is not approved, covered workers shall be
paid the mandated wage increase/allowance as provided for under the
Order retroactive to the date of effectivity of the Order plus simple
interest of one percent (1%) per month.
SECTION 12. NON-DIMINUTION
OF BENEFITS
Exemption granted under
this Guidelines shall not be construed to reduce existing wages and
other benefits enjoyed by the workers under existing laws, decrees,
issuances or under any contract of agreement between the workers and
employees.
SECTION 13. SUPPLEMENTARY
GUIDELINES ON EXEMPTION
The Board may issue
supplementary guidelines for exemption in accordance with this
Guidelines, subject to review/approval by the Commission.
SECTION 14. EFFECTIVITY
This
Guidelines shall take effect fifteen (15) days after publication in a
newspaper of general circulation.
SECTION 15. REPEAL
All
Commission Guidelines previously adopted and inconsistent herewith are
hereby repealed.
Manila, Philippines, 18 November
1996.
(Sgd.)
LEONARDO A.
QUISUMBING
Chairman
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(Sgd.) CIELITO
F.
HABITO
Vice-Chairman
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(Sgd.) FRANCISCO
R. FLORO
Employer Sector
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(Sgd.) CEDRIC
R. BAGTAS
Member Labor Sector
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(Sgd.) EDUARDO
T.
RONDAIN
Member Employer Sector
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(Sgd.) ROSELI
C. CRUZ
Member Labor Sector
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(Sgd.) CIRIACO A.
LAGUNZAD III
Member |
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