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Marco, Mark Olyver T.

Labor Law I – Block A

G.R. No. L-52415 Date Promulgated: October 23, 1984



HON. AMADO G. INCIONG, Deputy Minister, Ministry of Labor and INSULAR BANK OF ASIA AND
AMERICA, respondents,

Ponente: Makasiar, J.

Facts: Petitioner filed a complaint against the respondent bank on June 20, 1975 for the payment of
holiday pay before the then Department of Labor, NLRC in Manila. Conciliation having failed, the case
was certified for arbitration and later on a decision was rendered by the Labor Arbiter granting petitioner’s
complaint. Respondent bank complied by paying the holiday pay to and including January 1976. On
December 1975, PD 850 was promulgated amending the provisions of the Labor Code with the
controversial section stating that monthly paid employees receiving uniform monthly pay is presumed to
be already paid the “10 paid legal holidays”. Policy instruction 9 was issued thereafter interpreting the said
rule. Respondents bank stopped the payment by reason of the promulgated PD 850 and Policy Instruction

Issue: Whether monthly paid employees should excluded from the benefit of holiday pay in view of the
provision of PD 850 which provides that monthly paid employees receiving uniform monthly pay is
presumed to be already paid the “10 paid legal holidays”.

Held: No. 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 9, the then Secretary of Labor
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. While it is true that the contemporaneous
construction placed upon a statue by executive officers whose duty is to enforce it should be given great
weight by the courts, still if such construction is so erroneous, the same must be declared as null and void.
Marco, Mark Olyver T. Labor Law I – Block A

G.R. No. 111988 Date Promulgated: October 14, 1994


CORPORATION, petitioner,



CORPORATION, respondent,

Ponente: Mendoza, J.

Facts: ALU (Associated Labor Union) entered into a CBA (Collective Bargaining) with AMS Farming
Corporation. The CBA was to be effective from 1990 to 1995. Part of the CBA provides that AMS
Farming shall be paying for holiday pay which shall include among others local and national elections. In
1992, the President declared December 4, 1992 as a general election for SK (Sanggunian Kabataan)
throughout the nation. AMS Farming did not pay any holiday for said day as it argued that said election by
any stretch of the imagination cannot be considered as a local election within the meaning of CBA because
not all people can vote in the said election but only qualified youths. The issue was submitted to a
voluntary arbitrator Rosalina Letrondo-Montejo. The latter ruled in favor of AMS Farming.

Issue: Whether the SK Election is a local election and therefore should be deemed a holiday despite of the
fact that not all people can vote in said election but only qualified youths.

Held: Yes. It is in fact a regular election as even defined by the Revised Administrative Code of 1987. It
was even announced through the media that such day is a non-working holiday. Consequently, whether in
the context of the CBA or the Labor Code, December 4, 1992 was a holiday for which holiday pay should
be paid by AMS Farming Corporation.
Marco, Mark Olyver T. Labor Law I – Block A

G.R. No. 146775 Date Promulgated: January 30, 2002



COURT OF APPEALS et al., respondents,

Ponente: Kapunan, J.

Facts: During a routine inspection by the DOLE in the premises of San Miguel Corporation (SMC) in
Iligan City, it was discovered that there was underpayment by SMC of its employees of the regular
Muslim Holiday. SMC received the inspection result which it later on contested. DOLE then conducted
summary hearings. However, both DOLE Regional Office and National Office ruled against SMC and
ordered the latter to consider Muslim Holidays as regular holidays and to pay its Muslim and non-Muslim
employees holiday pay.

Issue: Whether Muslim holiday pay should apply to both Muslims and non-Muslims employees of SMC.

Held: Yes. Although Art. 3 of PD 1083 (Code of Muslim Personal Laws) provides that the provisions of
the code shall be applicable only to Muslims, on which the petitioner based its defense, the same article
provides further that “nothing in the code shall be construed to the prejudice of non-Muslims”. The
Supreme Court stated that there should be no distinction between Muslims and non-Muslims as regards
the payment of benefits for Muslim Holidays. The Court, quoting the CA, “assuming that the SMC is
correct, then Muslims throughout the Philippines are also not entitled to holiday pays on Christian
holidays declared by law. We must remind SMC that wages and other emoluments granted by law are
determined not on the basis of the worker’s faith or religion”.
Marco, Mark Olyver T. Labor Law I – Block A

G.R. No. 114734 Date Promulgated: March 31, 2000

VIVIAN Y. IMBUIDO, petitioner,



Ponente: Buena, J.

Facts: Petitioner was employed as a date encoder by private respondent. From 1988 until 1991, she
entered into 13 employment contracts with private respondent, each contract for a period of 3 months. In
September 1991, petitioner and 12 other employees allegedly agreed to the filing of a petition for
certification election involving the rank-and-file employees of private respondent. Subsequently, petition
received a termination letter due to “low volume of work.” Petitioner filed a complaint for illegal
dismissal. The labor Arbiter ruled in favor of petitioner holding that she was a regular employee. The
NLRC reversed the decision stating that although petitioner is a regular employee, she has no tenurial
security beyond the period for which she was hired (only up to the time the specific project for which she
was hired was completed).

Issue: Whether there was illegal dismissal considering that petitioner, a project employee, must be deemed
a regular employee entitled security of tenure.

Held: Yes. As held in Maraguinot, Jr. vs. NLRC, such project employee or member of a work pool may
acquire the status of a regular employee when the following concur:

1. There is continuous rehiring of project employees even after the cessation of a project,

2. The tasks performed by the alleged “project employee” are vital, necessary and indispensable to the
usual business and trade of the employer.

In the present case, private respondent was employed as a data encoder performing duties, which are
usually necessary or desirable in the usual business or trade of the employer, continuously for a period of
more than 3 years.

Being a regular employee, petitioner is entitled to security of tenure and could only be dismissed for a just
and authorized cause. “Low volume of work” is not a valid cause for dismissal under Art. 282 or 283.
Having worked for more than 3 years, petitioner is also entitled to service incentive leave benefits from
1989 until her actual reinstatement since such is demandable after one year of service, whether continuous
or broken.
Marco, Mark Olyver T. Labor Law I – Block A

G.R. No. 105892 Date Promulgated: January 28, 1998

LEIDEN FERNANDEZ, et al., petitioners,




Ponente: Panganiban, J.

Facts: The case stemmed from a consolidated complaint against private respondents for illegal dismissal.
Petitioners Fernandez, et al alleged that they demanded from the private respondent an increase in their
salaries since her business was making good and that she was evading the payment of taxes. For other
petitioners Lim and Canonigo however, they alleged that they also demanded for an increase in their
salaries due to the progress of the business, the false statement of the private respondent in her account,
and they informed the latter that they were going to join the Associated Labor Union. However, the private
respondent contends that the petitioners were not illegally dismissed but they abandoned their employment
and some of the petitioners allegedly have committed anomalies against the company. It was eventually
proven that some of the petitioners were in fact illegally dismissed by the private respondent to which they
are entitled to their back wages inclusive of allowances and other benefits or their monetary equivalent.
However, upon recommending that the Labor Arbiter’s decision be reinstated substantially, the Solicitor
General recommended that the award of service incentive leave be limited to three years.

Issue: Whether the Solicitor General’s recommendation, that petitioner’s back wages inclusive of
allowances and other benefits such as service incentive leave should only be limited to three years, is in
accordance with law.

Held: No, the back wages, allowances and service incentive leave due to the petitioners should not be
limited to three years. Sec. 2, Rule V, Book 3 of the IRR, provides that “every employee who has rendered
at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.”
Service incentive leave is a right which accrues to ever employee who has served for 12 months or 1 year.
It is also commutable to its money equivalent if not used or exhausted at the end of the year. He may use it
as leave days or he may collect its monetary value. To limit the award to three years, as the solicitor
general recommends, is to impair the rights of the petitioners to the service incentive leave.

Regarding the illegal dismissal of the petitioners, they are entitled to reinstatement without loss of
seniority rights and other privileges and to their full backwages, inclusive of allowances, and to their other
benefits or their monetary equivalent computed from the time their compensation was withheld from them
up to the time of their actual reinstatement, in accordance with Article 279 of the Labor Code
Marco, Mark Olyver T. Labor Law I – Block A

G.R. No. L-30279 Date Promulgated: July 30, 1982





Ponente: Barredo, J.

Facts: PNB and PNB Employees Association (PEMA) had a dispute regarding the proper computation of
overtime pay. PEMA wanted the cost of living allowance (granted in 1958) and longevity pay (granted in
1961) to be included in the computation. PNB disagreed and the 2 parties later went before the CIR to
resolve the dispute. CIR decided in favor of PEMA and held that PNB should compute the overtime pay of
its employees on the basis of the sum total of the employee’s basic salary or wage plus cost of living
allowance and longevity pay. The CIR relied on the ruling in NAWASA v. NAWASA Consolidated
Unions, which held that “for purposes of computing overtime compensation, regular wage includes all
payments which the parties have agreed shall be received during the work week, including differentiated
payments for working at undesirable times, such as at night and the board and lodging customarily
furnished the employee.”

Issue: Whether the computation of overtime pay should include the cost of living allowance and longevity

Held: No. Overtime pay is for extra effort beyond that contemplated in the employment contract;
additional pay given for any other purpose cannot be included in the basis for the computation of overtime
pay. Absent a specific provision in the CBA, the bases for the computation of overtime pay are 2
computations, namely:

1.) Whether or not the additional pay is for extra work done or service rendered

2.) Whether or not the same is intended to be permanent and regular, not contingent nor temporary as a
given only to remedy a situation which can change any time.

Longevity pay cannot be included in the computation of overtime pay for the very simple reason that the
contrary is expressly stipulated in the CBA, which constitutes the law between the parties. As regards cost
of living allowance, there is nothing in Commonwealth Act 444 (or “the 8-hour Labor Law,” now Art. 87
Labor Code) that could justify PEMA’s posture that it should be added to the regular wage in computing
overtime pay. C.A. 444 prescribes that overtime work shall be paid “at the same rate as their regular wages
or salary, plus at least 25% additional.” The law did not define what is a regular wage or salary. What the
Marco, Mark Olyver T. Labor Law I – Block A

law emphasized is that in addition to “regular wage,” there must be paid an additional 25% of that “regular
wage” to constitute overtime rate of pay. Parties were thus allowed to agree on what shall be mutually
considered regular pay from or upon which a 25% premium shall be based and added to makeup overtime

No rule of universal application to other cases may be justifiably extracted from the NAWASA case. CIR
relies on the part of the NAWASA decision where the SC cited American decisions whose legislation on
overtime is at variance with the law in this jurisdiction. The US legislation considers work in excess of
forty hours a week as overtime; whereas, what is generally considered overtime in the Philippines is work
in excess of the regular 8 hours a day. It is understandably material to refer to precedents in the US for
purposes of computing weekly wages under a 40-hour week rule, since the particular issue involved in
NAWASA is the conversion of prior weekly regular earnings into daily rates without allowing diminution
or addition.

To apply the NAWASA computation would require a different formula for each and every employee. It
would require reference to and continued use of individual earnings in the past, thus multiplying the
administrative difficulties of the Company. It would be cumbersome and tedious a process to compute
overtime pay and this may again cause delays in payments, which in turn could lead to serious disputes.
To apply this mode of computation would retard and stifle the growth of unions themselves as Companies
would be irresistibly drawn into denying, new and additional fringe benefits, if not those already existing,
for fear of bloating their overhead expenses through overtime which, by reason of being unfixed, becomes
instead a veritable source of irritant in labor relations.

Overtime Pay Rationale: Why is a laborer or employee who works beyond the regular hours of work
entitled to extra compensation called, in this enlightened time, overtime pay?

There can be no other reason than that he is made to work longer than what is commensurate with his
agreed compensation for the statutorily fixed or voluntarily agreed hours of labor he is supposed to do.
When he thus spends additional time to his work, the effect upon him is multi-faceted; he puts in more
effort, physical and/or mental; he is delayed in going home to his family to enjoy the comforts thereof; he
might have no time for relaxation, amusement or sports; he might miss important pre-arranged
engagements; etc. It is thus the additional work, labor or service employed and the adverse effects just
mentioned of his longer stay in his place of work that justify and are the real reasons for the extra
compensation that is called overtime pay.

Overtime Pay Definition: The additional pay for service or work rendered or performed in excess of 8
hours a day by employees or laborers in employment covered by the 8 hour Labor Law [C.A. 444, now
Art. 87 Labor Code] and not exempt from its requirements. It is computed by multiplying the overtime
hourly rate by the number of hours worked in excess of eight.