Trans-Asia Phil Employees Association (TAPEA) v.

NLRC
13 December 1999; Kapunan, J.
I. Facts
July 1988: TAPEA (the duly-recognized collective bargaining agent of the monthly-paid rank-
and-file employees) entered into a CBA. The CBA was, however, unable to resolve an issue
regarding holiday pay claims over a period before the effectivity of the CBA (1985-1987 v
1988-1991).
Preventive mediation in the NMCB was fruitless and TAPEA filed a case for holiday pay in
arrears, holiday pay over the CBA, unfair labor practice, damages and attorney's fees.
TAPEA contended that their claim for holiday pay in arrears is based on the non-inclusion of
the same in their monthly pay:
1. Employees' Manual which requires, as a pre-condition for the payment of holiday pay,
that the employee should have worked or was on authorized leave with pay on the day
immediately preceding the legal holiday.
 TAPEA: If the intention [of Trans-Asia] was not to pay holiday pay in addition to the
employee's monthly pay, then there would be no need to impose or specify the pre-
condition for the payment.
 TAP: Not indicative of its non-payment of holiday pay since it has always
honored the labor law provisions on holiday pay by incorporating the same in
the payment of monthly salaries.
 It has long been the standing practice of the company to use the divisor of "286"
days in computing for its employees' overtime pay and daily rate deductions for
absences.
 The "286" days divisor already takes into account the ten (10) regular holidays
in a year since it only subtracts from the 365 calendar days the unworked and
unpaid 52 Sundays and 26 Saturdays (employees are required to work half-day
during Saturdays).
 If the ten (10) regular holidays were not included in the computation of their
employee's monthly salary, the divisor which they would have used would only
be 277 days which is arrived at by subtracting 52 Sundays, 26 Saturdays and the
10 Legal holidays.
2. Appointment papers which do not contain any stipulation on the inclusion of holiday
pay in their monthly salary.
 Absence of such stipulation is an indication that the mandated holiday pay is not
incorporated in the monthly salary.
3. Inclusion of a provision in the CBA for the payment of an amount equivalent to 200%
of the regular daily wage plus 60% premium pay to employees who are permitted to
work on a regular holiday.
 This very generous provision was the remedy availed of by Trans-Asia to allow its
employees to recoup the holiday pay in arrears and, as such, is a tacit admission of the
non-payment of the same during the period prior to the current CBA.

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  Included in the CBA in order to comply with Section 4, Rule IV, Book III of the
Omnibus Rules Implementing the Labor Code.1
4. Current CBA provision which obligates Trans-Asia to give holiday pay.
 This provision is an acknowledgment by Trans-Asia of its failure to pay the same in the
past since, if it was already giving holiday pay prior to the CBA, there was no need to
stipulate on the said obligation in the current CBA.
 Simply a recognition of the mandate of the Labor Code that employees are
entitled to holiday pay. It clarified that the company's firm belief in the payment
of holiday pay to employees led it to agree to the inclusion of the holiday pay
provision.
5. Trans-Asia is guilty of bad faith in negotiating and executing the current CBA since,
after it recognized the right of the employees to receive holiday pay, Trans-Asia
allegedly refused to honor the CBA.
 What petitioners would like the company to do is to give double holiday pay
since the company has already included the same in its employees monthly
salary.
II. Ratio
The Court agreed with the Labor Arbiter and the NLRC that the petition has no merit.
1. Trans-Asia's inclusion of holiday pay in petitioners' monthly salary is clearly
established by its consistent use of the divisor of "286" days in the computation of its
employees' benefits and deductions. Since the ten (10) legal holidays were never
included in subtracting the unworked and unpaid days in a calendar year, the only
logical conclusion would be that the payment for holiday pay is already incorporated
into the said divisor.
When viewed against this very convincing piece of evidence, the arguments regarding
the pre-condition stated in the Employees' Manual for entitlement to holiday pay, the
absence of a stipulation in the employees' appointment papers for the inclusion of
holiday pay in their monthly salary, and the stipulation in the CBA recognizing the
entitlement of the petitioners to holiday pay with a concomitant provision for the
granting of an "allegedly" very generous holiday pay rate, would appear to be merely
inferences and suppositions.
2. TAPEA used Chartered Bank Employees Association vs. Ople for its allegation on the
generous holiday pay rate, but this cannot be relied upon by petitioners since the facts
are very different. In that case, the bank used different divisors in computing for its
employees benefits and deductions.
Due to this confusing situation, the Court declared that there existed a doubt as to
whether holiday pay is already incorporated in the employees' monthly salary; and

1 Sec. 4. Compensation for holiday work. - Any employee who is permitted or suffered to work
on any regular holiday, not exceeding eight (8) hours, shall be paid at least two hundred
percent (200%) of his regular daily wage. If the holiday falls on the scheduled rest day of the
employee, he shall be entitled to an additional premium pay of at least 30% of his regular
holiday rate of 200% based on his regular wage rate.

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 doubts should be resolved in favor of labor.
3. The Court then noted that there is a need to adjust the divisor used by Trans-Asia to
287 days, instead of only 286 days. This will account for the entirety of regular holidays
and special days in a year as prescribed by Executive Order No. 203 and Republic Act
No. 6727 which a suggested Formula in Determining the Equivalent Monthly Statutory
Minimum Wage Rates.
Based on both, the proper divisor that should be used for a situation wherein the
employees do not work and are not considered paid on Saturdays and Sundays or rest
days is 262 days. In the present case, since the employees of Trans-Asia are required to
work half-day on Saturdays, 26 days should be added to the divisor of 262 days, thus,
resulting to 288 days. However, due to the fact that the rest days of petitioners fall on a
Sunday, the number of unworked but paid legal holidays should be reduced to nine (9),
instead of ten (10), since one legal holiday under E.O. No. 203 always falls on the last
Sunday of August, National Heroes Day.
4. However, the Court noted that if the divisor is increased to 287 days, the resulting daily
rate for purposes of overtime pay, holiday pay and conversions of accumulated leaves
would be diminished. If, for example, a worker had an 8000 peso/month salary, his
daily rate would be 335.66 (286 days), while it would be 334.49 in the alternative (287
days).
Clearly, this muddled situation would be violative of the proscription on the non-
diminution of benefits under Section 100 of the Labor Code. In view of this situation,
the Court ruled that the adjusted divisor of 287 days should only be used by Trans-Asia
for computations which would be advantageous (ex. if it is used for purposes of
computing for deductions due to the employee's absences).

WELLINGTON INVESTMENT AND MANUFACTURING

CORPORATION, petitioner,
vs.
CRESENCIANO B. TRAJANO, Under-Secretary of Labor and Employment, ELMER
ABADILLA, and 34 others, respondents.
3 July 1995 || Narvasa, C.J.

FACTS: On 6 August 1991, a routine inspection was conducted by a Labor Enforcement

Office on Wellington Flour Mills, an establishment owned & operated by P Wellington
Investment and Manufacturing Corporation. His report, with a copy “explained to and
received by” Wellington’s personnel manager, set forth the finding of “non-payment of
regular holidays falling on a Sunday for monthly-paid employees.” P Wellington sought
reconsideration, arguing that their monthly-salaries already includes holiday pay for all
regular holidays, hence there is no legal basis for LEO’s finding. It pays its 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 the 10 unworked regular holidays
within a year.

The Regional Director 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

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holiday is already included in the 314 factor,” and accordingly directed Wellington to pay its
employees compensation corresponding to four (4) extra working days.

P filed an MR, 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. This was taken as an appeal, and acted on by R
Undersecretary Trajano. The latter held that the “divisor being used by P does not reliably
reflect the actual working days in a year,” and demanded Wellington to pay the six additional
working days resulting from regular holidays falling on Sundays in 1988, 1989 and 1990. P’s
reconsideration was denied.

P instituted this special civil action of certiorari to nullify the above orders. SC granted TRO
enjoining R from enforcing the above orders.

ISSUE: W/N 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

HELD: Yes. Every worker should, according to the Labor Code, "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).

There is no question that P complied with the minimum norm laid down by the law – by
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.”

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. The
“314 factor” simply deducted 51 Sundays from the 365 days normally comprising a year, and
used the difference 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.

Based on the routine inspection, it was discovered that in certain years, two or three regular
holidays had fallen on Sundays. According to R Labor Undersecretary:
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

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 or include payment of additional working days created as a result of some regular
holidays falling on Sundays.

G.R. No. 146775. January 30, 2002

San Miguel vs CA
Facts:
Upon a routine inspection done by the Department of Labor and Employment in the premises
of San Miguel Corporation in Iligan City, it was discovered that there was underpayment by
SMC of regular Muslim Holiday pay to its employees. SMC received the inspection result
which later on contested such thus DOLE conducted summary hearings. Both DOLE
Regional Office and National Office ruled against SMC ordering the latter to consider
Muslim Holidays as regular holidays and to pay its Muslim and non-Muslim employees
holiday pay.
Thus, this appeal.
Issue:
Whether or not the Muslim holiday pay is applicable to employees regardless of faith or
religion
Held:
Yes.
Although Article 3 of Presidential Decree 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 Court of Appeals, “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”, finds against the
petitioner, and dismissed the petition.

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 Makati Haberdashery vs NLRC
G.R. No. 83380-81 – 15 November 1989
Penned by Justice Fernan

Nature: Petition for certiorari to review the decision of the NLRC which affirmed the decision
of the Labor Arbiter who jointly heard and decided two cases filed by the Union in behalf of
the private respondents

MAIN FACTS:

• Individual complainants are working for Makati Haberdashery Inc as tailors, seamstress,
sewers, basters, and “plantsadoras” and are paid on a piece-rate basis (except two petitioners
who are paid on a monthly basis)

• In addition, they are given a daily allowance of P 3.00 provided they report before 9:30 a.m.
everyday.

•Work schedule: 9:30-6 or 7 p.m., Mondays to Saturdays and even on Sundays and holidays
during peak periods.

• The Sandigan ng Manggagawang Pilipino filed a complaint for underpayment of the basic
wages, underpayment of living allowance, nonpayment of overtime work, nonpayment of
holiday pay, and other money claims.

• The Labor Arbiter rendered judgment in favor of complainants which the NLRC affirmed but
limited back wages to one year.

• Petitioner urged that the NLRC erred in concluding that an employer-employee relationship
existed between the petitioner and the workers.

Issue:

1. WON employees paid on piece-rate basis are entitled to service incentive pay?
2. WON there is an Employer-Employee Relationship?

Held:

1. NO, fall under exceptions set forth in the implementing rules (this will be reexamined under
Article 101).

2. Yes, evident in a Memorandum issued by the Assistant Manager.

Ratio:

1. As to the service incentive leave pay: as piece-rate workers being paid at a fixed amount for
performing work irrespective of time consumed in the performance thereof, they fall under the
exceptions stated in Sec1(d), Rule V, IRR, Book III, Labor Code.

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Service Incentive Leave
SECTION 1. Coverage. — This rule shall apply to all employees except:
(d) Field personnel and other employees whose performance is unsupervised by the employer
including those who are engaged on task or contract basis, purely commission basis, or those
who are paid a fixed amount for performing work irrespective of the time consumed in the
performance thereof;

2. Employer-Employee Relationship

There is such relationship because in the application of the four-fold test, it was found that
petitioners had control over the respondents not only as to the result but also as to the means
and method by which the same is to be accomplished. Such control is proven by a memorandum
which enumerates procedures and instructions regarding job orders, alterations, and their
behavior inside the shop issued by the Assistant Manager which reads in part:

"Effective immediately, new procedures shall be followed:

a. To follow instruction and orders from the undersigned…
b. Before accepting the job orders, tailors must check the materials, job orders, due
dates, and other things to maximize efficiency…
c. Effective immediately all job orders, must be finished one day before the due date.
This can be done by proper scheduling of job order and if you will cooperate with
your supervisors. xxxx
d. If there is any problem regarding supervisors or co-tailor inside our shop, consult
with me at once to settle the problem. Fighting inside the shop is strictly prohibited.
Any tailor violating this memorandum will be subject to disciplinary action.”

WHEREFORE, the decision of the National Labor Relations Commission dated March 30,
1988 and that of the Labor Arbiter dated June 10, 1986 are hereby modified. The complaint
filed by Pelobello and Zapata for illegal dismissal docketed as NLRC NCR Case No. 2-428-85
is dismissed for lack of factual and legal bases. Award of service incentive leave pay to private
respondents is deleted. SO ORDERED.
___________________________________________________________________________
__
OTHER FACTS: (there are only two main issues, just in case this is going to be asked)

•While the first case was pending decision, Pelobello left an open package containing a jusi
barong tagalong with salesman Rivera. He was caught and confronted about this and he
explained that this was ordered by Zapata, also a worker, for his (personal) customer. Zapata
allegedly admitted that he copied the design of the company but later denied ownership of the
same.

•They were made to explain why no action should be taken against them for accepting a job
order which is prejudicial and in direct competition with the business. However they did not
submit and went on AWOL until the period given for them to explain expired hence the
dismissal.

•Illegal dismissal complaint on the second case filed before the Labor Arbiter Diosana
(THIS IS THE 3rd ISSUE IN THE FULL CASE).

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•LA declared petitioners guilty of illegal dismissal and ordered to reinstate Pelobello and
Zapata and found petitioners violating decrees of Cost-Of-Living Allowance (COLA), service
incentive and 13th month pay. Commission analyst was directed to compute the monetary
awards which retroacts to three years prior to filing of case.
___________________________________________________________________________
__
Other issues discussed:
•Minimum Wage

Held: No dispute that entitled to minimum wage but court dismissed case for lack of sufficient
evidence to support claim that there was in fact underpayment which was ruled by the LAand
which the private respondents did not appeal to in the NLRC nor in the SC. Well-settled is the
rule that “an appellee who has not himself appealed cannot obtain from the appellate court any
affirmative relief other than the ones granted in the decision of the court below”.

•COLA (Cost-Of-Living Allowance)

Held: Entitled. They are regular employees. IRR of Wage No. 1, 2, and 5 provide that “all
workers in the private sector, regardless of their position, designation of status, and irrespective
of the method by which their wages are paid” are entitled to such allowance.

•13th Month pay

Held: Entitled under Sec. 3(e) of the IRR of PD 851 which is an exception to the exception of
such provision which states that employers whose workers are paid on piece-rate basis in which
are covered by such issuance in so far as such workers are concerned.

•Illegal dismissal

Held: Dismissed for justifiable ground based on Article 283 (a)and (c). Inimical to the
interest of the employer. Not dismissed just because of union activities.
___________________________________________________________________________
___

14. Labor Congress of the Philippines vs. NLRC

GR No. 123938 May 21, 1998
FIRST DIVISION | Davide, Jr., J.:

FACTS:

- Private petitioners, represented by Labor Congress of the Philippines (LCP), are rank-and-
file employees of respondent Empire Food Products.

- Petitioners filed a complaint against Empire, praying for money claims and direct certification
of Labor Congress as their bargaining representative.

- Oct. 1990 - LCP and Empire entered into a Memorandum of Agreement (MOA), providing:

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 A) LCP is recognized as the sole bargaining rep. of the employees.
B) To adjust the wages of the employees.
C) Deduct Union dues to the payroll

- Nov. 9, 1990 - LCP submitted to Empire a proposal for collective bargaining.

- Jan. 29, 1991 - LCP filed a complaint against Empire, alleging:

A) Unfair labor practices ( illegal lockout, dismissal)

B) Union busting
C) violation of MOA
D) underpayment of wages
E) other damages

- The Labor Arbiter ruled IN FAVOR of Empire, but ordered the reinstatement of the
employees who resigned and those who signed quitclaims and releases.

- Upon appeal, NLRC remanded the case back to the Labor Arbiter

- The Labor Arbiter, and AFFIRMED by NLRC, ruled that:

A) no prima facie evidence of existence of unfair labor practice, etc.
B) Employees were piece-rate workers, hence not entitles to benefits
C) Not underpaid

ISSUE/S: 1) Whether the petitioners who are piece-rate workers are entitled to benefits
2) Whether they are considered regular employees

HELD: They are piece-rate workers; they are entitled to benefits; they are regular employees

RATIO: They are piece-rate workers. They are entitled to full backwages, however, the amount
is indeterminate, hence, there is need to determine the varying degrees of production and days
worked by each worker. They are REGULAR EMPLOYESS although they are paid in piece-
rate basis, based on the following factors: (a) their job is necessary and desirable in the usual
business of Empire, (b) petitioners work for them throughout the year, their employment NOT
HAVING BEEN DEPENDENT on a specific season, and ( c ) the length of time they worked
for Empire. Thus, “while petitioners mode of compensation was on a ‘per piece basis’, the
status and nature of their employment was that of regular employees.”

Sentinel Security Agency Inc. v. NLRC

Facts:
The complainants were employees of Sentinel Security Agency. They were assigned to
render guard duty at the premises of [Philippine American Life Insurance Company] at Jones
Avenue, Cebu City. Philippine American Life Insurance Company, the Client, sent notice to
replace all the security guards in the company’s offices at the cities of Cebu, Bacolod,
Cagayan de Oro, Dipolog and Ilagan. Agency issued a Relief and Transfer Order replacing

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the complainants as guards [of the Client] and for then to be re-assigned [to] other clients. As
ordered, the complainants reported but were never given new assignments but instead they
were told that they were replaced because they are already old. The complainants prayed for
payment of separation pay and other labor standard benefits.

Held:
The transfer of an employee involves a lateral movement within the business or operation of
the employer, without demotion in rank, diminution of benefits or, worse, suspension of
employment even if temporary. The recall and transfer of security guards require
reassignment to another post and are not equivalent to their placement on “floating status.”
Off-detailing security guards for a reasonable period of six months is justified only in bona
fide cases of suspension of operation, business or undertaking.

The Client did not, as it could not, illegally dismiss the complainants. Thus, it should not be
held liable for separation pay and back wages. But even if the Client is not responsible for
the illegal dismissal of the complainants, it is jointly and severally liable with the Agency for
the complainants’ service incentive leave pay.

As the indirect employer, the Client is jointly and severally liable with the contractor for the
workers’ wages, in the same manner and extent that it is liable to its direct employees. This
liability of the Client covers the payment of the service incentive leave pay of the
complainants during the time they were posted at the Cebu branch of the Client. As service
had been rendered, the liability accrued, even if the complainants were eventually transferred
or reassigned.

[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.

Facts:
1. Petitoner Mantrade Union files a petition for certiorari and mandamus against the
respondent Voluntary Arbitrator Bancungan and Mantrade Development.
2. The voluntary arbitrator ruled 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.”
3. The respondent raised its objection that the 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

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 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.)

Issue: 1. WON the decision of the Voluntary Arbitrator is Final.

2. WON A CERTIORARI is applicable to the instant case.

Held: 1. NO. "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.

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. . . .

2. YES. 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 Court’s 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."

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