Framanlis Farms, Inc., et. al. v. Hon. Minister of Labor, et. al. G.R. No. 72616-17 March 8, 1989 Case Doctrine: Productivit !tandards Minister did not err in requiring the petitioners to pay wage differentials to their pakyaw workers who worked for at least eight hours daily da ily and earned less than !."" per day.
#nder $ection % of & 'o. !(), such benefits in the form of food or free electricity, assuming they were given, were not a proper substitute for the )%th month pay required by law. 'either may year*end rewards for loyalty and service be considered in lieu of )%th month pay. "acts: +ighteen )!- employees of Framanlis Farms, Inc. filed against their employer two labor standard cases alleging that in )// to )/ they were not paid emergency cost of living allowance +01L2- minimum wage, )%th month pay, holiday pay, and service incentive leave pay. In their answer, answer, Framanlis Framanlis Farms alleged that the employees employees were not regular workers on their hacienda but were migratory sacadas- or pakyaw workers who worked on*and*off and were hired seasonally, or only during the milling season, to do piece*work on the farms, hence, they were not entitled to the benefits claimed by b y them.
3he Minister of Labor directed Framanlis Farms to pay the deficiency payment of emergency living allowance and service incentive leave pay, holiday pay and social amelioration bonus for % years for )// to )/. #pon the petitioners4 appeal of that 1rder, the &eputy Minister of Labor modified it by ordering the employer to pay all non*pakyaw workers their claim for holiday and incentive leave pay for the years )//, )/!, all 4pakyaw4 workers their pay differentials for the same period on days they worked for at least eight !- hours and earned below !."5 daily, and all complainants their )%th month pay for the years )/! and )/. 3he &eputy Minister clarified that pakyaw workers were e6cluded from holiday and service incentive leave pay. 7hether awarding awarding pay differentials differentials,, holiday and service service incentive incentive leave for pakyaw #ssu #ssue: e: 7hether workers who are not regular employees but are merely paid on piece*rate, contrary to 2rt. !8 of the Labor 0ode9 7hether or not Framanlis Farm is required to pay )%th month pay despite the fact that they had substantially complied with the requirement by e6tending yearly bonuses and other benefits in kind and in cash to the complainants, pursuant to $ection %c- of & !() which e6empts the employer from paying )%th month pay when its equivalent has already been given9 Ru$in%:
In )/5, & 'o. 8! fi6ed a minimum wage of /."" for agricultural workers in any plantation or agricultural enterprise irrespective of whether or not the worker was paid on a piece*rate basis. However, effective :uly ), )/!, the minimum wage was increased to !."" $ec. ), & )%!-. $ubsequently, & )5); provided for a 8."" increase in the daily wage of all workers effective 2pril 2pril ), )/. )/. 3he petition petitioners ers admit that that those those were were the minimu minimum m rates rates prevai prevailin ling g then. then.
3herefore, the respondent Minister did not err in requiring the petitioners to pay wage differentials to their pakyaw workers who worked for at least eight hours daily and earned less than !."" per day in )/! to )/. 7ith regard to the )%th month pay, petitioners admitted that they failed to pay their workers )%th month pay in )/! and )/. However, they argued that they substantially complied with the law by giving their workers a yearly bonus and other non*monetary benefits amounting to not less than )<)8th of their basic salary, in the form of food and free electricity. #nfortunately, under $ection % of & 'o. !(), such benefits in the form of food or free electricity, assuming they were given, were not a proper substitute for the )%th month pay required by law. & !() provides= $ection %. +mployees covered > 3he &ecree shall apply to all employees e6cept to= 666 3he term 4its equivalent4 as used in paragraph c- hereof shall include 0hristmas bonus, mid*year bonus, profit*sharing payments and other cash bonuses amounting to not less than )<)8 of the basic salary but shall not include cash and stock dividends, cost of living allowances and all other allowances regularly en?oyed by the employee, as well as non*monetary benefits.666 'either may year*end rewards for loyalty and service be considered in lieu of )%th month pay. $ection )" of the @ules and @egulations Implementing residential &ecree 'o. !() provides for the prohibition against reduction or elimination of benefits or favorable practice being en?oyed by the employee.
