CONPENSATION FOR REST DAY

G.R. No. 126383 November 28, 1997

SAN JUAN DE DIOS HOSPITAL EMPLOYEES ASSOCIATION-AFW/MA. CONSUELO
MACQUILING LEONARDO MARTINEZ, DOMINGO ELA, JR., RODOLFO CALUCIN,
JR., PERLA MENDOZA, REX RAPHAEL REYES, ROGELIO BELMONTE, and 375 other
EMPLOYEE-UNION MEMBERS, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, and SAN JUAN DE DIOS
HOSPITAL, respondents.

FRANCISCO, J.:
Petitioners, the rank-and-file employee-union officers and members of San Juan
De Dios Hospital Employees Association, sent on July 08, 1991, a "four (4)-page
letter with attached support signatures . . . requesting and pleading for the
expeditious implementation and payment by respondent" Juan De Dios Hospital
"of the '40-HOURS/5-DAY WORKWEEK' with compensable weekly two (2) days off
provided for by Republic Act 5901 as clarified for enforcement by the Secretary of
Labor's Policy Instructions No. 54 dated April 12, 1988." 1 Respondent hospital
failed to give a favorable response; thus, petitioners filed a complaint regarding
their "claims for statutory benefits under the above-cited law and policy
issuance" 2, docketed as NLRC NCR Case No. 00-08-04815-19. On February 26,
1992, the Labor Arbiter 3 dismissed the complaint. Petitioners appealed before
public respondent National Labor Relations Commission 4 (NLRC), docketed as
NLRC NCR CA 003028-92, which affirmed the Labor Arbiter's decision. Petitioners'
subsequent motion for reconsideration was denied; hence, this petition under
Rule 65 of the Rules of Court ascribing grave abuse of discretion on the part of
NLRC in concluding that Policy Instructions No. 54 "proceeds from a wrong
interpretation of RA 5901" 5 and Article 83 of the Labor Code.
As the Court sees it, the core issue is whether Policy Instructions No. 54 issued by
then Labor Secretary (now Senator) Franklin M. Drilon is valid or not.
The policy instruction in question provides in full as follows:
Policy Instruction No. 54
To: All Concerned
Subject: Working Hours and Compensation of Hospital/Clinic Personnel
This issuance clarifies the enforcement policy of this Department on the working
hours and compensation of personnel employed by hospitals/clinics with a bed
capacity of 100 or more and those located in cities and municipalities with a
population of one million or more.
Republic Act 5901 took effect on 21 June 1969 prescribes a 40-hour/5 day work
week for hospital/clinic personnel. At the same time, the Act prohibits the
diminution of the compensation of these workers who would suffer a reduction
in their weekly wage by reason of the shortened workweek prescribed by the Act.
In effect, RA 5901 requires that the covered hospital workers who used to work
seven (7) days a week should be paid for such number of days for working only 5
days or 40 hours a week.
The evident intention of RA 5901 is to reduce the number of hospital personnel,
considering the nature of their work, and at the same time guarantee the
payment to them of a full weekly wage for seven (7) days. This is quite clear in the
Exemplary Note of RA 5901 which states:
As compared with the other employees and laborers, these hospital and health
clinic personnel are over-worked despite the fact that their duties are more
delicate in nature. If we offer them better working conditions, it is believed that
the "brain drain", that our country suffers nowadays as far as these personnel are
concerned will be considerably lessened. The fact that these hospitals and health
clinics personnel perform duties which are directly concerned with the health and
lives of our people does not mean that they should work for a longer period than
most employees and laborers. They are also entitled to as much rest as other
workers. Making them work longer than is necessary may endanger, rather than
protect the health of their patients. Besides, they are not receiving better pay
than the other workers. Therefore, it is just and fair that they may be made to
enjoy the privileges of equal working hours with other workers except those
excepted by law. (Sixth Congress of the Republic of the Philippines, Third Session,
House of Representatives, H. No. 16630)
The Labor Code in its Article 83 adopts and incorporates the basic provisions of
RA 5901 and retains its spirit and intent which is to shorten the workweek of
covered hospital personnel and at the same time assure them of a full weekly
wage.
Consistent with such spirit and intent, it is the position of the Department that
personnel in subject hospital and clinics are entitled to a full weekly wage for
seven (7) days if they have completed the 40-hour/5-day workweek in any given
workweek.
All enforcement and adjudicatory agencies of this Department shall be guided by
this issuance in the disposition of cases involving the personnel of covered
hospitals and clinics.
Done in the City of Manila, this 12th day of April, 1988.
(Sgd.) FRANKLIN M. DRILON
Secretary
(Emphasis Added)
We note that Policy Instruction No. 54 relies and purports to implement Republic
Act No. 5901, otherwise known as "An Act Prescribing Forty Hours A Week Of
Labor For Government and Private Hospitals Or Clinic Personnel", enacted on
June 21, 1969. Reliance on Republic Act No. 5901, however, is misplaced for the
said statute, as correctly ruled by respondent NLRC, has long been repealed with
the passage of the Labor Code on May 1, 1974, Article 302 of which explicitly
provides: "All labor laws not adopted as part of this Code either directly or by
reference are hereby repealed. All provisions of existing laws, orders, decree,
rules and regulations inconsistent herewith are likewise repealed." Accordingly,
only Article 83 of the Labor Code which appears to have substantially
incorporated or reproduced the basic provisions of Republic Act No. 5901 may
support Policy Instructions No. 54 on which the latter's validity may be gauged.
Article 83 of the Labor Code states:
Art. 83. Normal Hours of Work. The normal hours of work of any employee
shall not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population of at least one
million (1,000,000) or in hospitals and clinics with a bed capacity of at least one
hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5)
days a week, exclusive of time for meals, except where the exigencies of the
service require that such personnel work for six (6) days or forty-eight (48) hours,
in which case they shall be entitled to an additional compensation of at least
thirty per cent (30%) of their regular wage for work on the sixth day. For purposes
of this Article, "health personnel" shall include: resident physicians, nurses,
nutritionists, dietitians, pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives, attendants and all other
hospital or clinic personnel. (Emphasis supplied)
A cursory reading of Article 83 of the Labor Code betrays petitioners' position
that "hospital employees" are entitled to "a full weekly salary with paid two (2)
days' off if they have completed the 40-hour/5-day workweek". 6 What Article 83
merely provides are: (1) the regular office hour of eight hours a day, five days per
week for health personnel, and (2) where the exigencies of service require that
health personnel work for six days or forty-eight hours then such health
personnel shall be entitled to an additional compensation of at least thirty
percent of their regular wage for work on the sixth day. There is nothing in the
law that supports then Secretary of Labor's assertion that "personnel in subject
hospitals and clinics are entitled to a full weekly wage for seven (7) days if they
have completed the 40-hour/5-day workweek in any given workweek". Needless
to say, the Secretary of Labor exceeded his authority by including a two days off
with pay in contravention of the clear mandate of the statute. Such act the Court
shall not countenance. Administrative interpretation of the law, we reiterate, is at
best merely advisory, 7 and the Court will not hesitate to strike down an
administrative interpretation that deviates from the provision of the statute.
Indeed, even if we were to subscribe with petitioners' erroneous assertion that
Republic Act No. 5901 has neither been amended nor repealed by the Labor
Code, we nevertheless find Policy Instructions No. 54 invalid. A perusal of
Republic Act No. 5901 8 reveals nothing therein that gives two days off with pay
for health personnel who complete a 40-hour work or 5-day workweek. In fact,
the Explanatory Note of House Bill No. 16630 (later passed into law as Republic
Act No. 5901) explicitly states that the bill's sole purpose is to shorten the
working hours of health personnel and not to dole out a two days off with pay.
Hence:
The accompanying bill seeks to grant resident physicians, staff nurses,
nutritionist, midwives, attendants and other hospital and health clinic personnel
of public and private hospitals and clinics, the privilege of enjoying the eight hours
a week exclusive of time for lunch granted by law to all government employees
and workers except those employed in schools and in courts. At present those
hospitals and clinics, work six days a week, 8 hours a day or 48 hours a week.
As compared with the other employees and laborers, these hospital and health
clinic personnel are over-worked despite the fact that their duties are more
delicate in nature. If we offer them better working conditions, it is believed that
the "brain drain", that our country suffers nowadays as far as these personnel are
concerned will be considerably lessened. The fact that these hospitals and health
clinic personnel perform duties which are directly concerned with the health and
lives of our people does not mean that they should work for a longer period than
most employees and laborers. They are also entitled to as much rest as other
workers. Making them work longer than is necessary may endanger, rather than
protect, the health of their patients. Besides, they are not receiving better pay
than the other workers. Therefore, it is just and fair that they be made to enjoy
the privileges of equal working hours with other workers except those excepted by
law.
In the light of the foregoing, approval of this bill is strongly recommended.
(SGD.) SERGIO H. LOYOLA
"Congressman, 3rd District
Manila" (Annex "F" of petition, emphasis supplied)
Further, petitioners' position is also negated by the very rules and regulations
promulgated by the Bureau of Labor Standards which implement Republic Act
No. 5901. Pertinent portions of the implementing rules provide:
RULES AND REGULATIONS IMPLEMENTING
REPUBLIC ACT NO. 5901
By virtue of Section 79 of the Revised Administrative Code, as modified by section
18 of Implementation Report for Reorganization Plan No. 20-A on Labor, vesting
in the Bureau of Labor Standards the authority to promulgate rules and
regulations to implement wage and hour laws, the following rules and regulations
to are hereby issued for the implementation of Republic Act No. 5901.
CHAPTER I Coverage
Sec. 1. General Statement on Coverage. Republic Act No. 5901, hereinafter
referred to as the Act, shall apply to:
(a) All hospitals and clinics, including those with a bed capacity of less than one
hundred, which are situated in cities or municipalities with a population of one
million or more; and to
(b) All hospitals and clinics with a bed capacity of at least one hundred,
irrespective of the size of population of the city or municipality where they may
be situated.
xxx xxx xxx
Sec. 7. Regular Working Day. The regular working days of covered employees
shall be not more than five days in a workweek. The workweek may begin at any
hour and on any day, including Saturday or Sunday, designated by the employer.
Employers are not precluded from changing the time at which the workday or
workweek begins, provided that the change is not intended to evade the
requirements of these regulations on the payment of additional compensation.
xxx xxx xxx
Sec. 15. Additional Pay Under the Act and C.A. No. 444. (a) Employees of covered
hospitals and clinics who are entitled to the benefits provided under the Eight-
Hour Labor Law, as amended, shall be paid an additional compensation
equivalent to their regular rate plus at least twenty-five percent thereof for work
performed on Sunday and Holidays, not exceeding eight hours, such employees
shall be entitled to an additional compensation of at least 25% of their regular
rate.
(b) For work performed in excess of forty hours a week, excluding those rendered
in excess of eight hours a day during the week, employees covered by the Eight-
Hour Labor Law shall be entitled to an additional straight-time pay which must be
equivalent at least to their regular rate.
If petitioners are entitled to two days off with pay, then there appears to be no
sense at all why Section 15 of the implementing rules grants additional
compensation equivalent to the regular rate plus at least twenty-five percent
thereof for work performed on Sunday to health personnel, or an "additional
straight-time pay which must be equivalent at least to the regular rate" "[f]or
work performed in excess of forty hours a week. . . . Policy Instructions No. 54 to
our mind unduly extended the statute. The Secretary of Labor moreover erred in
invoking the "spirit and intent" of Republic Act No. 5901 and Article 83 of the
Labor Code for it is an elementary rule of statutory construction that when the
language of the law is clear and unequivocal, the law must be taken to mean
exactly what it says. 9 No additions or revisions may be permitted. Policy
Instructions No. 54 being inconsistent with and repugnant to the provision of
Article 83 of the Labor Code, as well as to Republic Act No. 5901, should be, as it
is hereby, declared void.
WHEREFORE, the decision appealed from is AFFIRMED. No costs.
SO ORDERED.







REGULAR HOLIDAYS
MONTHLY PAID EMPLOYEES

G.R. No. L-52415 October 23, 1984
INSULAR BANK OF ASIA AND AMERICA EMPLOYEES' UNION
(IBAAEU), petitioner,
vs.
HON. AMADO G. INCIONG, Deputy Minister, Ministry of Labor and INSULAR
BANK OF ASIA AND AMERICA,respondents.
Sisenando R. Villaluz, Jr. for petitioner.
Abdulmaid Kiram Muin colloborating counsel for petitioner.
The Solicitor General Caparas, Tabios, Ilagan Alcantara & Gatmaytan Law Office
and Sycip, Salazar, Feliciano & Hernandez Law Office for respondents.

MAKASIAR, J.:+.wph!1
This is a petition for certiorari to set aside the order dated November 10, 1979, of
respondent Deputy Minister of Labor, Amado G. Inciong, in NLRC case No. RB-IV-
1561-76 entitled "Insular Bank of Asia and America Employees' Union
(complainant-appellee), vs. Insular Bank of Asia and America" (respondent-
appellant), the dispositive portion of which reads as follows: t.hqw
xxx xxx xxx
ALL THE FOREGOING CONSIDERED, let the appealed Resolution en banc of the
National Labor Relations Commission dated 20 June 1978 be, as it is hereby, set
aside and a new judgment. promulgated dismissing the instant case for lack of
merit (p. 109 rec.).
The antecedent facts culled from the records are as follows:
On June 20, 1975, petitioner filed a complaint against the respondent bank for
the payment of holiday pay before the then Department of Labor, National Labor
Relations Commission, Regional Office No. IV in Manila. Conciliation having failed,
and upon the request of both parties, the case was certified for arbitration on
July 7, 1975 (p. 18, NLRC rec.
On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered a decision in the
above-entitled case, granting petitioner's complaint for payment of holiday pay.
Pertinent portions of the decision read: t.hqw
xxx xxx xxx
The records disclosed that employees of respondent bank were not paid their
wages on unworked regular holidays as mandated by the Code, particularly
Article 208, to wit: t.hqw
Art. 208. Right to holiday pay.
(a) Every worker shall be paid his regular daily wage during regular holidays,
except in retail and service establishments regularly employing less than 10
workers.
(b) The term "holiday" as used in this chapter, shall include: New Year's Day,
Maundy Thursday, Good Friday, the ninth of April the first of May, the twelfth of
June, the fourth of July, the thirtieth of November, the twenty-fifth and the
thirtieth of December and the day designated by law for holding a general
election.
xxx xxx xxx
This conclusion is deduced from the fact that the daily rate of pay of the bank
employees was computed in the past with the unworked regular holidays as
excluded for purposes of determining the deductible amount for absences
incurred Thus, if the employer uses the factor 303 days as a divisor in determining
the daily rate of monthly paid employee, this gives rise to a presumption that the
monthly rate does not include payments for unworked regular holidays. The use
of the factor 303 indicates the number of ordinary working days in a year (which
normally has 365 calendar days), excluding the 52 Sundays and the 10 regular
holidays. The use of 251 as a factor (365 calendar days less 52 Saturdays, 52
Sundays, and 10 regular holidays) gives rise likewise to the same presumption
that the unworked Saturdays, Sundays and regular holidays are unpaid. This
being the case, it is not amiss to state with certainty that the instant claim for
wages on regular unworked holidays is found to be tenable and meritorious.
WHEREFORE, judgment is hereby rendered:
(a) xxx xxxx xxx
(b) Ordering respondent to pay wages to all its employees for all regular h(olidays
since November 1, 1974 (pp. 97-99, rec., underscoring supplied).
Respondent bank did not appeal from the said decision. Instead, it complied with
the order of Arbiter Ricarte T. Soriano by paying their holiday pay up to and
including January, 1976.
On December 16, 1975, Presidential Decree No. 850 was promulgated amending,
among others, the provisions of the Labor Code on the right to holiday pay to
read as follows: t.hqw
Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily
wages during regular holidays, except in retail and service establishments
regularly employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such
employee shall be paid a compensation equivalent to twice his regular rate and
(c) As used in this Article, "holiday" includes New Year's Day, Maundy Thursday,
Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of
July, the thirtieth of November, the twenty-fifth and the thirtieth of December,
and the day designated by law for holding a general election.
Accordingly, on February 16, 1976, by authority of Article 5 of the same Code, the
Department of Labor (now Ministry of Labor) promulgated the rules and
regulations for the implementation of holidays with pay. The controversial
section thereof reads: t.hqw
Sec. 2. Status of employees paid by the month. Employees who are uniformly
paid by the month, irrespective of the number of working days therein, with a
salary of not less than the statutory or established minimum wage shall be
presumed to be paid for all days in the month whether worked or not.
For this purpose, the monthly minimum wage shall not be less than the statutory
minimum wage multiplied by 365 days divided by twelve" (italics supplied).
On April 23, 1976, Policy Instruction No. 9 was issued by the then Secretary of
Labor (now Minister) interpreting the above-quoted rule, pertinent portions of
which read: t.hqw
xxx xxx xxx
The ten (10) paid legal holidays law, to start with, is intended to benefit
principally daily employees. In the case of monthly, only those whose monthly
salary did not yet include payment for the ten (10) paid legal holidays are entitled
to the benefit.
Under the rules implementing P.D. 850, this policy has been fully clarified to
eliminate controversies on the entitlement of monthly paid employees, The new
determining rule is this: If the monthly paid employee is receiving not less than
P240, the maximum monthly minimum wage, and his monthly pay is uniform
from January to December, he is presumed to be already paid the ten (10) paid
legal holidays. However, if deductions are made from his monthly salary on
account of holidays in months where they occur, then he is still entitled to the ten
(10) paid legal holidays. ..." (emphasis supplied).
Respondent bank, by reason of the ruling laid down by the aforecited rule
implementing Article 94 of the Labor Code and by Policy Instruction No. 9,
stopped the payment of holiday pay to an its employees.
On August 30, 1976, petitioner filed a motion for a writ of execution to enforce
the arbiter's decision of August 25, 1975, whereby the respondent bank was
ordered to pay its employees their daily wage for the unworked regular holidays.
On September 10, 1975, respondent bank filed an opposition to the motion for a
writ of execution alleging, among others, that: (a) its refusal to pay the
corresponding unworked holiday pay in accordance with the award of Labor
Arbiter Ricarte T. Soriano dated August 25, 1975, is based on and justified by
Policy Instruction No. 9 which interpreted the rules implementing P. D. 850; and
(b) that the said award is already repealed by P.D. 850 which took effect on
December 16, 1975, and by said Policy Instruction No. 9 of the Department of
Labor, considering that its monthly paid employees are not receiving less than
P240.00 and their monthly pay is uniform from January to December, and that no
deductions are made from the monthly salaries of its employees on account of
holidays in months where they occur (pp. 64-65, NLRC rec.).
On October 18, 1976, Labor Arbiter Ricarte T. Soriano, instead of issuing a writ of
execution, issued an order enjoining the respondent bank to continue paying its
employees their regular holiday pay on the following grounds: (a) that the
judgment is already final and the findings which is found in the body of the
decision as well as the dispositive portion thereof is res judicata or is the law of
the case between the parties; and (b) that since the decision had been partially
implemented by the respondent bank, appeal from the said decision is no longer
available (pp. 100-103, rec.).
On November 17, 1976, respondent bank appealed from the above-cited order of
Labor Arbiter Soriano to the National Labor Relations Commission, reiterating
therein its contentions averred in its opposition to the motion for writ of
execution. Respondent bank further alleged for the first time that the questioned
order is not supported by evidence insofar as it finds that respondent bank
discontinued payment of holiday pay beginning January, 1976 (p. 84, NLRC rec.).
On June 20, 1978, the National Labor Relations Commission promulgated its
resolution en banc dismissing respondent bank's appeal, the dispositive portion
of which reads as follows: t.hqw
In view of the foregoing, we hereby resolve to dismiss, as we hereby dismiss,
respondent's appeal; to set aside Labor Arbiter Ricarte T. Soriano's order of 18
October 1976 and, as prayed for by complainant, to order the issuance of the
proper writ of execution (p. 244, NLRC rec.).
Copies of the above resolution were served on the petitioner only on February 9,
1979 or almost eight. (8) months after it was promulgated, while copies were
served on the respondent bank on February 13, 1979.
On February 21, 1979, respondent bank filed with the Office of the Minister of
Labor a motion for reconsideration/appeal with urgent prayer to stay execution,
alleging therein the following: (a) that there is prima facie evidence of grave
abuse of discretion, amounting to lack of jurisdiction on the part of the National
Labor Relations Commission, in dismissing the respondent's appeal on pure
technicalities without passing upon the merits of the appeal and (b) that the
resolution appealed from is contrary to the law and jurisprudence (pp. 260-274,
NLRC rec.).
On March 19, 1979, petitioner filed its opposition to the respondent bank's
appeal and alleged the following grounds: (a) that the office of the Minister of
Labor has no jurisdiction to entertain the instant appeal pursuant to the
provisions of P. D. 1391; (b) that the labor arbiter's decision being final, executory
and unappealable, execution is a matter of right for the petitioner; and (c) that
the decision of the labor arbiter dated August 25, 1975 is supported by the law
and the evidence in the case (p. 364, NLRC rec.).
On July 30, 1979, petitioner filed a second motion for execution pending appeal,
praying that a writ of execution be issued by the National Labor Relations
Commission pending appeal of the case with the Office of the Minister of Labor.
Respondent bank filed its opposition thereto on August 8, 1979.
On August 13, 1979, the National Labor Relations Commission issued an order
which states: t.hqw
The Chief, Research and Information Division of this Commission is hereby
directed to designate a Socio-Economic Analyst to compute the holiday pay of the
employees of the Insular Bank of Asia and America from April 1976 to the
present, in accordance with the Decision of the Labor Arbiter dated August 25,
1975" (p. 80, rec.).
On November 10, 1979, the Office of the Minister of Labor, through Deputy
Minister Amado G. Inciong, issued an order, the dispositive portion of which
states: t.hqw
ALL THE FOREGOING CONSIDERED, let the appealed Resolution en banc of the
National Labor Relations Commission dated 20 June 1978 be, as it is hereby, set
aside and a new judgment promulgated dismissing the instant case for lack of
merit (p. 436, NLRC rec.).
Hence, this petition for certiorari charging public respondent Amado G. Inciong
with abuse of discretion amounting to lack or excess of jurisdiction.
The issue in this case is: whether or not the decision of a Labor Arbiter awarding
payment of regular holiday pay can still be set aside on appeal by the Deputy
Minister of Labor even though it has already become final and had been partially
executed, the finality of which was affirmed by the National Labor Relations
Commission sitting en banc, on the basis of an Implementing Rule and Policy
Instruction promulgated by the Ministry of Labor long after the said decision had
become final and executory.
WE find for the petitioner.
I
WE agree with the petitioner's contention that Section 2, Rule IV, Book III of the
implementing rules and Policy Instruction No. 9 issued by the then Secretary of
Labor are null and void since in the guise of clarifying the Labor Code's provisions
on holiday pay, they in effect amended them by enlarging the scope of their
exclusion (p. 1 1, rec.).
Article 94 of the Labor Code, as amended by P.D. 850, provides: t.hqw
Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily
wage during regular holidays, except in retail and service establishments regularly
employing less than ten (10) workers. ...
The coverage and scope of exclusion of the Labor Code's holiday pay provisions is
spelled out under Article 82 thereof which reads: t.hqw
Art. 82. Coverage. The provision of this Title shall apply to employees in all
establishments and undertakings, whether for profit or not, but not to
government employees, managerial employees, field personnel members of the
family of the employer who are dependent on him for support domestic helpers,
persons in the personal service of another, and workers who are paid by results as
determined by the Secretary of Labor in appropriate regulations.
... (emphasis supplied).
From the above-cited provisions, it is clear that monthly paid employees are not
excluded from the benefits of holiday pay. However, the implementing rules on
holiday pay promulgated by the then Secretary of Labor excludes monthly paid
employees from the said benefits by inserting, under Rule IV, Book Ill of the
implementing rules, Section 2, which provides that: "employees who are
uniformly paid by the month, irrespective of the number of working days therein,
with a salary of not less than the statutory or established minimum wage shall be
presumed to be paid for all days in the month whether worked or not. "
Public respondent maintains that "(T)he rules implementing P. D. 850 and Policy
Instruction No. 9 were issued to clarify the policy in the implementation of the
ten (10) paid legal holidays. As interpreted, 'unworked' legal holidays are deemed
paid insofar as monthly paid employees are concerned if (a) they are receiving
not less than the statutory minimum wage, (b) their monthly pay is uniform from
January to December, and (c) no deduction is made from their monthly salary on
account of holidays in months where they occur. As explained in Policy
Instruction No, 9, 'The ten (10) paid legal holidays law, to start with, is intended
to benefit principally daily paid employees. In case of monthly, only those whose
monthly salary did not yet include payment for the ten (10) paid legal holidays
are entitled to the benefit' " (pp. 340-341, rec.). This contention is untenable.
It is elementary in the rules of statutory construction that when the language of
the law is clear and unequivocal the law must be taken to mean exactly what it
says. In the case at bar, the provisions of the Labor Code on the entitlement to
the benefits of holiday pay are clear and explicit - it provides for both the
coverage of and exclusion from the benefits. In Policy Instruction No. 9, the then
Secretary of Labor went as far as to categorically state that the benefit is
principally intended for daily paid employees, when the law clearly states that
every worker shall be paid their regular holiday pay. This is a flagrant violation of
the mandatory directive of Article 4 of the Labor Code, which states that "All
doubts in the implementation and interpretation of the provisions of this
Code, including its implementing rules and regulations, shall be resolved in favor
of labor." Moreover, it shall always be presumed that the legislature intended to
enact a valid and permanent statute which would have the most beneficial effect
that its language permits (Orlosky vs. Haskell, 155 A. 112.)
Obviously, the Secretary (Minister) of Labor had exceeded his statutory authority
granted by Article 5 of the Labor Code authorizing him to promulgate the
necessary implementing rules and regulations.
Public respondent vehemently argues that the intent and spirit of the holiday pay
law, as expressed by the Secretary of Labor in the case of Chartered Bank
Employees Association v. The Chartered Bank (NLRC Case No. RB-1789-75, March
24, 1976), is to correct the disadvantages inherent in the daily compensation
system of employment holiday pay is primarily intended to benefit the daily
paid workers whose employment and income are circumscribed by the principle
of "no work, no pay." This argument may sound meritorious; but, until the
provisions of the Labor Code on holiday pay is amended by another law, monthly
paid employees are definitely included in the benefits of regular holiday pay. As
earlier stated, the presumption is always in favor of law, negatively put, the Labor
Code is always strictly construed against management.
While it is true that the contemporaneous construction placed upon a statute by
executive officers whose duty is to enforce it should be given great weight by the
courts, still if such construction is so erroneous, as in the instant case, the same
must be declared as null and void. It is the role of the Judiciary to refine and,
when necessary, correct constitutional (and/or statutory) interpretation, in the
context of the interactions of the three branches of the government, almost
always in situations where some agency of the State has engaged in action that
stems ultimately from some legitimate area of governmental power (The
Supreme Court in Modern Role, C. B. Swisher 1958, p. 36).
Thus. in the case of Philippine Apparel Workers Union vs. National Labor Relations
Commission (106 SCRA 444, July 31, 1981) where the Secretary of Labor enlarged
the scope of exemption from the coverage of a Presidential Decree granting
increase in emergency allowance, this Court ruled that: t.hqw
... the Secretary of Labor has exceeded his authority when he included paragraph
(k) in Section 1 of the Rules implementing P. D. 1 1 23.
xxx xxx xxx
Clearly, the inclusion of paragraph k contravenes the statutory authority granted
to the Secretary of Labor, and the same is therefore void, as ruled by this Court in
a long line of cases . . . .. t.hqw
The recognition of the power of administrative officials to promulgate rules in the
administration of the statute, necessarily limited to what is provided for in the
legislative enactment, may be found in the early case of United States vs. Barrios
decided in 1908. Then came in a 1914 decision, United States vs. Tupasi Molina
(29 Phil. 119) delineation of the scope of such competence. Thus: "Of course the
regulations adopted under legislative authority by a particular department must
be in harmony with the provisions of the law, and for the sole purpose of carrying
into effect its general provisions. By such regulations, of course, the law itself
cannot be extended. So long, however, as the regulations relate solely to carrying
into effect the provisions of the law, they are valid." In 1936, in People vs.
Santos, this Court expressed its disapproval of an administrative order that would
amount to an excess of the regulatory power vested in an administrative official
We reaffirmed such a doctrine in a 1951 decision, where we again made clear
that where an administrative order betrays inconsistency or repugnancy to the
provisions of the Act, 'the mandate of the Act must prevail and must be followed.
Justice Barrera, speaking for the Court in Victorias Milling inc. vs. Social Security
Commission, citing Parker as well as Davis did tersely sum up the matter thus: "A
rule is binding on the Courts so long as the procedure fixed for its promulgation is
followed and its scope is within the statutory authority granted by the legislature,
even if the courts are not in agreement with the policy stated therein or its innate
wisdom. ... On the other hand, administrative interpretation of the law is at best
merely advisory, for it is the courts that finally determine chat the law means."
"It cannot be otherwise as the Constitution limits the authority of the President,
in whom all executive power resides, to take care that the laws be faithfully
executed. No lesser administrative executive office or agency then can, contrary
to the express language of the Constitution assert for itself a more extensive
prerogative. Necessarily, it is bound to observe the constitutional mandate. There
must be strict compliance with the legislative enactment. Its terms must be
followed the statute requires adherence to, not departure from its provisions. No
deviation is allowable. In the terse language of the present Chief Justice, an
administrative agency "cannot amend an act of Congress." Respondents can be
sustained, therefore, only if it could be shown that the rules and regulations
promulgated by them were in accordance with what the Veterans Bill of Rights
provides" (Phil. Apparel Workers Union vs. National Labor Relations
Commission, supra, 463, 464, citing Teozon vs. Members of the Board of
Administrators, PVA 33 SCRA 585; see also Santos vs. Hon. Estenzo, et al, 109 Phil.
419; Hilado vs. Collector of Internal Revenue, 100 Phil. 295; Sy Man vs. Jacinto &
Fabros, 93 Phil. 1093; Olsen & Co., Inc. vs. Aldanese and Trinidad, 43 Phil. 259).
This ruling of the Court was recently reiterated in the case of American Wire &
Cable Workers Union (TUPAS) vs. The National Labor Relations Commission and
American Wire & Cable Co., Inc., G.R. No. 53337, promulgated on June 29, 1984.
In view of the foregoing, Section 2, Rule IV, Book III of the Rules to implement the
Labor Code and Policy instruction No. 9 issued by the then Secretary of Labor
must be declared null and void. Accordingly, public respondent Deputy Minister
of Labor Amado G. Inciong had no basis at all to deny the members of petitioner
union their regular holiday pay as directed by the Labor Code.
II
It is not disputed that the decision of Labor Arbiter Ricarte T. Soriano dated
August 25, 1975, had already become final, and was, in fact, partially executed by
the respondent bank.
However, public respondent maintains that on the authority of De Luna vs.
Kayanan, 61 SCRA 49, November 13, 1974, he can annul the final decision of
Labor Arbiter Soriano since the ensuing promulgation of the integrated
implementing rules of the Labor Code pursuant to P.D. 850 on February 16, 1976,
and the issuance of Policy Instruction No. 9 on April 23, 1976 by the then
Secretary of Labor are facts and circumstances that transpired subsequent to the
promulgation of the decision of the labor arbiter, which renders the execution of
the said decision impossible and unjust on the part of herein respondent bank
(pp. 342-343, rec.).
This contention is untenable.
To start with, unlike the instant case, the case of De Luna relied upon by the
public respondent is not a labor case wherein the express mandate of the
Constitution on the protection to labor is applied. Thus Article 4 of the Labor
Code provides that, "All doubts in the implementation and interpretation of the
provisions of this Code, including its implementing rules and regulations, shall be
resolved in favor of labor and Article 1702 of the Civil Code provides that, " In
case of doubt, all labor legislation and all labor contracts shall be construed in
favor of the safety and decent living for the laborer.
Consequently, contrary to public respondent's allegations, it is patently unjust to
deprive the members of petitioner union of their vested right acquired by virtue
of a final judgment on the basis of a labor statute promulgated following the
acquisition of the "right".
On the question of whether or not a law or statute can annul or modify a judicial
order issued prior to its promulgation, this Court, through Associate Justice Claro
M. Recto, said: t.hqw
xxx xxx xxx
We are decidedly of the opinion that they did not. Said order, being
unappealable, became final on the date of its issuance and the parties who
acquired rights thereunder cannot be deprived thereof by a constitutional
provision enacted or promulgated subsequent thereto. Neither the Constitution
nor the statutes, except penal laws favorable to the accused, have retroactive
effect in the sense of annulling or modifying vested rights, or altering contractual
obligations" (China Ins. & Surety Co. vs. Judge of First Instance of Manila, 63 Phil.
324, emphasis supplied).
In the case of In re: Cunanan, et al., 19 Phil. 585, March 18, 1954, this Court said:
"... when a court renders a decision or promulgates a resolution or order on the
basis of and in accordance with a certain law or rule then in force, the subsequent
amendment or even repeal of said law or rule may not affect the final decision,
order, or resolution already promulgated, in the sense of revoking or rendering it
void and of no effect." Thus, the amendatory rule (Rule IV, Book III of the Rules to
Implement the Labor Code) cannot be given retroactive effect as to modify final
judgments. Not even a law can validly annul final decisions (In re: Cunanan, et al.,
Ibid).
Furthermore, the facts of the case relied upon by the public respondent are not
analogous to that of the case at bar. The case of De Luna speaks of final and
executory judgment, while iii the instant case, the final judgment is partially
executed. just as the court is ousted of its jurisdiction to annul or modify a
judgment the moment it becomes final, the court also loses its jurisdiction to
annul or modify a writ of execution upon its service or execution; for, otherwise,
we will have a situation wherein a final and executed judgment can still be
annulled or modified by the court upon mere motion of a panty This would
certainly result in endless litigations thereby rendering inutile the rule of law.
Respondent bank counters with the argument that its partial compliance was
involuntary because it did so under pain of levy and execution of its assets (p.
138, rec.). WE find no merit in this argument. Respondent bank clearly
manifested its voluntariness in complying with the decision of the labor arbiter by
not appealing to the National Labor Relations Commission as provided for under
the Labor Code under Article 223. A party who waives his right to appeal is
deemed to have accepted the judgment, adverse or not, as correct, especially if
such party readily acquiesced in the judgment by starting to execute said
judgment even before a writ of execution was issued, as in this case. Under these
circumstances, to permit a party to appeal from the said partially executed final
judgment would make a mockery of the doctrine of finality of judgments long
enshrined in this jurisdiction.
Section I of Rule 39 of the Revised Rules of Court provides that "... execution shall
issue as a matter of right upon the expiration of the period to appeal ... or if no
appeal has been duly perfected." This rule applies to decisions or orders of labor
arbiters who are exercising quasi-judicial functions since "... the rule of execution
of judgments under the rules should govern all kinds of execution of judgment,
unless it is otherwise provided in other laws" Sagucio vs. Bulos 5 SCRA 803) and
Article 223 of the Labor Code provides that "... decisions, awards, or orders of the
Labor Arbiter or compulsory arbitrators are final and executory unless appealed
to the Commission by any or both of the parties within ten (10) days from receipt
of such awards, orders, or decisions. ..."
Thus, under the aforecited rule, the lapse of the appeal period deprives the
courts of jurisdiction to alter the final judgment and the judgment becomes
final ipso jure (Vega vs. WCC, 89 SCRA 143, citing Cruz vs. WCC, 2 PHILAJUR 436,
440, January 31, 1978; see also Soliven vs. WCC, 77 SCRA 621; Carrero vs. WCC
and Regala vs. WCC, decided jointly, 77 SCRA 297; Vitug vs. Republic, 75 SCRA
436; Ramos vs. Republic, 69 SCRA 576).
In Galvez vs. Philippine Long Distance Telephone Co., 3 SCRA 422, 423, October
31, 1961, where the lower court modified a final order, this Court ruled
thus: t.hqw
xxx xxx xxx
The lower court was thus aware of the fact that it was thereby altering or
modifying its order of January 8, 1959. Regardless of the excellence of the motive
for acting as it did, we are constrained to hold however, that the lower court had
no authorities to make said alteration or modification. ...
xxx xxx xxx
The equitable considerations that led the lower court to take the action
complained of cannot offset the dem ands of public policy and public interest
which are also responsive to the tenets of equity requiring that an issues
passed upon in decisions or final orders that have become executory, be deemed
conclusively disposed of and definitely closed for, otherwise, there would be no
end to litigations, thus setting at naught the main role of courts of justice, which
is to assist in the enforcement of the rule of law and the maintenance of peace
and order, by settling justiciable controversies with finality.
xxx xxx xxx
In the recent case of Gabaya vs. Mendoza, 113 SCRA 405, 406, March 30, 1982,
this Court said: t.hqw
xxx xxx xxx
In Marasigan vs. Ronquillo (94 Phil. 237), it was categorically stated that the rule
is absolute that after a judgment becomes final by the expiration of the period
provided by the rules within which it so becomes, no further amendment or
correction can be made by the court except for clerical errors or mistakes. And
such final judgment is conclusive not only as to every matter which was offered
and received to sustain or defeat the claim or demand but as to any other
admissible matter which must have been offered for that purpose (L-7044, 96
Phil. 526). In the earlier case of Contreras and Ginco vs. Felix and China Banking
Corp., Inc. (44 O.G. 4306), it was stated that the rule must be adhered to
regardless of any possible injustice in a particular case for (W)e have to
subordinate the equity of a particular situation to the over-mastering need of
certainty and immutability of judicial pronouncements
xxx xxx xxx
III
The despotic manner by which public respondent Amado G. Inciong divested the
members of the petitioner union of their rights acquired by virtue of a final
judgment is tantamount to a deprivation of property without due process of law
Public respondent completely ignored the rights of the petitioner union's
members in dismissing their complaint since he knew for a fact that the judgment
of the labor arbiter had long become final and was even partially executed by the
respondent bank.
A final judgment vests in the prevailing party a right recognized and protected by
law under the due process clause of the Constitution (China Ins. & Surety Co. vs.
Judge of First Instance of Manila, 63 Phil. 324). A final judgment is "a vested
interest which it is right and equitable that the government should recognize and
protect, and of which the individual could no. be deprived arbitrarily without
injustice" (Rookledge v. Garwood, 65 N.W. 2d 785, 791).
lt is by this guiding principle that the due process clause is interpreted. Thus, in
the pithy language of then Justice, later Chief Justice, Concepcion "... acts of
Congress, as well as those of the Executive, can deny due process only under pain
of nullity, and judicial proceedings suffering from the same flaw are subject to the
same sanction, any statutory provision to the contrary notwithstanding (Vda. de
Cuaycong vs. Vda. de Sengbengco 110 Phil. 118, emphasis supplied), And "(I)t has
been likewise established that a violation of a constitutional right divested the
court of jurisdiction; and as a consequence its judgment is null and void and
confers no rights" (Phil. Blooming Mills Employees Organization vs. Phil. Blooming
Mills Co., Inc., 51 SCRA 211, June 5, 1973).
Tested by and pitted against this broad concept of the constitutional guarantee of
due process, the action of public respondent Amado G. Inciong is a clear example
of deprivation of property without due process of law and constituted grave
abuse of discretion, amounting to lack or excess of jurisdiction in issuing the
order dated November 10, 1979.
WHEREFORE, THE PETITION IS HEREBY GRANTED, THE ORDER OF PUBLIC
RESPONDENT IS SET ASIDE, AND THE DECISION OF LABOR ARBITER RICARTE T.
SORIANO DATED AUGUST 25, 1975, IS HEREBY REINSTATED.
COSTS AGAINST PRIVATE RESPONDENT INSULAR BANK OF ASIA AND AMERICA
SO ORDERED.

[G.R. No. L-48437. September 30, 1986.]

MANTRADE/FMMC DIVISION EMPLOYEES AND WORKERS UNION (represented
by PHILIPPINE SOCIAL SECURITY LABOR UNION PSSLU Fed.
TUCP), Petitioner, v. ARBITRATOR FROILAN M. BACUNGAN and MANTRADE
DEVELOPMENT CORPORATION, Respondents.

SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; VOLUNTARY ARBITRATORS;
DECISIONS SUBJECT TO JUDICIAL REVIEW. The contentions of respondent
corporation have been ruled against in the decision of this court in the case of
Oceanic Bic Division (FFW) v. Romero, promulgated on July 16, 1984, wherein it
stated: . . . "A voluntary arbitrator by the nature of her functions acts in a
quasijudicial capacity. There is no reason why her decisions involving
interpretation of law should be beyond this courts review. Administrative
officials are presumed to act in accordance with law and yet we do not hesitate to
pass upon their work where a question of law is involved or where a showing of
abuse of discretion in their officials acts is properly raised in petitions
for certiorari." (130 SCRA 392, 399, 400-401)

2. ID.; ID.; GRANT FOR HOLIDAY PAY MONTHLY PAID EMPLOYEES; ISSUE SETTLED
IN THE CASES OF INSULAR BANK OF ASIA AND AMERICA EMPLOYEES UNION VS.
INCIONG, [132 SCRA 633], AND CHARTERED BANK EMPLOYEES UNION VS. OPLE
[141 SCRA 9]. Respondent arbitrator opined that respondent corporation does
not have any legal obligation to grant its monthly salaried employees holiday pay,
unless it is argued that the pertinent section of the Rule and Regulations
implementing Section 94 of the Labor Code is not in conformity with the law, and
thus, without force and effect. This issue was subsequently decided on October
24, 1984 by a division of this court in the case of Insular Bank of Asia and
American Employees Union (IBAAEU) v. Inciong, wherein it held as follows: "We
agree with petitioners contention that Section 2, Rule IV, Book III of the
implementing rules and Policy Instruction No. 9 issued by the then Secretary of
Labor are null and void since in the guise of clarifying the Labor Codes provisions
on holiday pay, they in effect amended them enlarging the scope of their
exclusion (p. 11, rec.). . . . "From the above-cited provisions, it is clear that
monthly paid employees are not excluded from the benefits of holiday pay.
However, the implementing rules on holiday pay promulgated by the then
Secretary of Labor excludes monthly paid employees from the said benefits by
inserting under Rule IV, Book III of the implementing rules, section 2, which
provides that: employees who are uniformly paid by the month, irrespective of
the number of working days therein , with the salary of not less than the
statutory or established minimum wage shall be presumed to be paid for all days
in the month whether worked or not." (132 SCRA 663, 672-673) This ruling was
reiterated by the court en banc on August 28, 1985 in the case of Chartered Bank
Employees Association v. Ople, wherein it added that: "The questioned Sec. 2,
Rule IV, Book III of the Integrated Rules and the Secretarys Policy Instruction No.
9 add another excluded group, namely employees who are uniformly paid by the
month. While additional exclusion is only in the form of a presumption that all
monthly paid employees have already been paid holiday paid, it constitutes a
taking away or a deprivation which must be in the law if it is to be valid. An
administrative interpretation which diminishes the benefits of labor more than
what the statute delimits or withholds is obviously ultra vires." (138 SCRA 273,
282. See also CBTC Employees Union v. Clave, January 7, 1986, 141 SCRA 9.)

3. REMEDIAL LAW; SPECIAL CIVIL ACTION; MANDAMUS; APPROPRIATE
EQUITABLE REMEDY IN CASE AT BAR. Respondent corporation contends that
mandamus does not lie to compel the performance of an act which the law does
not clearly enjoin as a duty. True it is also that mandamus is not proper to enforce
a contractual obligation, the remedy being an action for specific performance
(Province of Pangasinan v. Reparations Commission, November 29, 1977, 80 SCRA
376). In the case at bar, however, in view of the above-cited subsequent decisions
of this Court clearly defining the legal duty to grant holiday pay to monthly
salaried employees, mandamus is an appropriate equitable remedy (Dionisio v.
Paterno, July 23, 1980, 98 SCRA 677; Gonzales v. Government Service Insurance
System, September 10, 1981, 107 SCRA 492).
D E C I S I O N
FERIA, J.:
This is a petition for Certiorari and Mandamus filed by petitioner against
arbitrator Froilan M. Bacungan and Mantrade Development Corporation arising
from the decision of respondent arbitrator, the dispositive part of which reads as
follows:jgc:chanrobles.com.ph

"CONSIDERING ALL THE ABOVE, We rule that Mantrade Development
Corporation is not under legal obligation to pay holiday pay (as provided for in
Article 94 of the Labor Code in the third official Department of Labor edition) to
its monthly paid employees who are uniformly paid by the month, irrespective of
the number of working days therein, with a salary of not less than the statutory
or established minimum wage, and this rule is applicable not only as of March 2,
1976 but as of November 1, 1974."cralaw virtua1aw library

Petitioner questions the validity of the pertinent section of the Rules and
Regulations Implementing the Labor Code as amended on which respondent
arbitrator based his decision.

On the other hand, respondent corporation has raised procedural and
substantive objections. It contends that petitioner is barred from pursuing the
present action in view of Article 263 of the Labor Code, which provides in part
that "voluntary arbitration awards or decisions shall be final, inappealable, and
executory," as well as the rules implementing the same; the pertinent provision
of the Collective Bargaining Agreement between petitioner and respondent
corporation; and Article 2044 of the Civil Code which provides that "any
stipulation that the arbitrators award or decision shall be final, is valid, without
prejudice to Articles 2038, 2039, and 2040." Respondent corporation further
contends that the special civil action of certiorari does not lie because respondent
arbitrator is not an "officer exercising judicial functions" within the contemplation
of Rule 65, Section 1, of the Rules of Court; that the instant petition raises an
error of judgment on the part of respondent arbitrator and not an error of
jurisdiction; that it prays for the annulment of certain rules and regulations issued
by the Department of Labor, not for the annulment of the voluntary arbitration
proceedings; and that appeal by certiorari under Section 29 of the Arbitration
Law, Republic Act No. 876, is not applicable to the case at bar because arbitration
in labor disputes is expressly excluded by Section 3 of said law.chanrobles law
library : red

These contentions have been ruled against in the decision of this Court in the
case of Oceanic Bic Division (FFW) v. Romero, promulgated on July 16, 1984,
wherein it stated:jgc:chanrobles.com.ph

"We agree with the petitioner that the decisions of voluntary arbitrators must be
given the highest respect and as a general rule must be accorded a certain
measure of finality. This is especially true where the arbitrator chosen by the
parties enjoys the first rate credentials of Professor Flerida Ruth Pineda Romero,
Director of the U.P. Law Center and an academician of unquestioned expertise in
the field of Labor Law. It is not correct, however, that this respect precludes the
exercise of judicial review over their decisions. Article 262 of the Labor Code
making voluntary arbitration awards final, inappealable and executory, except
where the money claims exceed P100,000.00 or 40% of the paid-up capital of the
employer or where there is abuse of discretion or gross incompetence refers to
appeals to the National Labor Relations Commission and not to judicial review.

"In spite of statutory provisions making final the decisions of certain
administrative agencies, we have taken cognizance of petitions questioning these
decisions where want of jurisdiction, grave abuse of discretion, violation of due
process, denial of substantial justice, or erroneous interpretation of the Law were
brought to our attention. . . .
x x x


"A voluntary arbitrator by the nature of her functions acts in a quasi-judicial
capacity. There is no reason why her decisions involving interpretation of law
should be beyond this Courts review. Administrative officials are presumed to act
in accordance with law and yet we do not hesitate to pass upon their work where
a question of law is involved or where a showing of abuse of discretion in their
official acts is properly raised in petitions for certiorari." (130 SCRA 392, 399, 400-
401)

In denying petitioners claim for holiday pay, respondent arbitrator stated that
although monthly salaried employees are not among those excluded from
receiving such additional pay under Article 94 of the Labor Code of the
Philippines, to wit:chanrobles virtual lawlibrary

ART. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily
wage during regular holidays, except in retail and service establishments regularly
employing less than ten (10) workers;

(b) The employer may require an employee to work on any holiday but such
employee shall be paid compensation equivalent to twice his regular rate; and

(c) As used in this Article, "holiday" includes: New Years Day, Maundy Thursday,
Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of
July, the thirtieth of November, the twenty-fifth and the thirtieth of December,
and the day designated by law for holding a general election.

they appear to be excluded under Sec. 2, Rule IV, Book III of the Rules and
Regulations implementing said provision which reads thus:chanrob1es virtual
1aw library

SEC. 2. Status of employees paid by the month. Employees who are uniformly
paid by the month, irrespective of the number of working days therein, with a
salary of not less than the statutory or established minimum wage shall be
presumed to be paid for all days in the month whether worked or not.

Respondent arbitrator further opined that respondent corporation does not have
any legal obligation to grant its monthly salaried employees holiday pay, unless it
is argued that the pertinent section of the Rules and Regulations implementing
Section 94 of the Labor Code is not in conformity with the law, and thus, without
force and effect.

This issue was subsequently decided on October 24, 1984 by a division of this
Court in the case of Insular Bank of Asia and America Employees Union (IBAAEU)
v. Inciong, wherein it held as follows:jgc:chanrobles.com.ph

"WE agree with the petitioners contention that Section 2, Rule IV, Book III of the
implementing rules and Policy Instruction No. 9, issued by the then Secretary of
Labor are null and void since in the guise of clarifying the Labor Codes provisions
on holiday pay, they in effect amended them by enlarging the scope of their
exclusion (p. 11, rec.)

"Article 94 of the Labor Code, as amended by P.D. 850, provides:chanrob1es
virtual 1aw library

Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily
wage during regular holidays, except in retail and service establishments regularly
employing less than ten (10) workers . . .

"The coverage and scope of exclusion of the Labor Codes holiday pay provisions
is spelled out under Article 82 thereof which reads:chanrob1es virtual 1aw library

Art. 82. Coverage. The provision of this Title shall apply to employees in all
establishments and undertakings, whether for profit or not, but not to
government employees, managerial employees, field personnel, members of the
family of the employer who are dependent on him for support, domestic helpers,
persons, in the personal service of another, and workers who are paid by results
as determined by the Secretary of Labor in appropriate regulations.
x x x


"From the above-cited provisions, it is clear that monthly paid employees are not
excluded from the benefits of holiday pay. However, the implementing rules on
holiday pay promulgated by the then Secretary of Labor excludes monthly paid
employees from the said benefits by inserting under Rule IV, Book III of the
implementing rules, Section 2, which provides that: employees who are
uniformly paid by the month, irrespective of the number of working days therein,
with a salary of not less than the statutory or established minimum wage shall be
presumed to be paid for all days in the month whether worked or not." (132
SCRA 663, 672-673).

This ruling was reiterated by the Court en banc on August 28, 1985 in the case of
Chartered Bank Employees Association v. Ople, wherein it added that:chanrobles
virtualawlibrary chanrobles.com:chanrobles.com.ph

"The questioned Sec. 2, Rule IV, Book III of the Integrated Rules and the
Secretarys Policy Instruction No. 9 add another excluded group, namely
employees who are uniformly paid by the month. While the additional exclusion
is only in the form of a presumption that all monthly paid employees have
already been paid holiday pay, it constitutes a taking away or a deprivation which
must be in the law if it is to be valid. An administrative interpretation which
diminishes the benefits of labor more than what the statute delimits or withholds
is obviously ultra vires." (138 SCRA 273, 282. See also CBTC Employees Union v. ,
Clave, January 7, 1986, 141 SCRA 9.)

Lastly, respondent corporation contends that mandamus does not lie to compel
the performance of an act which the law does not clearly enjoin as a duty. True it
is also that mandamus is not proper to enforce a contractual obligation, the
remedy being an action for specific performance (Province of Pangasinan v.
Reparations Commission, November 29, 1977, 80 SCRA 376). In the case at bar,
however, in view of the above cited subsequent decisions of this Court clearly
defining the legal duty to grant holiday pay to monthly salaried employees,
mandamus is an appropriate equitable remedy (Dionisio v. Paterno, July 23, 1980,
98 SCRA 677; Gonzales v. Government Service Insurance System, September 10,
1981, 107 SCRA 492).

WHEREFORE, the questioned decision of respondent arbitrator is SET ASIDE and
respondent corporation is ordered to GRANT holiday pay to its monthly salaried
employees. No costs.

SO ORDERED.

G.R. No. 79255 January 20, 1992
UNION OF FILIPRO EMPLOYEES (UFE), petitioner,
vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and NESTL
PHILIPPINES, INC. (formerly FILIPRO, INC.), respondents.
Jose C. Espinas for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.

GUTIERREZ, JR., J.:
This labor dispute stems from the exclusion of sales personnel from the holiday
pay award and the change of the divisor in the computation of benefits from 251
to 261 days.
On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed
with the National Labor Relations Commission (NLRC) a petition for declaratory
relief seeking a ruling on its rights and obligations respecting claims of its monthly
paid employees for holiday pay in the light of the Court's decision in Chartered
Bank Employees Association v. Ople (138 SCRA 273 [1985]).
Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case
for voluntary arbitration and appointed respondent Benigno Vivar, Jr. as
voluntary arbitrator.
On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to:
pay its monthly paid employees holiday pay pursuant to Article 94 of the Code,
subject only to the exclusions and limitations specified in Article 82 and such
other legal restrictions as are provided for in the Code. (Rollo,
p. 31)
Filipro filed a motion for clarification seeking (1) the limitation of the award to
three years, (2) the exclusion of salesmen, sales representatives, truck drivers,
merchandisers and medical representatives (hereinafter referred to as sales
personnel) from the award of the holiday pay, and (3) deduction from the holiday
pay award of overpayment for overtime, night differential, vacation and sick
leave benefits due to the use of 251 divisor. (Rollo, pp. 138-145)
Petitioner UFE answered that the award should be made effective from the date
of effectivity of the Labor Code, that their sales personnel are not field personnel
and are therefore entitled to holiday pay, and that the use of 251 as divisor is an
established employee benefit which cannot be diminished.
On January 14, 1986, the respondent arbitrator issued an order declaring that the
effectivity of the holiday pay award shall retroact to November 1, 1974, the date
of effectivity of the Labor Code. He adjudged, however, that the company's sales
personnel are field personnel and, as such, are not entitled to holiday pay. He
likewise ruled that with the grant of 10 days' holiday pay, the divisor should be
changed from 251 to 261 and ordered the reimbursement of overpayment for
overtime, night differential, vacation and sick leave pay due to the use of 251
days as divisor.
Both Nestle and UFE filed their respective motions for partial reconsideration.
Respondent Arbitrator treated the two motions as appeals and forwarded the
case to the NLRC which issued a resolution dated May 25, 1987 remanding the
case to the respondent arbitrator on the ground that it has no jurisdiction to
review decisions in voluntary arbitration cases pursuant to Article 263 of the
Labor Code as amended by Section 10, Batas Pambansa Blg. 130 and as
implemented by Section 5 of the rules implementing B.P. Blg. 130.
However, in a letter dated July 6, 1987, the respondent arbitrator refused to take
cognizance of the case reasoning that he had no more jurisdiction to continue as
arbitrator because he had resigned from service effective May 1, 1986.
Hence, this petition.
The petitioner union raises the following issues:
1) Whether or not Nestle's sales personnel are entitled to holiday pay; and
2) Whether or not, concomitant with the award of holiday pay, the divisor should
be changed from 251 to 261 days and whether or not the previous use of 251 as
divisor resulted in overpayment for overtime, night differential, vacation and sick
leave pay.
The petitioner insists that respondent's sales personnel are not field personnel
under Article 82 of the Labor Code. The respondent company controverts this
assertion.
Under Article 82, field personnel are not entitled to holiday pay. Said article
defines field personnel as "non-agritultural employees who regularly perform
their duties away from the principal place of business or branch office of the
employer and whose actual hours of work in the field cannot be determined with
reasonable certainty."
The controversy centers on the interpretation of the clause "whose actual hours
of work in the field cannot be determined with reasonable certainty."
It is undisputed that these sales personnel start their field work at 8:00 a.m. after
having reported to the office and come back to the office at 4:00 p.m. or 4:30
p.m. if they are Makati-based.
The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m.
comprises the sales personnel's working hours which can be determined with
reasonable certainty.
The Court does not agree. The law requires that the actual hours of work in the
field be reasonably ascertained. The company has no way of determining
whether or not these sales personnel, even if they report to the office before
8:00 a.m. prior to field work and come back at 4:30 p.m, really spend the hours in
between in actual field work.
We concur with the following disquisition by the respondent arbitrator:
The requirement for the salesmen and other similarly situated employees to
report for work at the office at 8:00 a.m. and return at 4:00 or 4:30 p.m. is not
within the realm of work in the field as defined in the Code but an exercise of
purely management prerogative of providing administrative control over such
personnel. This does not in any manner provide a reasonable level of
determination on the actual field work of the employees which can be reasonably
ascertained. The theoretical analysis that salesmen and other similarly-situated
workers regularly report for work at 8:00 a.m. and return to their home station at
4:00 or 4:30 p.m., creating the assumption that their field work is supervised, is
surface projection. Actual field work begins after 8:00 a.m., when the sales
personnel follow their field itinerary, and ends immediately before 4:00 or 4:30
p.m. when they report back to their office. The period between 8:00 a.m. and
4:00 or 4:30 p.m. comprises their hours of work in the field, the extent or scope
and result of which are subject to their individual capacity and industry and which
"cannot be determined with reasonable certainty." This is the reason why
effective supervision over field work of salesmen and medical representatives,
truck drivers and merchandisers is practically a physical impossibility.
Consequently, they are excluded from the ten holidays with pay award. (Rollo,
pp. 36-37)
Moreover, the requirement that "actual hours of work in the field cannot be
determined with reasonable certainty" must be read in conjunction with Rule IV,
Book III of the Implementing Rules which provides:
Rule IV Holidays with Pay
Sec. 1. Coverage This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose time and performance is
unsupervised by the employer . . . (Emphasis supplied)
While contending that such rule added another element not found in the law
(Rollo, p. 13), the petitioner nevertheless attempted to show that its affected
members are not covered by the abovementioned rule. The petitioner asserts
that the company's sales personnel are strictly supervised as shown by the SOD
(Supervisor of the Day) schedule and the company circular dated March 15, 1984
(Annexes 2 and 3, Rollo, pp. 53-55).
Contrary to the contention of the petitioner, the Court finds that the
aforementioned rule did not add another element to the Labor Code definition of
field personnel. The clause "whose time and performance is unsupervised by the
employer" did not amplify but merely interpreted and expounded the clause
"whose actual hours of work in the field cannot be determined with reasonable
certainty." The former clause is still within the scope and purview of Article 82
which defines field personnel. Hence, in deciding whether or not an employee's
actual working hours in the field can be determined with reasonable certainty,
query must be made as to whether or not such employee's time and performance
is constantly supervised by the employer.
The SOD schedule adverted to by the petitioner does not in the least signify that
these sales personnel's time and performance are supervised. The purpose of this
schedule is merely to ensure that the sales personnel are out of the office not
later than 8:00 a.m. and are back in the office not earlier than 4:00 p.m.
Likewise, the Court fails to see how the company can monitor the number of
actual hours spent in field work by an employee through the imposition of
sanctions on absenteeism contained in the company circular of March 15, 1984.
The petitioner claims that the fact that these sales personnel are given incentive
bonus every quarter based on their performance is proof that their actual hours
of work in the field can be determined with reasonable certainty.
The Court thinks otherwise.
The criteria for granting incentive bonus are: (1) attaining or exceeding sales
volume based on sales target; (2) good collection performance; (3) proper
compliance with good market hygiene; (4) good merchandising work; (5) minimal
market returns; and (6) proper truck maintenance. (Rollo, p. 190).
The above criteria indicate that these sales personnel are given incentive bonuses
precisely because of the difficulty in measuring their actual hours of field work.
These employees are evaluated by the result of their work and not by the actual
hours of field work which are hardly susceptible to determination.
In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613
[1963]), the Court had occasion to discuss the nature of the job of a salesman.
Citing the case of Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court
stated:
The reasons for excluding an outside salesman are fairly apparent. Such a
salesman, to a greater extent, works individually. There are no restrictions
respecting the time he shall work and he can earn as much or as little, within the
range of his ability, as his ambition dictates. In lieu of overtime he ordinarily
receives commissions as extra compensation. He works away from his employer's
place of business, is not subject to the personal supervision of his employer, and
his employer has no way of knowing the number of hours he works per day.
While in that case the issue was whether or not salesmen were entitled to
overtime pay, the same rationale for their exclusion as field personnel from
holiday pay benefits also applies.
The petitioner union also assails the respondent arbitrator's ruling that,
concomitant with the award of holiday pay, the divisor should be changed from
251 to 261 days to include the additional 10 holidays and the employees should
reimburse the amounts overpaid by Filipro due to the use of 251 days' divisor.
Arbitrator Vivar's rationale for his decision is as follows:
. . . The new doctrinal policy established which ordered payment of ten holidays
certainly adds to or accelerates the basis of conversion and computation by ten
days. With the inclusion of ten holidays as paid days, the divisor is no longer 251
but 261 or 262 if election day is counted. This is indeed an extremely difficult
legal question of interpretation which accounts for what is claimed as falling
within the concept of "solutio indebti."
When the claim of the Union for payment of ten holidays was granted, there was
a consequent need to abandon that 251 divisor. To maintain it would create an
impossible situation where the employees would benefit with additional ten days
with pay but would simultaneously enjoy higher benefits by discarding the same
ten days for purposes of computing overtime and night time services and
considering sick and vacation leave credits. Therefore, reimbursement of such
overpayment with the use of 251 as divisor arises concomitant with the award of
ten holidays with pay. (Rollo, p. 34)
The divisor assumes an important role in determining whether or not holiday pay
is already included in the monthly paid employee's salary and in the computation
of his daily rate. This is the thrust of our pronouncement in Chartered Bank
Employees Association v. Ople (supra). In that case, We held:
It is argued that even without the presumption found in the rules and in the
policy instruction, the company practice indicates that the monthly salaries of the
employees are so computed as to include the holiday pay provided by law. The
petitioner contends otherwise.
One strong argument in favor of the petitioner's stand is the fact that the
Chartered Bank, in computing overtime compensation for its employees, employs
a "divisor" of 251 days. The 251 working days divisor is the result of subtracting
all Saturdays, Sundays and the ten (10) legal holidays from the total number of
calendar days in a year. If the employees are already paid for all non-working
days, the divisor should be 365 and not 251.
In the petitioner's case, its computation of daily ratio since September 1, 1980, is
as follows:
monthly rate x 12 months

251 days
Following the criterion laid down in the Chartered Bank case, the use of 251 days'
divisor by respondent Filipro indicates that holiday pay is not yet included in the
employee's salary, otherwise the divisor should have been 261.
It must be stressed that the daily rate, assuming there are no intervening salary
increases, is a constant figure for the purpose of computing overtime and night
differential pay and commutation of sick and vacation leave credits. Necessarily,
the daily rate should also be the same basis for computing the 10 unpaid
holidays.
The respondent arbitrator's order to change the divisor from 251 to 261 days
would result in a lower daily rate which is violative of the prohibition on non-
diminution of benefits found in Article 100 of the Labor Code. To maintain the
same daily rate if the divisor is adjusted to 261 days, then the dividend,
which represents the employee's annual salary, should correspondingly be
increased to incorporate the holiday pay. To illustrate, if prior to the grant of
holiday pay, the employee's annual salary is P25,100, then dividing such figure by
251 days, his daily rate is P100.00 After the payment of 10 days' holiday pay, his
annual salary already includes holiday pay and totals P26,100 (P25,100 + 1,000).
Dividing this by 261 days, the daily rate is still P100.00. There is thus no merit in
respondent Nestle's claim of overpayment of overtime and night differential pay
and sick and vacation leave benefits, the computation of which are all based on
the daily rate, since the daily rate is still the same before and after the grant of
holiday pay.
Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to
its use of 251 days as divisor must fail in light of the Labor Code mandate that "all
doubts in the implementation and interpretation of this Code, including its
implementing rules and regulations, shall be resolved in favor of labor." (Article
4). Moreover, prior to September 1, 1980, when the company was on a 6-day
working schedule, the divisor used by the company was 303, indicating that the
10 holidays were likewise not paid. When Filipro shifted to a 5-day working
schebule on September 1, 1980, it had the chance to rectify its error, if ever there
was one but did not do so. It is now too late to allege payment by mistake.
Nestle also questions the voluntary arbitrator's ruling that holiday pay should be
computed from November 1, 1974. This ruling was not questioned by the
petitioner union as obviously said decision was favorable to it. Technically,
therefore, respondent Nestle should have filed a separate petition raising the
issue of effectivity of the holiday pay award. This Court has ruled that an appellee
who is not an appellant may assign errors in his brief where his purpose is to
maintain the judgment on other grounds, but he cannot seek modification or
reversal of the judgment or affirmative relief unless he has also appealed. (Franco
v. Intermediate Appellate Court, 178 SCRA 331 [1989], citing La Campana Food
Products, Inc. v. Philippine Commercial and Industrial Bank, 142 SCRA 394
[1986]). Nevertheless, in order to fully settle the issues so that the execution of
the Court's decision in this case may not be needlessly delayed by another
petition, the Court resolved to take up the matter of effectivity of the holiday pay
award raised by Nestle.
Nestle insists that the reckoning period for the application of the holiday pay
award is 1985 when the Chartered Bank decision, promulgated on August 28,
1985, became final and executory, and not from the date of effectivity of the
Labor Code. Although the Court does not entirely agree with Nestle, we find its
claim meritorious.
In Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong, 132
SCRA 663 [1984], hereinafter referred to as the IBAA case, the Court declared
that Section 2, Rule IV, Book III of the implementing rules and Policy Instruction
No. 9, issued by the then Secretary of Labor on February 16, 1976 and April 23,
1976, respectively, and which excluded monthly paid employees from holiday pay
benefits, are null and void. The Court therein reasoned that, in the guise of
clarifying the Labor Code's provisions on holiday pay, the aforementioned
implementing rule and policy instruction amended them by enlarging the scope
of their exclusion. The Chartered Bank case reiterated the above ruling and added
the "divisor" test.
However, prior to their being declared null and void, the implementing rule and
policy instruction enjoyed the presumption of validity and hence, Nestle's non-
payment of the holiday benefit up to the promulgation of the IBAA case on
October 23, 1984 was in compliance with these presumably valid rule and policy
instruction.
In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429 [1971], the
Court discussed the effect to be given to a legislative or executive act
subsequently declared invalid:
xxx xxx xxx
. . . It does not admit of doubt that prior to the declaration of nullity such
challenged legislative or executive act must have been in force and had to be
complied with. This is so as until after the judiciary, in an appropriate case,
declares its invalidity, it is entitled to obedience and respect. Parties may have
acted under it and may have changed their positions. What could be more fitting
than that in a subsequent litigation regard be had to what has been done while
such legislative or executive act was in operation and presumed to be valid in all
respects. It is now accepted as a doctrine that prior to its being nullified, its
existence as a fact must be reckoned with. This is merely to reflect awareness
that precisely because the judiciary is the government organ which has the final
say on whether or not a legislative or executive measure is valid, a period of time
may have elapsed before it can exercise the power of judicial review that may
lead to a declaration of nullity. It would be to deprive the law of its quality of
fairness and justice then, if there be no recognition of what had transpired prior
to such adjudication.
In the language of an American Supreme Court decision: "The actual existence of
a statute, prior to such a determination of [unconstitutionality], is an operative
fact and may have consequences which cannot justly be ignored. The past cannot
always be erased by a new judicial declaration. The effect of the subsequent
ruling as to invalidity may have to be considered in various aspects, with
respect to particular relations, individual and corporate, and particular conduct,
private and official." (Chicot County Drainage Dist. v. Baxter States Bank, 308 US
371, 374 [1940]). This language has been quoted with approval in a resolution
in Araneta v. Hill (93 Phil. 1002 [1952]) and the decision in Manila Motor Co.,
Inc. v. Flores (99 Phil. 738 [1956]). An even more recent instance is the opinion of
Justice Zaldivar speaking for the Court in Fernandez v. Cuerva and Co. (21 SCRA
1095 [1967]. (At pp. 434-435)
The "operative fact" doctrine realizes that in declaring a law or rule null and void,
undue harshness and resulting unfairness must be avoided. It is now almost the
end of 1991. To require various companies to reach back to 1975now and nullify
acts done in good faith is unduly harsh. 1984 is a fairer reckoning period under
the facts of this case.
Applying the aforementioned doctrine to the case at bar, it is not far-fetched that
Nestle, relying on the implicit validity of the implementing rule and policy
instruction before this Court nullified them, and thinking that it was not obliged
to give holiday pay benefits to its monthly paid employees, may have been
moved to grant other concessions to its employees, especially in the collective
bargaining agreement. This possibility is bolstered by the fact that respondent
Nestle's employees are among the highest paid in the industry. With this
consideration, it would be unfair to impose additional burdens on Nestle when
the non-payment of the holiday benefits up to 1984 was not in any way
attributed to Nestle's fault.
The Court thereby resolves that the grant of holiday pay be effective, not from
the date of promulgation of the Chartered Bank case nor from the date of
effectivity of the Labor Code, but from October 23, 1984, the date of
promulgation of the IBAA case.
WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The
divisor to be used in computing holiday pay shall be 251 days. The holiday pay as
above directed shall be computed from October 23, 1984. In all other respects,
the order of the respondent arbitrator is hereby AFFIRMED.
SO ORDERED.

G.R. No. L-50568 November 7, 1979
OCEANIC PHARMACAL EMPLOYEES UNION (FFW), complainant/appellant,
vs.
HON. AMADO G. INCIONG and OCEANIC PHARMACAL
INC, respondents/appellees.
Jaime D. Lauron for appellant.
Siguion, Reyna, Montecillo & Ongsiako for private appellee.

ABAD SANTOS, J.:
'This is a petition to review a decision of Deputy Minister Amado G. Inciong who
acted by authority of tile Minister of Labor in NLRC Case No. RB-IV-10042-77.
Oceanic Pharmacal Employees Union and Oceanic Pharmacal, Inc. had a collective
bargaining agreement (CBA) good from March 1, 1976 to February 28, 1979. On
April 27, 1976, the following letter was sent to the Union:
Mr. Arturo Fernandez
President Oceanic Pharmacal Employees Union (FFW)
Makati, Rizal
Dear Mr. Fernandez:
Subject: Supplementary Agreement to CBA
This is to confirm in writing the agreement made between your panel and our
own panel on April 24, 1976 on the following points:
1) Emergency Allowance The management of OPI will continue its present
practice of extending emergency allowance to all employees receiving less than
P1,000.00 per month as basic pay.
2) Holiday Pay OPI management will likewise continue to give holiday pay to
monthly-salaried employees.
Please be informed too that we shall continue to extend the said benefits unless
otherwise directed by other new requirements, rules, laws, decrees, etc. on the
subject.
Very truly yours,
OCEANIC PHARMACAL, INC.
R. A. ALCANTARA
President-Treasurer
On October 25, 1976, the Company posted on its bulletin board the following
memorandum:
October 25, 1976
To : All Concern
From : Personnel Dept.
Ref. : Discontinuance of The Payment to Regular
Employees of The Regular Holidays Pay For
Regular Holidays.
This has reference to the payment of the subject benefit forming part of the
supplemental Collective Bargaining Agreement dated April 27, 1976.
This commitment to pay said benefit is being discontinued on account to the
proviso in the said memo of the General Manager dated April 27, 1976, taken in
relation to Section 2, Rule IV, Book Ill of the Implementing Rules, Policy
Instruction No. 9 and the decision of the Secretary of Labor in the Chartered Bank
Case dated September 7. 1976.
For your information and dissemination.
The Union objected to the discontinuance of the holiday pay and when an
amicable settlement could not be reached, the Union filed a complaint against
the Company for unfair labor practice and violation of the CBA regarding holiday
pay. In a decision dated March 24, 1977, Labor Arbiter Apolonio R. Reyes ordered
the Company to resume payment of the holiday p . pay effective October 25,
1976. On appeal by the Company to the National Labor Relations Commission,
the appeal was dismissed for lack of merit. Still not satisfied, the Company
appealed to the Minister of Labor who, on April 16, 1979, rendered a decision
with the following dispositive portion: "Wherefore, the Resolution appealed from
is hereby set aside, and a new judgment entered dismissing this case for lack of
merit."
We required the respondents to comment on the petition, which they did. Private
respondent, as expected, urges us to dismiss the petition. However, the Solicitor
General recommends that the petition be given due course. We did so on
November 12, 1979. Hence this decision.
We have to reverse the decision of the Minister of Labor.
The issue in this case is whether the Company may discontinue the holiday pay it
had agreed to give pursuant to its letter dated April 27, 1976, by invoking the last
paragraph thereof, namely: "Please be informed too that we shall continue to
extend the said benefits unless otherwise directed by other new requirements,
rules, laws, decrees, etc. on the subject." Stated in other words, is the
discontinuance of the of the benefit justified by Section 2, Rule IV, Book III of the
Rules and Regulation Implementing the Labor Code and Policy Instructions No. 9
of the Minister of Labor, as stated in the second paragraph of the Company's
memorandum dated October 25, 1976? These issuances are respectively as
follows:
Section 2. Status of employees paid by the month. Employees who are
uniformly paid by the month, irrespective of the number of working days therein,
with a salary of not less than the statutory or established minimum wages shall
be presumed to be paid for all days in the month whether worked or not.
For this purpose, the monthly minimum wage shall not be less than the statutory
minimum wage multiplied by 365 days divided by twelve. (Issued in February 16,
1976.)
Policy Instructions No. 9 The rules implementing PD 850 have clarified the
policy in the implementation of the ten (10) paid legal holidays. Before PD 850,
the number of working days a year in a firm was considered important in
determining entitlement to the benefit. Thus, where an employee was working
for at least 313 days, he was considered definitely already paid. If he was working
for less than 313, there was no certainty whether the ten (10) paid legal holidays
were already paid to him or not.
The ten (10) paid legal holidays law, to start with, is intended to benefit
principally daily employees. ln the case of monthly, only those whose monthly
salary did not yet include payment for the ten (10) paid legal holidays are entitled
to the benefit.
Under the rules implementing PD 850, this policy has been fully clarified to
eliminate controversies on the entitlement of monthly paid employees. The new
determining rule is this: If the monthly paid employee is receiving not less than
P240, the maximum monthly minimum wage, and his monthly pay is uniform
from January to December, he is presumed to be already paid the ten (10) paid
legal holidays. However, if deductions are made from his monthly salary on
account of holidays in months where they occur, then he is still entitled to the ten
(10) paid legal holidays.
These new interpretations must be uniformly and consistently upheld.
This issuance shall take effect immediately. (Issued on February 23, 1916.)
As stated by the Solicitor General, the questions above stated should be
answered in the negative for the following reasons:
1. Section 2, Rule IV, Book Ill of the Rules and Regulations Implementing the
Labor Code was promulgated on February 16, 1976. On the other hand, Policy
Instructions No. 9 was issued on February 23, 1976. Since the said rules and
policy instructions were already existing and effective prior to the execution of
the Supplementary Agreement on April 27, 1976, it is clear that respondent
company agreed to continue giving holiday pay to its monthly paid employees
knowing fully well that said employees are not covered by the law requiring
payment of holiday pay. When respondent company, therefore, interposed the
condition that it "shall continue to extend the said benefits unless otherwise
directed by other new requirements, rules, laws, decrees, etc. on the subject," it
was referring to laws, decrees, rules, etc. other than the abovecited issuances.
2. Even granting arguendo that the said issuance were promulgated after the
execution of the agreement, there is still no justification for withdrawal of holiday
pay benefits by respondent. company, in view of Section 11, Rule IV, Book III of
the Implementing Rules and Regulations, which explicitly provides:
Sec. 11. Relation to agreements. Nothing in this Rule shall justify an employer in
withdrawing or reducing any benefits, supplements or payments for unworked
holidays as provided it) existing individual or collective agreement or employer
practice or policy."
In the case of States Marine Corporation v. Cebu Seaman's Association (G.R. No.
L-12444, February 28, 1963; 7 SCRA 294), this Court, on the basis of a similar
provision in the Minimum Wage Law (R.A. No. 602), ruled that nothing in the Act
justified an employer in reducing the wage paid to any of his employees in excess
of the minimum wage established under the Act or in reducing supplements
furnished on the date of enactment.
Evidently, there is no legal basis for the withdrawal of holiday benefits by the
Company. Consequently, its violation of the Supplementary Agreement
constitutes unfair labor practice.
It shall be unfair labor practice for an employer to violate a collective bargaining
agreement (Art. 248, Labor Code)
WHEREFORE, the decision appealed from is hereby reversed and those of the
Labor Arbiter and NLRC are reinstated. No costs.
SO ORDERED.
G.R. No. L-50184 April 11, 1980
CITIBANK PHILS. EMPLOYEES UNION NATU, petitioner,
vs.
THE HONORABLE MINISTER OF LABOR and CITIBANK, N. A., respondents.
BARREDO, J.:
Petition for certiorari praying that the order of the respondent Minister of Labor
dated February 19, 1979 setting aside the resolution of National Labor Relations
Commission of December 19, 1977, which in turn dismiss private respondent
Citibank, N. A.'s appeal from the order dated December 13, 1976 of Executive
Labor Arbiter Guillermo C. Medina denying said respondent's motion to quash
the writ of execution issued against it in Case No. RB4-8-6332-75, entitled FNCB
Employees Union Natu vs. First National City Bank, by virtue of the award
made in said case by the mutually chosen lone voluntary Arbitrator Ruben F.
Santos of December 19, 1975.
The basic facts are stated in the order under review, which being quite brief may
be quoted in full as basis for further discussion:
Briefly, the undisputed facts are as follows: On 5 August 1975, petitioner filed the
instant case for payment of regular holiday pay pursuant to Article 208 (a) of the
Labor Code. Upon failure of concilation efforts to settle the case, the parties
agreed to submit their dispute to voluntary arbitration.
After hearing, the Voluntary Arbitrator rendered an Award, dated 15 December
1975, ordering respondent to pay the employees herein concerned, their holiday
pay on the basis of his finding that the monthly salary of said employees does not
include their pay for unworked holidays. The award was partially implemented by
the respondent when it paid to the employees concerned their accrued holiday
pay benefits covering the period November 1974 to December 1975.
However, when the promulgation of the Integrated Implementing Rules of the
Labor Code, pursuant to P. D. 850 on 16 February 1976 and the issuance by the
Secretary of Labor on 23 April 1976 of Policy Instructions No. 9, the respondent
stopped such payment. Hence, petitioner filed the subject motion for execution
to enforce the award of the Voluntary Arbitrator. As mentioned above, the
Executive Labor Arbiter, in his order dated 13 December 1976, ordered
respondent to continue paying the unworked regular holidays to its monthly paid
employees covered by the Award of the Voluntary Arbitrator, dated 15 December
1975. This was affirmed by the Commission and now before us on appeal.
IN VIEW OF THE FOREGOING, let the Resolution of the Commission dated
December 19, 1977 be, as it is hereby, set aside and a new judgment, granting
the Motion To Quash Execution, and this case dismissed, for lack of merit.
SO ORDERED. (Pp. 129-130, Record.)
For the sake of further clarity, the following important details alleged in the
petition and not denied by respondents may be added:
IV.
That in their letter of submission addressed to Atty. Ruben F. Santos, their
common choice for voluntary arbitrator, the parties spelled out the terms of their
arbitration agreement, as follows:
Pursuant to the pertinent provisions of the existing Collective Bargaining
Agreement between the First National City Bank and the First National City Bank
Employees Union and the provisions of Article 262 (subsequently re-numbered
263) of the Labor Code, as amended, the following question by the undersigned is
submitted to you for resolution as voluntary arbitrator:
Whether or not employees of the Bank are legally entitled to holiday pay
provided under Article 208 (now 94) of the Labor Code, considering their
contractual wage scale.
It is understood that the arbitrator may adopt such procedure, and call such
hearing, as he may consider to be convenient for the purpose of arriving at a just
decision. The costs of arbitration shall be borne equally by the Bank and the
Union.
V.
That the pertinent provisions of the parties' Collective Bargaining Agreement
referred to in said submission relate to Step 4 of Article XVI of the Agreement,
entitled 'Grievance', and reads as follows:
Should the grievance remain unsettled within the period stated in Step 3, the
matter shall be submitted to final and binding resolution by an arbitration
Committee consisting of three (3) members, mutually designated by the BANK
and the UNION and specifically named in Annex '2' whose tenure of office shall
be co-extensive with the life of this contract unless earlier terminated by mutual
agreement of the BANK and the UNION. (Emphasis supplied.)
as well as to paragraph (d) thereof, which state that:
The decision of the Arbitration Committee shall be in writing and shall be
concurred in and signed by at least two (2) members of the Arbitration
Committee. The decision of the Arbitration Committee sham befinal and binding
upon the BANK, the UNION, and the employee or employees concerned, and may
be enforced in any court of competent jurisdiction. (Emphasis supplied.)
VI
That, on the other hand, the pertinent provisions of Article 262 (now 263) of the
Labor Code referred to in the parties' submission are quoted as follows:
ART. 263. Voluntary arbitration All disputes, grievances and matters referred
to in the immediately preceding Article which are not settled through the
grievance procedure provided in the collective agreement shall be referred to
voluntary arbitration prescribed in said agreement.
x x x
Voluntary arbitration awards or decisions shall be final inappealable, and
executory. However, voluntary arbitration awards or decisions on money claims
involving an amount exceeding One Hundred Thousand Pesos (P100,000.00) or
forty per cent (40%) of the paid-up capital of the respondent employer,
whichever is lower, may be appealed to the Commission on grounds of abuse of
discretion or gross incompetence. (Pp. 3-5, Record.)
Thus, as stated in the order here at issue, the sole reason given by respondent
Minister of Labor for in effect refusing further implementation of the Arbitrator's
award was the subsequent promulgation by him of the Integrated Implementing
Rules of the Labor Code, pursuant to P. D. 850 which pertinently provides that:
Section 2. Status of employees paid by the month. Employees who are
uniformly paid by the month, irrespective of the number of working days therein,
with a salary of not less than the statutory or established minimum wage shall be
presumed to be paid for all days in the month whether worked or not.
(Section 2, Rule IV, Book Three of the Rules and Regulations Implementing the
Labor Code.
and the purported clarification thereof in Policy Instructions No. 9 of 23 February,
1976 (also his as follows:
If the monthly-paid employee is receiving not less than P240, the maximum
monthly minimum wage, and his monthly pay is uniform from January to
December, he is presumed to be already paid the ten (10) paid legal holidays.
(Emphasis supplied.) (Page 6, Record.)
In other words and briefly, the position of respondent Minister is that assuming
the final and executory character of the award in question, the same could still be
modified or set aside, as contended by the Solicitor General in his comment
dated August 6, 1979, in consequence or by reason of the supervening acts of
respondent Minister, citing, in support of such contention, the cases of Ocampo
vs. Sanchez, 97 Phil. 479 in which the Supreme Court ruled that "when after
judgment has been rendered and the latter has become final facts and
circumstances transpire which render its execution impossible or unjust, the
interested party may ask to modify or later judgment to harmonize the same with
justice and the facts (Molina vs. Dela Riva, 8 Phil. 569; Behn, Meyer & Co. vs.
McMicking, 1 Phil. 279; Warner Barners & Co. vs. Jaucian, 13 Phil. 4; Espiritu vs.
Cross-filed and Guash, 14 Phil. 588; Flor Unata vs. Lichauco and Salinas, 36 Phil.
809, emphasis supplied." (Pp. 134i35, Rec.)
After mature deliberation, We have arrived at the conclusion that the
respondent's position is not well taken. The situation before Us in the instant
case has no parity with those obtaining in the instances where this Court
sanctioned departure from the terms of a final and executory judgment by reason
of supervening events that would make literal execution in whole or in part of
such judgment unjust and inequitable. It should be clear to anyone conversant
with the elementary principles of collective bargaining and the constitutional
injunction assuring the rights of workers thereto (Sec. a, Article II, Constitution of
the Philippines) that the terms and conditions of a collective bargaining
agreement constitute the sacred law between the parties as long as they do not
contravene public order, interest or policy. We might say that the prohibition in
the Constitution's Bill of Rights against the passage or promulgation of any law
impairing the obligation of contracts applies with perhaps greater force to
collective bargaining agreements, considering that these deal with the rights and
interests of labor to which the charter explicitly affords protection. (Sec. 9, Article
II.)
The award of the arbitrator in this case is not to be equated with a judicial
decision. In effect, when in relation to a controversy as to working conditions,
which necessarily include the amount of wages, allowances, bonuses, overtime
pay, holiday pay, etc., the parties submit their differences to arbitration, they do
not seek any judicial pronouncement technically as such they are merely asking
the arbitrator to fix for them what would be the fair and just condition or term
regarding the matter in dispute that should govern further collective bargaining
relations between them. Stated differently, the arbitrator's award when
stipulated by the parties to be conclusive becomes part and parcel of the CBA.
Viewed in this sense, which We are fully convinced is most consistent with the
principles of collective bargaining, the subsequent or supervening facts referred
to by the Solicitor General consisting of acts of none other than the respondent
Minister may not be invoked to alter, modify, reform, much less abrogate, the
new terms, so to speak, of the collective bargaining inserted by virtue of the
award of the arbitrator. To do otherwise would violate the proscription of the
Constitution against impairment of the obligation of contracts.
Importantly, the argument that the implementation of the arbitrator's award
would contravene public policy (referring to the Policy Instructions of the
Minister of Labor) is unavailing, for the simple reason that for an employer to
agree either spontaneously or through arbitration to pay to this workers higher
compensation than that provided by law cannot obviously be against public policy
but, on the contrary, is a magnificent contribution to the attainment of the social
justice objectives envisioned in the Constitution.
With the foregoing view We have taken of the legal situation under controversy,
We find no need to dwell on any of the other issues discussed by the parties,
whether factual or legal, regarding the manner of computing and determining
whether or not a given monthly wage includes unworked holidays. We hold that
regardless of any law anterior or posterior to the Arbitrator's award, the
collective bargaining agreement in this case has been correspondingly amended
in a manner that is unalterable, immovable and immutable like the rock of
Gibraltar, during the lifetime of the said collective bargaining agreement.
WHEREFORE, the order of the respondent Minister of Labor of February 19, 1979
is hereby set aside and the resolution of the National Labor Regulations
Commission of December 19, 1977 is affirmed, with costs against the private
respondent.
G.R. No. L-44717 August 28, 1985
THE CHARTERED BANK EMPLOYEES ASSOCIATION, petitioner,
vs.
HON. BLAS F. OPLE, in his capacity as the Incumbent Secretary of Labor, and THE
CHARTERED BANK,respondents.
GUTIERREZ, JR., J.:
This is a petition for certiorari seeking to annul the decision of the respondent
Secretary, now Minister of Labor which denied the petitioner's claim for holiday
pay and its claim for premium and overtime pay differentials. The petitioner
claims that the respondent Minister of Labor acted contrary to law and
jurisprudence and with grave abuse of discretion in promulgating Sec. 2, Rule IV,
Book III of the Integrated Rules and in issuing Policy Instruction No. 9, both
referring to holidays with pay.
On May 20, 1975, the Chartered Bank Employees Association, in representation
of its monthly paid employees/members, instituted a complaint with the Regional
Office No. IV, Department of Labor, now Ministry of Labor and Employment
(MOLE) against private respondent Chartered Bank, for the payment of ten (10)
unworked legal holidays, as well as for premium and overtime differentials for
worked legal holidays from November 1, 1974.
The memorandum for the respondents summarizes the admitted and/or
undisputed facts as follows:
l. The work force of respondent bank consists of 149 regular employees, all of
whom are paid by the month;
2. Under their existing collective bargaining agreement, (Art. VII thereof) said
monthly paid employees are paid for overtime work as follows:
Section l. The basic work week for all employees excepting security guards who
by virtue of the nature of their work are required to be at their posts for 365 days
per year, shall be forty (40) hours based on five (5) eight (8) hours days, Monday
to Friday.
Section 2. Time and a quarter hourly rate shall be paid for authorized work
performed in excess of eight (8) hours from Monday through Friday and for any
hour of work performed on Saturdays subject to Section 5 hereof.
Section 3. Time and a half hourly rate shall be paid for authorized work
performed on Sundays, legal and special holidays.
xxx xxx xxx
xxx xxx xxx
Section 5. The provisions of Section I above notwithstanding the BANK may revert
to the six (6) days work week, to include Saturday for a four (4) hour day, in the
event the Central Bank should require commercial banks to open for business on
Saturday.
3. In computing overtime pay and premium pay for work done during regular
holidays, the divisor used in arriving at the daily rate of pay is 251 days although
formerly the divisor used was 303 days and this was when the respondent bank
was still operating on a 6-day work week basis. However, for purposes of
computing deductions corresponding to absences without pay the divisor used is
365 days.
4. All regular monthly paid employees of respondent bank are receiving salaries
way beyond the statutory or minimum rates and are among the highest paid
employees in the banking industry.
5. The salaries of respondent bank's monthly paid employees suffer no deduction
for holidays occurring within the month.
On the bases of the foregoing facts, both the arbitrator and the National Labor
Relations Commission (NLRC) ruled in favor of the petitioners ordering the
respondent bank to pay its monthly paid employees, holiday pay for the ten (10)
legal holidays effective November 1, 1974 and to pay premium or overtime pay
differentials to all employees who rendered work during said legal holidays. On
appeal, the Minister of Labor set aside the decision of the NLRC and dismissed
the petitioner's claim for lack of merit basing its decision on Section 2, Rule IV,
Book Ill of the Integrated Rules and Policy Instruction No. 9, which respectively
provide:
Sec. 2. Status of employees paid by the month. Employees who are uniformly
paid by the month, irrespective of the number of working days therein, with a
salary of not less than the statutory or established minimum wage shall be
presumed to be paid for all days in the month whether worked or not.
POLICY INSTRUCTION NO. 9
TO: All Regional Directors
SUBJECT: PAID LEGAL HOLIDAYS
The rules implementing PD 850 have clarified the policy in the implementation of
the ten (10) paid legal holidays. Before PD 850, the number of working days a
year in a firm was considered important in determining entitlement to the
benefit. Thus, where an employee was working for at least 313 days, he was
considered definitely already paid. If he was working for less than 313, there was
no certainty whether the ten (10) paid legal holidays were already paid to him or
not.
The ten (10) paid legal holidays law, to start with, is intended to benefit
principally daily employees. In the case of monthly, only those whose monthly
salary did not yet include payment for the ten (10) paid legal holidays are entitled
to the benefit.
Under the rules implementing PD 850, this policy has been fully clarified to
eliminate controversies on the entitlement of monthly paid employees. The new
determining rule is this: 'If the monthly paid employee is receiving not less than
P240, the maximum monthly minimum wage, and his monthly pay is uniform
from January to December, he is presumed to be already paid the ten (10) paid
legal holidays. However, if deductions are made from his monthly salary on
account of holidays in months where they occur, then he is still entitled to the ten
(10) paid legal holidays.
These new interpretations must be uniformly and consistently upheld.
This issuance shall take effect immediately.
The issues are presented in the form of the following assignments of errors:
First Error
Whether or not the Secretary of Labor erred and acted contrary to law in
promulgating Sec. 2, Rule IV, Book III of the Integrated Rules and Policy
Instruction No. 9.
Second Error
Whether or not the respondent Secretary of Labor abused his discretion and
acted contrary to law in applying Sec. 2, Rule IV of the Integrated Rules and Policy
Instruction No. 9 abovestated to private respondent's monthly-paid employees.
Third Error
Whether or not the respondent Secretary of Labor, in not giving due credence to
the respondent bank's practice of paying its employees base pay of 100% and
premium pay of 50% for work done during legal holidays, acted contrary to law
and abused his discretion in denying the claim of petitioners for unworked
holidays and premium and overtime pay differentials for worked holidays.
The petitioner contends that the respondent Minister of Labor gravely abused his
discretion in promulgating Section 2, Rule IV, Book III of the Integrated Rules and
Policy Instruction No. 9 as guidelines for the implementation of Articles 82 and 94
of the Labor Code and in applying said guidelines to this case. It maintains that
while it is true that the respondent Minister has the authority in the performance
of his duty to promulgate rules and regulations to implement, construe and
clarify the Labor Code, such power is limited by provisions of the statute sought
to be implemented, construed or clarified. According to the petitioner, the so-
called "guidelines" promulgated by the respondent Minister totally contravened
and violated the Code by excluding the employees/members of the petitioner
from the benefits of the holiday pay, when the Code itself did not provide for
their expanding the Code's clear and concise conclusion and notwithstanding the
Code's clear and concise phraseology defining those employees who are covered
and those who are excluded from the benefits of holiday pay.
On the other hand, the private respondent contends that the questioned
guidelines did not deprive the petitioner's members of the benefits of holiday pay
but merely classified those monthly paid employees whose monthly salary
already includes holiday pay and those whose do not, and that the guidelines did
not deprive the employees of holiday pay. It states that the question to be
clarified is whether or not the monthly salaries of the petitioner's members
already includes holiday pay. Thus, the guidelines were promulgated to avoid
confusion or misconstruction in the application of Articles 82 and 94 of the Labor
Code but not to violate them. Respondent explains that the rationale behind the
promulgation of the questioned guidelines is to benefit the daily paid workers
who, unlike monthly-paid employees, suffer deductions in their salaries for not
working on holidays. Hence, the Holiday Pay Law was enacted precisely to
countervail the disparity between daily paid workers and monthly-paid
employees.
The decision in Insular Bank of Asia and America Employees' Union (IBAAEU) v.
Inciong (132 SCRA 663) resolved a similar issue. Significantly, the petitioner in
that case was also a union of bank employees. We ruled that Section 2, Rule IV,
Book III of the Integrated Rules and Policy Instruction No. 9, are contrary to the
provisions of the Labor Code and, therefore, invalid This Court stated:
It is elementary in the rules of statutory construction that when the language of
the law is clear and unequivocal the law must be taken to mean exactly what it
says. In the case at bar, the provisions of the Labor Code on the entitlement to
the benefits of holiday pay are clear and explicit it provides for both the coverage
of and exclusion from the benefit. In Policy Instruction No. 9, the then Secretary
of Labor went as far as to categorically state that the benefit is principally
intended for daily paid employees, when the law clearly states that every worker
shall be paid their regular holiday pay. This is flagrant violation of the mandatory
directive of Article 4 of the Labor Code, which states that 'All doubts in the
implementation and interpretation of the provisions of this Code, including its
implementing rules and regulations, shall be resolved in favor of labor.'
Moreover, it shall always be presumed that the legislature intended to enact a
valid and permanent statute which would have the most beneficial effect that its
language permits (Orlosky v. Hasken, 155 A. 112)
Obviously, the Secretary (Minister) of Labor had exceeded his statutory authority
granted by Article 5 of the Labor Code authorizing him to promulgate the
necessary implementing rules and regulations.
We further ruled:
While it is true that the contemporaneous construction placed upon a statute by
executive officers whose duty is to enforce it should be given great weight by the
courts, still if such construction is so erroneous, as in the instant case, the same
must be declared as null and void. It is the role of the Judiciary to refine and,
when necessary correct constitutional (and/or statutory) interpretation, in the
context of the interactions of the three branches of the government, almost
always in situations where some agency of the State has engaged in action that
stems ultimately from some legitimate area of governmental power (The
Supreme Court in Modern Role, C.B. Swisher 1958, p. 36).
xxx xxx xxx
In view of the foregoing, Section 2, Rule IV, Book III of the Rules to implement the
Labor Code and Policy Instruction No. 9 issued by the then Secretary of Labor
must be declared null and void. Accordinglyl public respondent Deputy Minister
of Labor Amado G. Inciong had no basis at all to deny the members of petitioner
union their regular holiday pay as directed by the Labor Code.
Since the private respondent premises its action on the invalidated rule and
policy instruction, it is clear that the employees belonging to the petitioner
association are entitled to the payment of ten (10) legal holidays under Articles
82 and 94 of the Labor Code, aside from their monthly salary. They are not
among those excluded by law from the benefits of such holiday pay.
Presidential Decree No. 850 states who are excluded from the holiday provisions
of that law. It states:
ART. 82. Coverage. The provision of this Title shall apply to employees in all
establishments and undertakings, whether for profit or not, but not to
government employees, managerial employees, field personnel members of the
family of the employer who are dependent on him for support, domestic helpers,
persons in the personal service of another, and workers who are paid by results as
determined by the Secretary of Labor in appropriate regulations. (Emphasis
supplied).
The questioned Section 2, Rule IV, Book III of the Integrated Rules and the
Secretary's Policy Instruction No. 9 add another excluded group, namely,
"employees who are uniformly paid by the month." While the additional
exclusion is only in the form of a presumption that all monthly paid employees
have already been paid holiday pay, it constitutes a taking away or a deprivation
which must be in the law if it is to be valid. An administrative interpretation
which diminishes the benefits of labor more than what the statute delimits or
withholds is obviously ultra vires.
It is argued that even without the presumption found in the rules and in the
policy instruction, the company practice indicates that the monthly salaries of the
employees are so computed as to include the holiday pay provided by law. The
petitioner contends otherwise.
One strong argument in favor of the petitioner's stand is the fact that the
Chartered Bank, in computing overtime compensation for its employees, employs
a "divisor" of 251 days. The 251 working days divisor is the result of subtracting
all Saturdays, Sundays and the ten (10) legal holidays from the total number of
calendar days in a year. If the employees are already paid for all non-working
days, the divisor should be 365 and not 251.
The situation is muddled somewhat by the fact that, in computing the employees'
absences from work, the respondent bank uses 365 as divisor. Any slight doubts,
however, must be resolved in favor of the workers. This is in keeping with the
constitutional mandate of promoting social justice and affording protection to
labor (Sections 6 and 9, Article II, Constitution). The Labor Code, as amended,
itself provides:
ART. 4. Construction in favor of labor. All doubts in the implementation and
interpretation of the provisions of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor.
Any remaining doubts which may arise from the conflicting or different divisors
used in the computation of overtime pay and employees' absences are resolved
by the manner in which work actually rendered on holidays is paid. Thus,
whenever monthly paid employees work on a holiday, they are given an
additional 100% base pay on top of a premium pay of 50%. If the employees'
monthly pay already includes their salaries for holidays, they should be paid only
premium pay but not both base pay and premium pay.
The contention of the respondent that 100% base pay and 50% premium pay for
work actually rendered on holidays is given in addition to monthly salaries only
because the collective bargaining agreement so provides is itself an argument in
favor of the petitioner stand. It shows that the Collective Bargaining Agreement
already contemplated a divisor of 251 days for holiday pay computations before
the questioned presumption in the Integrated Rules and the Policy Instruction
was formulated. There is furthermore a similarity between overtime pay, which is
computed on the basis of 251 working days a year, and holiday pay, which should
be similarly treated notwithstanding the public respondents' issuances. In both
cases overtime work and holiday work- the employee works when he is supposed
to be resting. In the absence of an express provision of the CBA or the law to the
contrary, the computation should be similarly handled.
We are not unmindful of the fact that the respondent's employees are among the
highest paid in the industry. It is not the intent of this Court to impose any undue
burdens on an employer which is already doing its best for its personnel. we have
to resolve the labor dispute in the light of the parties' own collective bargaining
agreement and the benefits given by law to all workers. When the law provides
benefits for "employees in all establishments and undertakings, whether for
profit or not" and lists specifically the employees not entitled to those benefits,
the administrative agency implementing that law cannot exclude certain
employees from its coverage simply because they are paid by the month or
because they are already highly paid. The remedy lies in a clear redrafting of the
collective bargaining agreement with a statement that monthly pay already
includes holiday pay or an amendment of the law to that effect but not an
administrative rule or a policy instruction.
WHEREFORE, the September 7, 1976 order of the public respondent is hereby
REVERSED and SET ASIDE. The March 24, 1976 decision of the National Labor
Relations Commission which affirmed the October 30, 1975 resolution of the
Labor Arbiter but deleted interest payments is REINSTATED.
SO ORDERED.























FIELD PERSONNEL

UNION of FILIPRO vs VIVAR (see under monthly paid employees)
G.R. No. 162813 February 12, 2007
FAR EAST AGRICULTURAL SUPPLY, INC. and/or ALEXANDER UY, Petitioners,
vs.
JIMMY LEBATIQUE and THE HONORABLE COURT OF APPEALS, Respondents.
D E C I S I O N
QUISUMBING, J.:
Before us is a petition for review on certiorari assailing the Decision
1
dated
September 30, 2003 of the Court of Appeals in CA-G.R. SP No. 76196 and its
Resolution
2
dated March 15, 2004 denying the motion for reconsideration. The
appellate court had reversed the Decision
3
dated October 15, 2002 of the
National Labor Relations Commission (NLRC) setting aside the Decision
4
dated
June 27, 2001 of the Labor Arbiter.
Petitioner Far East Agricultural Supply, Inc. (Far East) hired on March 4, 1996
private respondent Jimmy Lebatique as truck driver with a daily wage of P223.50.
He delivered animal feeds to the companys clients.
On January 24, 2000, Lebatique complained of nonpayment of overtime work
particularly on January 22, 2000, when he was required to make a second
delivery in Novaliches, Quezon City. That same day, Manuel Uy, brother of Far
Easts General Manager and petitioner Alexander Uy, suspended Lebatique
apparently for illegal use of company vehicle. Even so, Lebatique reported for
work the next day but he was prohibited from entering the company premises.
On January 26, 2000, Lebatique sought the assistance of the Department of Labor
and Employment (DOLE) Public Assistance and Complaints Unit concerning the
nonpayment of his overtime pay. According to Lebatique, two days later, he
received a telegram from petitioners requiring him to report for work. When he
did the next day, January 29, 2000, Alexander asked him why he was claiming
overtime pay. Lebatique explained that he had never been paid for overtime
work since he started working for the company. He also told Alexander that
Manuel had fired him. After talking to Manuel, Alexander terminated Lebatique
and told him to look for another job.
On March 20, 2000, Lebatique filed a complaint for illegal dismissal and
nonpayment of overtime pay. The Labor Arbiter found that Lebatique was
illegally dismissed, and ordered his reinstatement and the payment of his full
back wages, 13th month pay, service incentive leave pay, and overtime pay. The
dispositive portion of the decision is quoted herein in full, as follows:
WHEREFORE, we find the termination of complainant illegal. He should thus be
ordered reinstated with full backwages. He is likewise ordered paid his 13th
month pay, service incentive leave pay and overtime pay as computed by the
Computation and Examination Unit as follows:
a) Backwages:
01/25/00 - 10/31/00 = 9.23 mos.
P 223.50 x 26 x 9.23 = P 53,635.53
11/01/00 06/26/01 = 7.86 mos.
P 250.00 x 26 x 7.86 = 51,090.00 P 104,725.53
13th Month Pay: 1/12 of P 104,725.53 = 8,727.13
Service Incentive Leave Pay
01/25/00 10/31/00 = 9.23 mos.
P 223.50 x 5/12 x 9.23 = P 859.54
11/01/00 06/26/01 = 7.86 mos.
P 250.00 x 5/12 x 7.86 = [818.75] 1,678.29 115,130.95
b) Overtime Pay: (3 hours/day)
03/20/97 4/30/97 = 1.36 mos.
P 180/8 x 1.25 x 3 x 26 x 1.36 = P 2,983.50
05/01/97 02/05/98 = 9.16 mos.
P 185/8 x 1.25 x 3 x 26 x 9.16 = 20,652.94
02/06/98 10/30/99 = 20.83 mos.
P 198/8 x 1.25 x 3 x 26 x [20.83] = 50,265.39
10/31/99 01/24/00 = 2.80 mos.
P 223.50/8 x 1.25 x 3 x 26 x 2.80 = 7,626.94 81,528.77
TOTAL AWARD P 196,659.72
SO ORDERED.
5

On appeal, the NLRC reversed the Labor Arbiter and dismissed the complaint for
lack of merit. The NLRC held that there was no dismissal to speak of since
Lebatique was merely suspended. Further, it found that Lebatique was a field
personnel, hence, not entitled to overtime pay and service incentive leave pay.
Lebatique sought reconsideration but was denied.
Aggrieved, Lebatique filed a petition for certiorari with the Court of
Appeals.1awphi1.net
The Court of Appeals, in reversing the NLRC decision, reasoned that Lebatique
was suspended on January 24, 2000 but was illegally dismissed on January 29,
2000 when Alexander told him to look for another job. It also found that
Lebatique was not a field personnel and therefore entitled to payment of
overtime pay, service incentive leave pay, and 13th month pay.
It reinstated the decision of the Labor Arbiter as follows:
WHEREFORE, premises considered, the decision of the NLRC dated 27 December
2002 is hereby REVERSEDand the Labor Arbiters decision dated 27 June
2001 REINSTATED.
SO ORDERED.
6

Petitioners moved for reconsideration but it was denied.
Hence, the instant petition wherein petitioners assign the following errors:
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE NATIONAL
LABOR RELATIONS COMMISSION DATED 15 OCTOBER 2002 AND IN RULING THAT
THE PRIVATE RESPONDENT WAS ILLEGALLY DISMISSED.
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE NATIONAL
LABOR RELATIONS COMMISSION DATED 15 OCTOBER 2002 AND IN RULING THAT
PRIVATE RESPONDENT IS NOT A FIELD PERSONNEL AND THER[E]FORE ENTITLED
TO OVERTIME PAY AND SERVICE INCENTIVE LEAVE PAY.
THE COURT OF APPEALS ERRED IN NOT DISMISSING THE PETITION FOR
CERTIORARI FOR FAILURE OF PRIVATE RESPONDENT TO ATTACH CERTIFIED TRUE
COPIES OF THE QUESTIONED DECISION AND RESOLUTION OF THE PUBLIC
RESPONDENT.
7

Simply stated, the principal issues in this case are: (1) whether Lebatique was
illegally dismissed; and (2) whether Lebatique was a field personnel, not entitled
to overtime pay.
Petitioners contend that, (1) Lebatique was not dismissed from service but
merely suspended for a day due to violation of company rules; (2) Lebatique was
not barred from entering the company premises since he never reported back to
work; and (3) Lebatique is estopped from claiming that he was illegally dismissed
since his complaint before the DOLE was only on the nonpayment of his overtime
pay.
Also, petitioners maintain that Lebatique, as a driver, is not entitled to overtime
pay since he is a field personnel whose time outside the company premises
cannot be determined with reasonable certainty. According to petitioners, the
drivers do not observe regular working hours unlike the other office employees.
The drivers may report early in the morning to make their deliveries or in the
afternoon, depending on the production of animal feeds and the traffic
conditions. Petitioners also aver that Lebatique worked for less than eight hours a
day.
8

Lebatique for his part insists that he was illegally dismissed and was not merely
suspended. He argues that he neither refused to work nor abandoned his job. He
further contends that abandonment of work is inconsistent with the filing of a
complaint for illegal dismissal. He also claims that he is not a field personnel,
thus, he is entitled to overtime pay and service incentive leave pay.
After consideration of the submission of the parties, we find that the petition
lacks merit. We are in agreement with the decision of the Court of Appeals
sustaining that of the Labor Arbiter.
It is well settled that in cases of illegal dismissal, the burden is on the employer to
prove that the termination was for a valid cause.
9
In this case, petitioners failed to
discharge such burden. Petitioners aver that Lebatique was merely suspended for
one day but he abandoned his work thereafter. To constitute abandonment as a
just cause for dismissal, there must be: (a) absence without justifiable reason;
and (b) a clear intention, as manifested by some overt act, to sever the employer-
employee relationship.
10

The records show that petitioners failed to prove that Lebatique abandoned his
job. Nor was there a showing of a clear intention on the part of Lebatique to
sever the employer-employee relationship. When Lebatique was verbally told by
Alexander Uy, the companys General Manager, to look for another job,
Lebatique was in effect dismissed. Even assuming earlier he was merely
suspended for illegal use of company vehicle, the records do not show that he
was afforded the opportunity to explain his side. It is clear also from the
sequence of the events leading to Lebatiques dismissal that it was Lebatiques
complaint for nonpayment of his overtime pay that provoked the management to
dismiss him, on the erroneous premise that a truck driver is a field personnel not
entitled to overtime pay.
An employee who takes steps to protest his layoff cannot by any stretch of
imagination be said to have abandoned his work and the filing of the complaint is
proof enough of his desire to return to work, thus negating any suggestion of
abandonment.
11
A contrary notion would not only be illogical but also absurd.
It is immaterial that Lebatique had filed a complaint for nonpayment of overtime
pay the day he was suspended by managements unilateral act. What matters is
that he filed the complaint for illegal dismissal on March 20, 2000, after he was
told not to report for work, and his filing was well within the prescriptive period
allowed under the law.
On the second issue, Article 82 of the Labor Code is decisive on the question of
who are referred to by the term "field personnel." It provides, as follows:
ART. 82. Coverage. - The provisions of this title [Working Conditions and Rest
Periods] shall apply to employees in all establishments and undertakings whether
for profit or not, but not to government employees, managerial employees, field
personnel, members of the family of the employer who are dependent on him for
support, domestic helpers, persons in the personal service of another, and
workers who are paid by results as determined by the Secretary of Labor in
appropriate regulations.
x x x x
"Field personnel" shall refer to non-agricultural employees who regularly perform
their duties away from the principal place of business or branch office of the
employer and whose actual hours of work in the field cannot be determined with
reasonable certainty.
In Auto Bus Transport Systems, Inc. v. Bautista,
12
this Court emphasized that the
definition of a "field personnel" is not merely concerned with the location where
the employee regularly performs his duties but also with the fact that the
employees performance is unsupervised by the employer. We held that field
personnel are those who regularly perform their duties away from the principal
place of business of the employer and whose actual hours of work in the field
cannot be determined with reasonable certainty. Thus, in order to determine
whether an employee is a field employee, it is also necessary to ascertain if actual
hours of work in the field can be determined with reasonable certainty by the
employer. In so doing, an inquiry must be made as to whether or not the
employees time and performance are constantly supervised by the employer.
13

As correctly found by the Court of Appeals, Lebatique is not a field personnel as
defined above for the following reasons: (1) company drivers, including
Lebatique, are directed to deliver the goods at a specified time and place; (2) they
are not given the discretion to solicit, select and contact prospective clients; and
(3) Far East issued a directive that company drivers should stay at the clients
premises during truck-ban hours which is from 5:00 to 9:00 a.m. and 5:00 to 9:00
p.m.
14
Even petitioners admit that the drivers can report early in the morning, to
make their deliveries, or in the afternoon, depending on the production of animal
feeds.
15
Drivers, like Lebatique, are under the control and supervision of
management officers. Lebatique, therefore, is a regular employee whose tasks
are usually necessary and desirable to the usual trade and business of the
company. Thus, he is entitled to the benefits accorded to regular employees of
Far East, including overtime pay and service incentive leave pay.
Note that all money claims arising from an employer-employee relationship shall
be filed within three years from the time the cause of action accrued; otherwise,
they shall be forever barred.
16
Further, if it is established that the benefits being
claimed have been withheld from the employee for a period longer than three
years, the amount pertaining to the period beyond the three-year prescriptive
period is therefore barred by prescription. The amount that can only be
demanded by the aggrieved employee shall be limited to the amount of the
benefits withheld within three years before the filing of the complaint.
17

Lebatique timely filed his claim for service incentive leave pay, considering that in
this situation, the prescriptive period commences at the time he was
terminated.
18
On the other hand, his claim regarding nonpayment of overtime
pay since he was hired in March 1996 is a different matter. In the case of
overtime pay, he can only demand for the overtime pay withheld for the period
within three years preceding the filing of the complaint on March 20, 2000.
However, we find insufficient the selected time records presented by petitioners
to compute properly his overtime pay. The Labor Arbiter should have required
petitioners to present the daily time records, payroll, or other documents in
managements control to determine the correct overtime pay due Lebatique.
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated
September 30, 2003 of the Court of Appeals in CA-G.R. SP No. 76196 and
its Resolution dated March 15, 2004 are AFFIRMED with MODIFICATIONto the
effect that the case is hereby REMANDED to the Labor Arbiter for further
proceedings to determine the exact amount of overtime pay and other monetary
benefits due Jimmy Lebatique which herein petitioners should pay without
further delay.
Costs against petitioners.
SO ORDERED.
































PRIVATE SCHOOL TEACHERS

G.R. No. L-65482 December 1, 1987
JOSE RIZAL COLLEGE, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND NATIONAL ALLIANCE OF
TEACHERS/OFFICE WORKERS, respondents.

PARAS, J.:
This is a petition for certiorari with prayer for the issuance of a writ of preliminary
injunction, seeking the annulment of the decision of the National Labor Relations
Commission * in NLRC Case No. RB-IV 23037-78 (Case No. R4-1-1081-71) entitled
"National Alliance of Teachers and Office Workers and Juan E. Estacio, Jaime
Medina, et al. vs. Jose Rizal College" modifying the decision of the Labor Arbiter
as follows:
WHEREFORE, in view of the foregoing considerations, the decision appealed from
is MODIFIED, in the sense that teaching personnel paid by the hour are hereby
declared to be entitled to holiday pay.
SO ORDERED.
The factual background of this case which is undisputed is as follows:
Petitioner is a non-stock, non-profit educational institution duly organized and
existing under the laws of the Philippines. It has three groups of employees
categorized as follows: (a) personnel on monthly basis, who receive their monthly
salary uniformly throughout the year, irrespective of the actual number of
working days in a month without deduction for holidays; (b) personnel on daily
basis who are paid on actual days worked and they receive unworked holiday pay
and (c) collegiate faculty who are paid on the basis of student contract hour.
Before the start of the semester they sign contracts with the college undertaking
to meet their classes as per schedule.
Unable to receive their corresponding holiday pay, as claimed, from 1975 to
1977, private respondent National Alliance of Teachers and Office Workers
(NATOW) in behalf of the faculty and personnel of Jose Rizal College filed with the
Ministry of Labor a complaint against the college for said alleged non-payment of
holiday pay, docketed as Case No. R04-10-81-72. Due to the failure of the parties
to settle their differences on conciliation, the case was certified for compulsory
arbitration where it was docketed as RB-IV-23037-78 (Rollo, pp. 155-156).
After the parties had submitted their respective position papers, the Labor
Arbiter ** rendered a decision on February 5, 1979, the dispositive portion of
which reads:
WHEREFORE, judgment is hereby rendered as follows:
1. The faculty and personnel of the respondent Jose Rizal College who are paid
their salary by the month uniformly in a school year, irrespective of the number
of working days in a month, without deduction for holidays, are presumed to be
already paid the 10 paid legal holidays and are no longer entitled to separate
payment for the said regular holidays;
2. The personnel of the respondent Jose Rizal College who are paid their wages
daily are entitled to be paid the 10 unworked regular holidays according to the
pertinent provisions of the Rules and Regulations Implementing the Labor Code;
3. Collegiate faculty of the respondent Jose Rizal College who by contract are paid
compensation per student contract hour are not entitled to unworked regular
holiday pay considering that these regular holidays have been excluded in the
programming of the student contact hours. (Rollo. pp. 26-27)
On appeal, respondent National Labor Relations Commission in a decision
promulgated on June 2, 1982, modified the decision appealed from, in the sense
that teaching personnel paid by the hour are declared to be entitled to holiday
pay (Rollo. p. 33).
Hence, this petition.
The sole issue in this case is whether or not the school faculty who according to
their contracts are paid per lecture hour are entitled to unworked holiday pay.
Labor Arbiter Julio Andres, Jr. found that faculty and personnel employed by
petitioner who are paid their salaries monthly, are uniformly paid throughout the
school year regardless of working days, hence their holiday pay are included
therein while the daily paid employees are renumerated for work performed
during holidays per affidavit of petitioner's treasurer (Rollo, pp. 72-73).
There appears to be no problem therefore as to the first two classes or categories
of petitioner's workers.
The problem, however, lies with its faculty members, who are paid on an hourly
basis, for while the Labor Arbiter sustains the view that said instructors and
professors are not entitled to holiday pay, his decision was modified by the
National Labor Relations Commission holding the contrary. Otherwise stated, on
appeal the NLRC ruled that teaching personnel paid by the hour are declared to
be entitled to holiday pay.
Petitioner maintains the position among others, that it is not covered by Book V
of the Labor Code on Labor Relations considering that it is a non- profit institution
and that its hourly paid faculty members are paid on a "contract" basis because
they are required to hold classes for a particular number of hours. In the
programming of these student contract hours, legal holidays are excluded and
labelled in the schedule as "no class day. " On the other hand, if a regular week
day is declared a holiday, the school calendar is extended to compensate for that
day. Thus petitioner argues that the advent of any of the legal holidays within the
semester will not affect the faculty's salary because this day is not included in
their schedule while the calendar is extended to compensate for special holidays.
Thus the programmed number of lecture hours is not diminished (Rollo, pp. 157-
158).
The Solicitor General on the other hand, argues that under Article 94 of the Labor
Code (P.D. No. 442 as amended), holiday pay applies to all employees except
those in retail and service establishments. To deprive therefore employees paid
at an hourly rate of unworked holiday pay is contrary to the policy considerations
underlying such presidential enactment, and its precursor, the Blue Sunday Law
(Republic Act No. 946) apart from the constitutional mandate to grant greater
rights to labor (Constitution, Article II, Section 9). (Reno, pp. 76-77).
In addition, respondent National Labor Relations Commission in its decision
promulgated on June 2, 1982, ruled that the purpose of a holiday pay is obvious;
that is to prevent diminution of the monthly income of the workers on account of
work interruptions. In other words, although the worker is forced to take a rest,
he earns what he should earn. That is his holiday pay. It is no excuse therefore
that the school calendar is extended whenever holidays occur, because such
happens only in cases of special holidays (Rollo, p. 32).
Subject holiday pay is provided for in the Labor Code (Presidential Decree No.
442, as amended), which reads:
Art. 94. Right to holiday pay (a) Every worker shall be paid his regular daily
wage during regular holidays, except in retail and service establishments regularly
employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such
employee shall be paid a compensation equivalent to twice his regular rate; ... "
and in the Implementing Rules and Regulations, Rule IV, Book III, which reads:
SEC. 8. Holiday pay of certain employees. (a) Private school teachers, including
faculty members of colleges and universities, may not be paid for the regular
holidays during semestral vacations. They shall, however, be paid for the regular
holidays during Christmas vacations. ...
Under the foregoing provisions, apparently, the petitioner, although a non-profit
institution is under obligation to give pay even on unworked regular holidays to
hourly paid faculty members subject to the terms and conditions provided for
therein.
We believe that the aforementioned implementing rule is not justified by the
provisions of the law which after all is silent with respect to faculty members paid
by the hour who because of their teaching contracts are obliged to work and
consent to be paid only for work actually done (except when an emergency or a
fortuitous event or a national need calls for the declaration of special
holidays). Regular holidays specified as such by law are known to both school and
faculty members as no class days;" certainly the latter do not expect payment for
said unworked days, and this was clearly in their minds when they entered into
the teaching contracts.
On the other hand, both the law and the Implementing Rules governing holiday
pay are silent as to payment on Special Public Holidays.
It is readily apparent that the declared purpose of the holiday pay which is the
prevention of diminution of the monthly income of the employees on account of
work interruptions is defeated when a regular class day is cancelled on account of
a special public holiday and class hours are held on another working day to make
up for time lost in the school calendar. Otherwise stated, the faculty member,
although forced to take a rest, does not earn what he should earn on that day. Be
it noted that when a special public holiday is declared, the faculty member paid
by the hour is deprived of expected income, and it does not matter that the
school calendar is extended in view of the days or hours lost, for their income
that could be earned from other sources is lost during the extended days.
Similarly, when classes are called off or shortened on account of typhoons,
floods, rallies, and the like, these faculty members must likewise be paid, whether
or not extensions are ordered.
Petitioner alleges that it was deprived of due process as it was not notified of the
appeal made to the NLRC against the decision of the labor arbiter.
The Court has already set forth what is now known as the "cardinal primary"
requirements of due process in administrative proceedings, to wit: "(1) the right
to a hearing which includes the right to present one's case and submit evidence in
support thereof; (2) the tribunal must consider the evidence presented; (3) the
decision must have something to support itself; (4) the evidence must be
substantial, and substantial evidence means such evidence as a reasonable mind
might accept as adequate to support a conclusion; (5) the decision must be based
on the evidence presented at the hearing, or at least contained in the record and
disclosed to the parties affected; (6) the tribunal or body of any of its judges must
act on its or his own independent consideration of the law and facts of the
controversy, and not simply accept the views of a subordinate; (7) the board or
body should in all controversial questions, render its decisions in such manner
that the parties to the proceeding can know the various issues involved, and the
reason for the decision rendered. " (Doruelo vs. Commission on Elections, 133
SCRA 382 [1984]).
The records show petitioner JRC was amply heard and represented in the instant
proceedings. It submitted its position paper before the Labor Arbiter and the
NLRC and even filed a motion for reconsideration of the decision of the latter, as
well as an "Urgent Motion for Hearing En Banc" (Rollo, p. 175). Thus, petitioner's
claim of lack of due process is unfounded.
PREMISES CONSIDERED, the decision of respondent National Labor Relations
Commission is hereby set aside, and a new one is hereby RENDERED:
(a) exempting petitioner from paying hourly paid faculty members their pay for
regular holidays, whether the same be during the regular semesters of the school
year or during semestral, Christmas, or Holy Week vacations;
(b) but ordering petitioner to pay said faculty members their regular hourly rate
on days declared as special holidays or for some reason classes are called off or
shortened for the hours they are supposed to have taught, whether extensions of
class days be ordered or not; in case of extensions said faculty members shall
likewise be paid their hourly rates should they teach during said extensions.
SO ORDERED.





























HOLIDAY ON A SUNDAY

G.R. No. 114698 July 3, 1995
WELLINGTON INVESTMENT AND MANUFACTURING CORPORATION, petitioner,
vs.
CRESENCIANO B. TRAJANO, Under-Secretary of Labor and Employment, ELMER
ABADILLA, and 34 others, respondents.

NARVASA, C.J.:
The basic issue raised by petitioner in this case is, as its counsel puts it, "whether
or not a monthly-paid employee, receiving a fixed monthly compensation, is
entitled to an additional pay aside from his usual holiday pay, whenever a regular
holiday falls on a Sunday."
The case arose from a routine inspection conducted by a Labor Enforcement
Officer on August 6, 1991 of the Wellington Flour Mills, an establishment owned
and operated by petitioner Wellington Investment and Manufacturing
Corporation (hereafter, simply Wellington). The officer thereafter drew up a
report, a copy of which was "explained to and received by" Wellington's
personnel manager, in which he set forth his finding of "(n)on-payment of regular
holidays falling on a Sunday for monthly-paid employees."
1

Wellington sought reconsideration of the Labor Inspector's report, by letter dated
August 10, 1991. It argued that "the monthly salary of the company's monthly-
salaried employees already includes holiday pay for all regular holidays . . . (and
hence) there is no legal basis for the finding of alleged non-payment of regular
holidays falling on a Sunday."
2
It expounded on this thesis in a position paper
subsequently submitted to the Regional Director, asserting that it pays its
monthly-paid employees a fixed monthly compensation "using the 314 factor
which undeniably covers and already includes payment for all the working days in
a month as well as all the 10 unworked regular holidays within a year."
3

Wellington's arguments failed to persuade the Regional Director who, in an Order
issued on July 28, 1992, ruled that "when a regular holiday falls on a Sunday, an
extra or additional working day is created and the employer has the obligation to
pay the employees for the extra day except the last Sunday of August since the
payment for the said holiday is already included in the 314 factor," and
accordingly directed Wellington to pay its employees compensation
corresponding to four (4) extra working days.
4

Wellington timely filed a motion for reconsideration of this Order of August 10,
1992, pointing out that it was in effect being compelled to "shell out an additional
pay for an alleged extra working day" despite its complete payment of all
compensation lawfully due its workers, using the 314 factor.
5
Its motion was
treated as an appeal and was acted on by respondent Undersecretary. By Order
dated September 22, the latter affirmed the challenged order of the Regional
Director, holding that "the divisor being used by the respondent (Wellington)
does not reliably reflect the actual working days in a year, " and consequently
commanded Wellington to pay its employees the "six additional working days
resulting from regular holidays falling on Sundays in 1988, 1989 and
1990."
6
Again, Wellington moved for reconsideration,
7
and again was rebuffed.
8

Wellington then instituted the special civil action of certiorari at bar in an attempt
to nullify the orders above mentioned. By Resolution dated July 4, 1994, this
Court authorized the issuance of a temporary restraining order enjoining the
respondents from enforcing the questioned orders.
9

Every worker should, according to the Labor Code,
10
"be paid his regular daily
wage during regular holidays, except in retail and service establishments regularly
employing less than ten (10) workers;" this, of course, even if the worker does no
work on these holidays. The regular holidays include: "New Year's Day, Maundy
Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the
fourth of July, the thirtieth of November, the twenty-fifth of December, and the
day designated by law for holding a general election (or national referendum or
plebiscite).
11

Particularly as regards employees "who are uniformly paid by the month, "the
monthly minimum wage shall not be less than the statutory minimum wage
multiplied by 365 days divided by twelve."
12
This monthly salary shall serve as
compensation "for all days in the month whether worked or not," and
"irrespective of the number of working days therein."
13
In other words, whether
the month is of thirty (30) or thirty-one (31) days' duration, or twenty-eight (28)
or twenty-nine (29) (as in February), the employee is entitled to receive the entire
monthly salary. So, too, in the event of the declaration of any special holiday, or
any fortuitous cause precluding work on any particular day or days (such as
transportation strikes, riots, or typhoons or other natural calamities), the
employee is entitled to the salary for the entire month and the employer has no
right to deduct the proportionate amount corresponding to the days when no
work was done. The monthly compensation is evidently intended precisely to
avoid computations and adjustments resulting from the contingencies just
mentioned which are routinely made in the case of workers paid on daily basis.
In Wellington's case, there seems to be no question that at the time of the
inspection conducted by the Labor Enforcement Officer on August 6, 1991, it was
and had been paying its employees "a salary of not less than the statutory or
established minimum wage," and that the monthly salary thus paid was "not . . .
less than the statutory minimum wage multiplied by 365 days divided by
twelve," supra. There is, in other words, no issue that to this extent, Wellington
complied with the minimum norm laid down by law.
Apparently the monthly salary was fixed by Wellington to provide for
compensation for every working day of the year including the holidays specified
by law and excluding only Sundays. In fixing the salary, Wellington used what it
calls the "314 factor;" that is to say, it simply deducted 51 Sundays from the 365
days normally comprising a year and used the difference, 314, as basis for
determining the monthly salary. The monthly salary thus fixed actually covers
payment for 314 days of the year, including regular and special holidays, as well
as days when no work is done by reason of fortuitous cause, as above specified, or
causes not attributable to the employees.
The Labor Officer who conducted the routine inspection of Wellington discovered
that in certain years, two or three regular holidays had fallen on Sundays. He
reasoned that this had precluded the enjoyment by the employees of a non-
working day, and the employees had consequently had to work an additional day
for that month. This ratiocination received the approval of his Regional Director
who opined
14
that "when a regular holiday falls on a Sunday, an extra or
additional working day is created and the employer has the obligation to pay its
employees for the extra day except the last Sunday of August since the payment
for the said holiday is already included in the 314 factor."
15

This ingenuous theory was adopted and further explained by respondent Labor
Undersecretary, to whom the matter was appealed, as follows:
16

. . . By using said (314) factor, the respondent (Wellington) assumes that all the
regular holidays fell on ordinary days and never on a Sunday. Thus, the
respondent failed to consider the circumstance that whenever a regular holiday
coincides with a Sunday, an additional working day is created and left unpaid. In
other words, while the said divisor may be utilized as proof evidencing payment
of 302 working days, 2 special days and the ten regular holidays in a calendar
year, the same does not cover or include payment of additional working days
created as a result of some regular holidays falling on Sundays.
He pointed out that in 1988 there was "an increase of three (3) working days
resulting from regular holidays falling on Sundays;" hence Wellington "should pay
for 317 days, instead of 314 days." By the same process of ratiocination,
respondent Undersecretary theorized that there should be additional payment by
Wellington to its monthly-paid employees for "an increment of three (3) working
days" for 1989 and again, for 1990. What he is saying is that in those years,
Wellington should have used the "317 factor," not the "314 factor."
The theory loses sight of the fact that the monthly salary in Wellington which is
based on the so-called "314 factor" accounts for all 365 days of a year; i.e.,
Wellington's "314 factor" leaves no day unaccounted for; it is paying for all the
days of a year with the exception only of 51 Sundays.
The respondents' theory would make each of the years in question (1988, 1989,
1990), a year of 368 days. Pursuant to this theory, no employer opting to pay his
employees by the month would have any definite basis to determine the number
of days in a year for which compensation should be given to his work force. He
would have to ascertain the number of times legal holidays would fall on Sundays
in all the years of the expected or extrapolated lifetime of his business.
Alternatively, he would be compelled to make adjustments in his employees'
monthly salaries every year, depending on the number of times that a legal
holiday fell on a Sunday.
There is no provision of law requiring any employer to make such adjustments in
the monthly salary rate set by him to take account of legal holidays falling on
Sundays in a given year, or, contrary to the legal provisions bearing on the point,
otherwise to reckon a year at more than 365 days. As earlier mentioned, what
the law requires of employers opting to pay by the month is to assure that "the
monthly minimum wage shall not be less than the statutory minimum wage
multiplied by 365 days divided by twelve,"
17
and to pay that salary "for all days in
the month whether worked or not," and "irrespective of the number of working
days therein."
18
That salary is due and payable regardless of the declaration of
any special holiday in the entire country or a particular place therein, or any
fortuitous cause precluding work on any particular day or days (such as
transportation strikes, riots, or typhoons or other natural calamities), or cause
not imputable to the worker. And as also earlier pointed out, the legal provisions
governing monthly compensation are evidently intended precisely to avoid re-
computations and alterations in salary on account of the contingencies just
mentioned, which, by the way, are routinely made between employer and
employees when the wages are paid on daily basis.
The public respondents argue that their challenged conclusions and dispositions
may be justified by Section 2, Rule X, Book III of the Implementing Rules, giving
the Regional Director power
19

. . . to order and administer (in cases where employer-employee relations still
exist), after due notice and hearing, compliance with the labor standards
provisions of the Code and the other labor legislations based on the findings of
their Regulations Officers or Industrial Safety Engineers (Labor Standard and
Welfare Officers) and made in the course of inspection, and to issue writs of
execution to the appropriate authority for the enforcement of his order, in line
with the provisions of Article 128 in relation to Articles 289 and 290 of the Labor
Code, as amended. . . .
The respondents beg the question. Their argument assumes that there are some
"labor standards provisions of the Code and the other labor legislations" imposing
on employers the obligation to give additional compensation to their monthly-
paid employees in the event that a legal holiday should fall on a Sunday in a
particular month with which compliance may be commanded by the Regional
Director when the existence of said provisions is precisely the matter to be
established.
In promulgating the orders complained of the public respondents have attempted
to legislate, or interpret legal provisions in such a manner as to create obligations
where none are intended. They have acted without authority, or at the very least,
with grave abuse of their discretion. Their acts must be nullified and set aside.
WHEREFORE, the orders complained of, namely: that of the respondent
Undersecretary dated September 22, 1993, and that of the Regional Director
dated July 30, 1992, are NULLIFIED AND SET ASIDE, and the proceeding against
petitioner DISMISSED.
SO ORDERED.