Dear Atty. Vlad,

I am an employee of La Liga Charms and Jewelry Store, working as a goldsmith. Last week, La Liga Charms and Jewelry imposed a policy for goldsmiths requiring them to post cash bonds or deposits in varying amounts but in no case exceeding 10 percent of the latter’s salaries per week. The deposits were intended to answer for any loss or damage which La Liga Charms and Jewelry may sustain by reason of the goldsmiths’ fault or negligence in handling the gold entrusted to them. The deposits shall be returned upon completion of the goldsmiths’ work and after an accounting of the gold received. In the alternative, the goldsmiths may sign authorizations allowing La Liga Charms and Jewelry to deduct from the former’s salaries amounts not exceeding 10 percent of their take home pay should it be found that they lost gold entrusted to them.

May La Liga validly implement this new policy? I hope you can help me.

Rainier

***

Dear Rainier,

Your employer may not validly implement its new policy on requiring the posting of deposits or bonds.

In the case of Niña Jewelry Manufacturing of Metal Arts, Inc. and Elisea B. Abella vs. Madeline C. Montecillo and Liza M. Trinidad (G.R. No. 188169, 28 November 2011), the Supreme Court explained:

“Article 113 of the Labor Code is clear that there are only three exceptions to the general rule that no deductions from the employees’ salaries can be made. The exception which finds application in the instant petition is in cases where the employer is authorized by law or regulations issued by the Secretary of Labor to effect the deductions. On the other hand, Article 114 states that generally, deposits for loss or damages are not allowed except in cases where the employer is engaged in such trades, occupations or business where the practice of making deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor in appropriate rules or regulations.

While employers should generally be given leeway in their exercise of management prerogatives, we agree with the respondents and the CA that in the case at bar, the petitioners had failed to prove that their imposition of the new policy upon the goldsmiths under Niña Jewelry’s employ falls under the exceptions specified in Articles 113 and 114 of the Labor Code.

The petitioners point out that Section 14, Book III, Rule VIII of the Omnibus Rules does not define the circumstances when the making of deposits is deemed recognized, necessary or desirable. The petitioners then argue that the intention of the law is for the courts to determine on a case-to-case basis what should be regarded as recognized, necessary or desirable and to test an employer’s policy of requiring deposits on the bases of its reasonableness and necessity.

We are not persuaded.

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.44 In other words, the 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.”

From what you have shared, it is not clear whether or not your employer was able to secure the Secretary of Labor’s determination of the necessity or desirability of requiring deposits or bonds for its business. As such, on the premise that no such determination was obtained, then the new policy of your employer is not valid.

I hope that I was able to guide you based on what you shared with me.

Atty. Vlad del Rosario