DOLE:

Baguio City – Janine, 25 years old works in a business establishment

along Session Road in Baguio City for the past three years. She was
hired November of 2015 and her first pay is given every 30th of the
month. Every cut off from the first day she reported for work to the
present, indicated in her payslip is a deduction of “cash bond/cash
deposit” amounting to P 600.00, which as far as she can remember
was not explained to her, and is not stated on the provisions of her
contract. Her co-employees told her that the cash bond or cash
deposit is to answer for loss or damage of materials or equipment
supplied by the employers.

Article 97 of the Labor Code defines wage as the remuneration or

earnings, however designated, capable of being expressed in terms of
money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which is
payable by an employer to an employee under a written or unwritten
contract of employment for work done or to be done, or for services
rendered or to be rendered and includes the fair and reasonable value,
as determined by the Secretary of Labor and Employment, of board,
lodging, or other facilities customarily furnished by the employer to the
employee. “Fair and reasonable value” shall not include any profit to
the employer, or any person affiliated with the employer. Being the
compensation of an employee for a hard day’s work, it should not be
subjected to deductions other than those authorized by law.

Our law prohibits employers, on their own behalf or in behalf of any

person, to make deductions from the wages of their employees except
in the following instances:

1) 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;

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

3) 3) the employer is authorized by law or regulations issued by the

Secretary of Labor and Employment (Article 113, Labor Code).
The making of deductions for cash bonds or deposits is one of the
allowable deductions from the employee’s wages (Article 114, Labor
Code of the Philippines). HOWEVER, the employers cannot just
unilaterally declare and impose upon their employees the giving of
bonds and/or deposits.

IN NIÑA JEWELRY MANUFACTURING OF METAL ARTS, INC., VS.

MONTECILLO, G.R. NO. 188169, the Court ruled that:

 Articles 113 and 114 of the Labor Code are clear as to what are the exceptions
to the general prohibition against requiring deposits and effecting deductions
from the employees' salaries. Hence, a statutory construction of the aforecited
provisions is not called for. Even if we were however called upon to interpret the
provisions, our inclination would still be to strictly construe the same against the
employer because evidently, the posting of cash bonds and the making of
deductions from the wages would inarguably impose an additional burden upon
the employees.

 While the petitioners are not absolutely precluded from imposing the new policy,
they can only do so upon compliance with the requirements of the law. In other
words, the petitioners should first (1) establish that the making of
deductions from the salaries is authorized by law, or (2) regulations issued
by the Secretary of Labor. Further, (3) the posting of cash bonds should be
proven as a recognized practice in the jewelry manufacturing business, or
alternatively, the petitioners should seek for the determination by the Secretary of
Labor through the issuance of appropriate rules and regulations that the policy
the former seeks to implement is necessary or desirable in the conduct of
business. The petitioners failed in this respect. It bears stressing that without
proofs that requiring deposits and effecting deductions are recognized practices,
or without securing the Secretary of Labor's determination of the necessity or
desirability of the same, the imposition of new policies relative to deductions and
deposits can be made subject to abuse by the employers. This is not what the
law intends.

HENCE, BEFORE the employers may make deductions from wages for
cash bonds, they must first establish that the same is authorized by
law, or regulations issued by the Secretary of Labor. They should also
prove that posting of cash bonds is a recognized practice in their
business or if there be none, the employers should seek for the
determination by the Secretary of Labor through the issuance of
appropriate rules and regulations that the policy that they wish to
implement is necessary or desirable in the conduct of their business.
The failure of the employers to comply with the foregoing will render
the deductions baseless and illegal.
Last July 27, 2018, DOLE Secretary Silvestre H. Bello III issued
Department Order 195, Series of 2018: “Rule Amending Section 10 of
Rule VIII of the Implementing Rules and Regulations of the Labor Code
on Wage Deduction” which is pursuant to Article 113 (c) of the Labor
Code.

The amended rule on wage deduction, Section 10 (b) (wage deduction)

of Rule VIII (Payment of Wages) is hereby amended as
follows: Section 10 (b) “When the deductions are with WRITTEN
AUTHORIZATION by the Employees for the payment to the employer or
third person and the employer agrees to do so, provided that the latter
does not receive any pecuniary benefit, directly or indirectly, from the
transaction.” For Non-Diminution of Benefit it states that nothing in
the issuance will be construed to cause the diminution or substitution
of any benefits and privileges currently enjoyed by the employee at
the time of issuance hereof.

On top of the general rule, the advisory provides that as to “cash

deposit to answer for loss or damage of tools, materials, or equipment
supplied by the employers. It is only in private security agency where
the practice is only recognized and allowed.”

The DOLE reminds employers not to make any deductions from the
wages of the employee, except in the following cases: In requiring
such a cash bond, however, a private security agency must first
strictly observe rules and standards to ensure its validity and with due
regard to social protection and welfare of an employee.

HENCE, IN SUM: In BLUER THAN BLUE JOINT VENTURES COMPANY/MARY ANN

DELA VEGA vs. GLYZA ESTEBAN (G.R. No. 192582)

Article 113 of the Labor Code provides that no employer, in his own behalf or in behalf
of any person, shall make any deduction from the wages of his employees, except in
cases where the employer is authorized by law or regulations issued by the Secretary of
Labor and Employment, among others. The Omnibus Rules Implementing the Labor
Code, meanwhile, provides:

SECTION 14. Deduction for loss or damage. – Where the employer is engaged in a
trade, occupation or business where the practice of making deductions or requiring
deposits is recognized to answer for the reimbursement of loss or damage to tools,
materials, or equipment supplied by the employer to the employee, the employer may
make wage deductions or require the employees to make deposits from which
deductions shall be made, subject to the following conditions:
 (a) That the employee concerned is clearly shown to be responsible for the
loss or damage;

(b) That the employee is given reasonable opportunity to show cause why
deduction should not be made;

(c) That the amount of such deduction is fair and reasonable and shall not
exceed the actual loss or damage; and

(d) That the deduction from the wages of the employee does not exceed 20
percent of the employee’s wages in a week.

In this case, the petitioner failed to sufficiently establish that Esteban was responsible
for the negative variance it had in its sales for the year 2005 to 2006 and that Esteban
was given the opportunity to show cause the deduction from her last salary should not
be made. The Court cannot accept the petitioner’s statement that it is the practice in the
retail industry to deduct variances from an employee’s salary, without more. In Niña
Jewelry Manufacturing of Metal Arts, Inc. v. Montecillo, the Court ruled that:

[T]he petitioners should first establish that the making of deductions from the salaries is
authorized by law, or regulations issued by the Secretary of Labor. Further, the posting
of cash bonds should be proven as a recognized practice in the jewelry manufacturing
business, or alternatively, the petitioners should seek for the determination by the
Secretary of Labor through the issuance of appropriate rules and regulations that the
policy the former seeks to implement is necessary or desirable in the conduct of
business. The petitioners failed in this respect. It bears stressing that without proofs that
requiring deposits and effecting deductions are recognized practices, or without
securing the Secretary of Labor's determination of the necessity or desirability of the
same, the imposition of new policies relative to deductions and deposits can be made
subject to abuse by the employers. This is not what the law intends.