MANILA - The Supreme Court (SC) has affirmed the legality of implementing a part-fixed-part-performance-based wage system for public utility bus (PUB) drivers and conductors to ensure road safety.

In a 52-page decision penned by Associate Justice Marvic Leonen, the high court dismissed the petition filed by the Provincial Bus Operators Association of the Philippines, Southern Luzon Bus Operators Association, Inc., Inter City Bus Operators Association, and City of San Jose Del Monte Bus Operators Association.

The petition sought to invalidate issuances of the Land Transportation Franchising and Regulatory Board (LTFRB), Department of Labor and Employment (DOLE), and National Wages and Productivity Commission (NWPC) that support the wage scheme in place of the “time immemorial" boundary scheme.

LTFRB issued Memorandum Circular No. 2012-001 1 on January 4, 2012, requiring all PUB operators to secure Labor Standards Compliance Certificates "under pain of revocation of their existing certificates of public convenience or denial of an application for a new certificate."

On January 9, 2012, the DOLE issued Department Order No. 118-12, elaborating on the part-fixed-part- performance-based compensation system referred to in the LTFRB memorandum circular, providing for the rule for computing the fixed and the performance-based components of a PUB driver's or conductor's wage.

On February 27, 2012, the NWCP issued Operational Guidelines on Department Order No. 118-12, providing suggested formulae for computing the new wage system.

Petitioners alleged these violate the constitutional rights of PUB operators to due process of law, equal protection of the laws, and honoring obligations of their contracts over the boundary scheme with the drivers and conductors.

The SC, in its ruling, said the bus operators “miserably failed to prove why [DOLE] Department Order No. 118-12 and [LTFRB] Memorandum Circular No. 2012-001 are unconstitutional.”

The high court stressed that the DOLE and LTFRB issuances were in the exercise of their quasi-legislative powers.

The SC also explained that the issuances are “reasonable and are not violative of due process” since these are in the nature of “social legislations” intended ”to enhance the economic status of bus drivers and conductors, and to promote the general welfare of the riding public.”

It explained that the DOLE created a Technical Working Group that conducted meetings and consultations with interested sectors before promulgating the challenged department order.

“The boundary system puts drivers in a ‘scarcity mindset’ that creates a tunnel vision where bus drivers are nothing but focused on meeting the boundary required and will do so by any means possible and regardless of risks...This scarcity mindset is eliminated by providing drivers with a fixed income plus variable income based on performance,” the decision stated.

“The fixed income equalizes the playing field, so to speak, so that competition and racing among bus drivers are prevented. The variable pay provided in Department Order No. 118-12 is based on safety parameters, incentivizing prudent driving,” it added.

The SC found petitioners to have failed to support their claim that the new wage scheme "may [result] in [the] diminution of the income of . . . bus drivers and conductors."

Also, the high court said the case should have been filed first with the lower courts consistent with the rule on hierarchy of courts.

WAGE SCHEME

Based on the part-fixed-part-performance-based scheme, the fixed wage shall be mutually agreed upon by the bus owner/operator and the driver/conductor, and shall not be lower than the minimum wage for work rendered during normal hours/days.

It shall include overtime pay, night shift differential, service incentive leave and premium pay, among others.

The payment of 13th-month pay, holiday and service incentive leave may be integrated into the daily wage of drivers and conductors, upon agreement of both owners/operators and drivers and conductors.

The fixed wage may be based on a time unit of work (hourly, daily or monthly), per trip or per kilometer basis.

Meantime, the performance-based wage component shall be based on business performance and revenue, safety performance and other parameters.