Sample legal opinion.pdf

16 January 2012

MS. MA. CRISTINA S. FALLS AVC Group of Companies No. 123 EDSA-Cubao, Quezon City Dear Ms. Falls, This pertains to your request for legal opinion regarding the following: a. How is the thirteenth (13th) month pay for daily paid (no work, no pay) workers computed? b. In the case of a daily paid worker who availed of maternity leave privileges, should the period covered by the maternity leave be excluded from the computation of the 13th month pay? Before proceeding to the foregoing questions, we deem it necessary to discuss some preliminary matters. Coverage of the Law Presidential Decree (P.D.) No. 851 is the law which requires all covered employers to pay employees a 13th month pay. To be entitled to the benefit, the employee must be: (a) a rank-and-file employee; and (b) must have rendered work for at least one month during the calendar year.1 For employers, on the other hand, the following are not covered by the law: a) Distressed employer; b) The Government and any of its political subdivisions, including governmentowned and controlled corporations, except those corporations operating essentially as private subsidiaries of the Government; c) Employers already paying their employees a 13th month pay or more in a calendar year or its equivalent at the time of this issuance; d) Employers of household helpers and persons in the personal service of another in relation to such workers; and e) Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof.2 Outside the foregoing exemptions, the employer is mandated to give qualified employees 13th month pay. 1 2

 Section  4,  Rule  and  Regulations  Implementing  P.  D.  No.  851.    Section  3,  ibid.  

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A worker is “daily-paid” if he gets paid only for days he actually worked.3 The distinction is merely on the method of determining the paid days, because a “monthlypaid” worker, on the other hand, gets uniformly paid by the month, irrespective of the number of working days therein. Therefore, being a “daily-paid” worker does not bring the employee beyond the coverage of the rule. Not being excluded by law and the rules, daily-paid employees are entitled to receive their 13th month pay. As clearly set forth in the law, all rank-and-file employees who have rendered work for at least one month regardless of their designation or employment status, and irrespective of the method by which their wages are paid4, are entitled to the 13th month pay benefit. Computing the 13th Month Pay, in general The 13th month pay is equivalent to at least one twelfth (1/12) of the basic salary of the employee within a calendar year. The "basic salary" pertained to shall include all remunerations or earnings paid by his employer for services rendered. Allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime premium, night differential and holiday pay, and cost-of-living allowances are excluded.5 Moreover, "basic salary" was interpreted to mean, not the amount actually received by an employee, but … their standard monthly wage… This only means that it is not affected by work interruptions or the employee’s absences which varies the amount they actually receive as salary. The employee should be credited with his entire length of service within a calendar year. The revised guidelines speak of pro-ration of this benefit only in cases of resignation or separation from work. As the rules state, under these circumstances, an employee is entitled to a pay in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year.6 Accordingly,

“computation for the 13th month pay should properly begin from the first day of employment.”7 To illustrate, an employee earning a basic salary of PhP12,000.00 per month had worked for the entire calendar year, his 13th month pay should be PhP12,000.00. Assuming he had worked for nine months and then, he resigned, how much is his 13th month pay? Answer: PhP9,000.00. [Computation: (PhP12,000.00 x 9 months) ÷ 12 = PhP9,000.00]

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 Azucena  Jr.,  Cesario  A.,  Everyone’s  Labor  Code,  2007  edition,  p.  83.    Section  1,  Revised  Guidelines  on  the  Implementation  of  the  13th  Month  Pay  Law.   5  Section  4(a),  paragraph  4,  Revised  Guidelines  on  the  Implementation  of  the  13th  Month  Pay  Law.   6  Honda  Phils.  v.  Samahan  Ng  Malayang  Manggagawa  sa  Honda,  G.R.  No.  145561,  June  15,  2005.   7  JPL  Marketing  Promotions  v.  Court  of  Appeals,  G.R.  No.  151966,  July  8,  2005.   4

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a. How is the thirteenth (13th) month pay for daily paid (no work, no pay) workers computed? Under the Revised Guidelines, the minimum 13th month pay required by law shall not be less than one-twelfth of the total basic salary earned by an employee within a calendar year. In the case of Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda8, the proper construction of the phrase “total basic salary earned by an employee within a calendar year” was discussed by the Supreme Court. The decision reads: “For employees receiving regular wage, we have interpreted "basic salary" to mean, not the amount actually received by an employee, but 1/12 of their standard monthly wage multiplied by their length of service within a given calendar year. … x

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Considering the foregoing, the computation of the 13th month pay should be based on the length of service and not on the actual wage earned by the worker.” Moreover, the decision also made it clear that: “The revised guidelines also provided for a pro-ration of this benefit only in cases of resignation or separation from work. As the rules state, under these circumstances, an employee is entitled to a pay in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year.” Notably, only a severance of the employer-employee relationship would result in the pro-rating of the 13th month pay. The interpretation is justified by the Supreme Court in this wise: “[T]he foregoing interpretation of law and jurisprudence is more in keeping with the underlying principle for the grant of this benefit. It is primarily given to alleviate the plight of workers and to help them cope with the exorbitant increases in the cost of living.” Furthermore, the decree has invented the 13th month pay as a scheme to augment the take-home pay of employees. It adds a one-month pay to the usual twelve-month earnings. “The law wanted to uniformly provide low-paid employees with additional income because on the average their salaries for twelve (12) months were grossly inadequate to meet the expenses for day-to-day subsistence. This additional income took the form of an extra month's salary to be given in December.”9

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 G.R.  No.  145561,  June  15,  2005.    UST  Faculty  Union  v.  National  Labor  Relations  Commission  and  University  of  Santo  Tomas,  Inc.,  G.R.  No.  90445   October  2,  1990.   9

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It must be emphasized that the computation of the 13th month pay is based on length of service and not on actual earnings. Hence, in all instances where 13th month pay is to be given and there is no resignation or separation from employment, the employee should be credited with 1/12 of the standard rate of pay receivable for a calendar year, whether or not the employee actually worked on all the days he/she is required to report for work. To summarize: 1. If the worker is employed from 1 January up to 31 December of a calendar year, he is entitled to receive 1/12 of his total basic salary for the year or an additional one-month pay. 2. If the worker was employed midway of the calendar year, regardless of whether he remained or was separated from the service during the same year, the 13th month pay should be pro-rated because the computation should begin from the first day of employment. 3. If the worker was employed at the start of the calendar year, but later on resigned or was separated from the service, the 13th month pay should also be proportion to the length of time he worked during the year, provided it is at least one month. b. In the case of a daily paid worker who availed of maternity leave privileges, should the period covered by the maternity leave be excluded from the computation of the 13th month pay? With the above discussions, the second question needs no lengthy explanation. In the Honda case cited above, the employee carried out a thirty-one (31)-day strike. Invoking the "no work, no pay" rule, Honda Philippines implemented a pro-rated computation of the 13th month benefit and deducted the 31 unworked days from the employees’ bonuses. Even if for that duration of the strike, the employees did not render actual work, the deduction was disallowed. The high Court said that “there being no gap in the service of the workers during the calendar year in question, the computation of the 13th month pay should not be pro-rated but should be given in full.”10 Suffice it to say that the 13th month pay is based on the length of service of the employee and not on actual earnings, and that the purpose of the law to give the qualified employee an extra month's salary. Pro-ration of this benefit is allowed ONLY in cases of resignation or separation from work. Therefore, even if the employee availed of maternity leave during the calendar year, the period covered should still be credited in computing her 13th month pay. After all, during the period, there was no severance of employment. Even if the employee did not render actual work, based on the Court’s ruling, there is no gap to speak of.

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 Supra.  

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Conclusion The general rule is that the 13th month pay of a qualified employee, serving as an additional one-month salary, should be given the full amount of his/ her benefit. It is not affected by the fact that the employee is daily-paid. The computation is the same: 1/12 of the basic salary. The only exception is when during the corresponding calendar year, the employee resigns or is separated from the service, in which case, the 13th month pay must be pro-rated. A work interruption, such as maternity leave, is not considered, because it does not severe the employee-employer relationship We hope we have sufficiently addressed your questions. If you need further assistance, please let us know.

Very truly yours,

XYZ and Associates Law Offices

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