MERCURY

DRUG, INC. VS DAYAO

Facts: The respondents filed a petition against the Held: The Supreme Court dismissed the petition. On
petitioner praying: 1) payment of their unpaid back the first issue, based on Sec. 4 CA No. 444, No person,
wages for work done on Sundays and legal holidays firm or corporation, business establishment or place
plus 25c/c additional compensation from date of of center of labor shall compel an employee or
their employment up to June 30, 1962; 2) payment of laborer to work during Sundays and legal holidays
extra compensation on work done at night; 3) unless he is paid an additional sum of at least twenty-
reinstatement of Januario Referente and Oscar five per centum of his regular remuneration:
Echalar to their former positions with back salaries; PROVIDED, HOWEVER, That this prohibition shall not
and, as against the respondent union, for its apply to public utilities performing some public
disestablishment and the refund of all monies it had service such as supplying gas, electricity, power,
collected from petitioners. water, or providing means of transportation or
communication.
The respondent court rendered its decision that:
In this case, the petitioner does not fall on
1. The claim of the petitioners for payment of back exemptions. On the second issue, their 25%
wages correspoding to the first four hours work additional compensation for work done on Sundays
rendered on every other Sunday and first four hours and Legal Holidays were not included in their
on legal holidays should be denied for lack of merit; respective monthly salaries. The petitioner
contention was not supported by substantial
2. Respondent Mercury Drug Company, Inc. is hereby evidence.
ordered to pay the sixty- nine (69) petitioners: (a) An
additional sum equivalent to 25% of their respective The last issue, the Mercury Drug Co., Inc., maintains a
basic or regular salaries for services rendered on chain of drugstores that are open every day of the
Sundays and legal holidays during the period from week and, for some stores, up to very late at night
March 20, 1961 up to June 30, 1962; and (b) Another because of the nature of the pharmaceutical retail
additional sum or premium equivalent to 25% of business. The respondents knew that they had to
their respective basic or regular salaries for work Sundays and holidays and at night, not as
nighttime services rendered from March 20, 1961 up exceptions to the rule but as part of the regular
to June 30, 1962; and course of employment. Presented with contracts
setting their compensation on an annual basis with
3. Petitioners' petition to convert them to monthly an express waiver of extra compensation for work on
employees should be, as it is hereby, denied for lack Sundays and holidays, the workers did not have much
of merit. Not satisfied with the decision, the choice.
respondents filed a motion for its reconsideration.
The motion for reconsideration, was however, denied The private respondents were at a disadvantage
by the Court en banc. insofar as the contractual relationship was
concerned. Workers in our country do not have the
Issues: luxury or freedom of declining job openings or filing
resignations even when some terms and conditions
a. Whether or not private respondent is entitled to of employment are not only onerous and iniquitous
claims for 25% additional compensation performing but illegal.
work during Sunday and legal holidays.
It is precisely because of this situation that the
b. Whether or not the 25% compensation had already framers of the Constitution embodied the provisions
been included in the private respondents monthly on social justice (Section 6, Article 11) and protection
salaries. to labor (Section 9, Article I I) in the Declaration of
Principles And State Policies.
c. Whether or not the contracts of employment were
null and void was not put in issue, hence, the
respondent court pursuant to the Rules of Court
should have refrained from ruling that such contracts
of employment were null and void.
LAGATIC VS NLRC memorandum requiring him to explain why Cityland
should not make good its previous warning for his
Facts: Petitioner Romeo Lagatic was employed in failure to submit cold call reports, as well as for
May 1986 by Cityland, first as a probationary sales issuing the written statement aforementioned. On
agent, and later on as a marketing specialist. He was February 24, 1993, he sent a letter-reply alleging that
tasked with soliciting sales for the company, with the his failure to submit cold call reports should trot be
corresponding duties of accepting call-ins, referrals, deemed as gross insubordination. He denied any
and making client calls and cold calls. Cold calls refer knowledge of the damaging statement, "TO HELL
to the practice of prospecting for clients through the WITH COLD CALLS!"
telephone directory. Cityland, believing that the same
is an effective and cost-efficient method of finding Finding petitioner guilty of gross insubordination,
clients, requires all its marketing specialists to make Cityland served a notice of dismissal upon him on
cold calls. The number of cold calls depends on the February 26, 1993. Aggrieved by such dismissal,
sales generated by each: more sales mean less cold petitioner filed a complaint against Cityland for illegal
calls. Likewise, in order to assess cold calls made by dismissal, illegal deduction, underpayment, overtime
the sales staff, as well as to determine the results and rest day pay, damages and attorney's fees. The
thereof, Cityland requires the submission of daily labor arbiter dismissed the petition for lack of merit.
progress reports on the same. On appeal, the same was affirmed by the NLRC; hence
the present recourse.
On October 22, 1991, Cityland issued a written
reprimand to petitioner for his failure to submit cold Issue:
call reports for September 10, October 1 and 10,
1991. This notwithstanding, petitioner again failed to W/N NLRC gravely abused its discretion in not
submit cold call reports for September 2, 5, 8, 10, 11, finding that petitioner was illegally dismissed?
12, 15, 17, 18, 19, 20, 22, and 28, as well as for
October 6, 8, 9, 10, 12, 13 and 14, 1992. Petitioner Held: The petition lacks merit.
was required to explain his inaction, with a warning
that further non-compliance would result in his To constitute a valid dismissal from employment, two
termination from the company. In a reply dated requisites must be met, namely: (1) the employee
October 18, 1992, petitioner claimed that the same must be afforded due process, and (2) the dismissal
was an honest omission brought about by his must be for a valid cause.
concentration on other aspects of his job. Cityland
found said excuse inadequate and, on November 9, Employers may, thus, make reasonable rules and
1992, suspended him for three days, with a similar regulations for the government of their employees,
warning. and when employees, with knowledge of an
established rule, enter the service, the rule becomes a
Notwithstanding the aforesaid suspension and part of the contract of employment. It is also
warning, petitioner again failed to submit cold call generally recognized that company policies and
reports for February 5, 6, 8, 10 and 12, 1993. He was regulations, unless shown to be grossly oppressive or
verbally reminded to submit the same and was even contrary to law, are generally valid and binding on
given up to February 17, 1993 to do so. Instead of the parties and must be complied with. Corollarily, an
complying with said directive, petitioner, on employee may be validly dismissed for violation of a
February 16, 1993, wrote a note, "TO HELL WITH reasonable company rule or regulation adopted for
COLD CALLS! WHO CARES?" and exhibited the same the conduct of the company business. An employer
to his co-employees. To worsen matters, he left the cannot rationally be expected to retain the
same lying on his desk where everyone could see it. employment of a person whose . . . lack of regard for
his employer's rules . . . has so plainly and completely
On February 23, 1993, petitioner received a been bared." 5 Petitioner's continued infraction of
company policy requiring cold call reports, as
evidenced by the 28 instances of non-submission of
aforesaid reports, justifies his dismissal.

With the finding that petitioner's dismissal was for a
just and valid cause, his claims for moral and
exemplary damages, as well as attorney's fees, must
fail.
Resolution is AFFIRMED and this petition is hereby
DISMISSED for lack of merit. Costs against petitioner.
ASIAN TRANSMISSION CORPORATION VS COURT April 9, 1998 which covers two regular holidays,
OF APPEALS namely, Araw ng Kagitignan and Maundy Thursday.”
Subject of interpretation in the case at bar is Article
Petitioner seeks via petition for certiorari under Rule 94 of the Labor Code which reads:
65 the nullification of the Decision1 of the Court of
Appeals denying its petition to annul 1) Explanatory ART. 94. Right to holiday pay. –
Bulletin”2 of the Department of Labor and
Employment (DOLE) entitled “Workers’ Entitlement (a) Every worker shall be paid his regular daily wage
to Holiday Pay on April 9, 1993, Araw ng Kagitingan during regular holidays, except in retail and service
and Good Friday”, which bulletin the DOLE establishments regularly employing less than ten
reproduced on January 23, 1998, 2) Decision3 of the (10) workers;
Panel of Voluntary Arbitrators ruling that the said
explanatory bulletin applied as well to April 9, 1998, (b) The employer may require an employee to work
and 3) Resolution of the Panel of Voluntary on any holiday but such employee shall be paid a
Arbitration denying its Motion for Reconsideration. compensation equivalent to twice his regular rate;
and
FACTS: The Department of Labor and Employment
(DOLE), through Undersecretary Cresenciano B. (c) As used in this Article, “holiday” includes: New
Trajano, issued an Explanatory Bulletin dated March Year’s Day, Maundy Thursday, Good Friday, the ninth
11, 1993 wherein it clarified, inter alia, that of April, the first of May, the twelfth of June, the
employees are entitled to 200% of their basic wage fourth of July, the thirtieth of November, the twenty-
on April 9, 1993, whether unworked, which[,] apart fifth and thirtieth of December and the day
from being Good Friday [and, therefore, a legal designated by law for holding a general election,
holiday], is also Araw ng Kagitingan [which is also a which was amended by Executive Order No. 203
legal holiday]. issued on June 30, 1987, such that the regular
holidays are now:

“On the correct payment of holiday compensation on
1. New Year’s Day January 1
April 9, 1993 which apart from being Good Friday is
2. Maundy Thursday Movable Date
also Araw ng Kagitingan, i.e., two regular holidays
3. Good Friday Movable Date
falling on the same day, this Department is of the
4. Araw ng Kagitingan April 9 (Bataan and
view that the covered employees are entitled to at
Corregidor Day)
least two hundred percent (200%) of their basic
5. Labor Day May 1
wage even if said holiday is unworked. The first
6. Independence Day June 12
100% represents the payment of holiday pay on April
7. National Heroes Day Last Sunday of August
9, 1993 as Good Friday and the second 100% is the
8. Bonifacio Day November 30
payment of holiday pay for the same date as Araw ng
9. Christmas Day December 25
Kagitingan.
10. Rizal Day December 30


Said bulletin was reproduced on January 23, 1998,
In deciding in favor of the Bisig ng Asian
when April 9, 1998 was both Maundy Thursday
Transmission Labor Union (BATLU), the Voluntary
and Araw ng Kagitingan x x x x
Arbitrator held that Article 94 of the Labor Code
Despite the explanatory bulletin, petitioner [Asian
provides for holiday pay for every regular holiday,
Transmission Corporation] opted to pay
the computation of which is determined by a legal
its daily paid employees only 100% of their basic pay
formula which is not changed by the fact that there
on April 9, 1998. Respondent Bisig ng Asian
are two holidays falling on one day, like on April 9,
Transmission Labor Union (BATLU) protested.
1998 when it was Araw ng Kagitingan and at the

same time was Maundy Thursday; and that that the
In accordance with Step 6 of the grievance procedure
law, as amended, enumerates ten regular holidays for
of the Collective Bargaining Agreement (CBA)
every year should not be interpreted as authorizing a
existing between petitioner and BATLU, the
reduction to nine the number of paid regular holidays
controversy was submitted for voluntary arbitration.
“just because April 9 (Araw ng Kagitingan) in certain
x x x x On July 31, 1998, the Office of the Voluntary
years, like 1993 and 1998, is also Holy Friday or
Arbitrator rendered a decision directing petitioner
Maundy Thursday.”
to pay its covered employees “200% and not just
100% of their regular daily wages for the unworked
In the assailed decision, the Court of Appeals upheld As reflected above, Art. 94 of the Labor Code, as
the findings of the Voluntary Arbitrator, holding that amended, affords a worker the enjoyment of ten paid
the Collective Bargaining Agreement (CBA) between regular holidays.9 The provision is
petitioner and BATLU, the law governing the mandatory,10regardless of whether an employee is
relations between them, clearly recognizes their paid on a monthly or daily basis.11Unlike a bonus,
intent to consider Araw ng Kagitingan and Maundy which is a management prerogative,12 holiday pay is
Thursday, on whatever date they may fall in any a statutory benefit demandable under the law. Since
calendar year, as paid legal holidays during the a worker is entitled to the enjoyment of ten paid
effectivity of the CBA and that “[t]here is no regular holidays, the fact that two holidays fall on
condition, qualification or exception for any variance the same date should not operate to reduce to
from the clear intent that all holidays shall be nine the ten holiday pay benefits a worker is
compensated.” entitled to receive.

The Court of Appeals further held that “in the absence From the pertinent provisions of the CBA entered
of an explicit provision in law which provides for [a] into by the parties, petitioner had obligated itself to
reduction of holiday pay if two holidays happen to fall pay for the legal holidays as required by law.
on the same day, any doubt in the interpretation and
implementation of the Labor Code provisions on Only an employee who works on the day immediately
holiday pay must be resolved in favor of labor.” preceding or after a regular holiday shall be entitled
to the holiday pay.
ISSUE: Whether daily-paid employees are entitled to
be paid for two regular holidays which fall on the A paid legal holiday occurring during the scheduled
same day. vacation leave will result in holiday payment in
addition to normal vacation pay but will not entitle
HELD: the employee to another vacation leave.

Under similar circumstances, the COMPANY will give
This Court finds no ground to disturb the assailed
a day’s wage for November 1st and December 31st
decision.
whenever declared a holiday. When required to work
on said days, the employee will be paid according to
Holiday pay is a legislated benefit enacted as part of Art. VI, Sec. 3B hereof.18
the Constitutional imperative that the State shall
afford protection to labor.7 Its purpose is not merely WHEREFORE, the petition is hereby DISMISSED.
“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.”8 It is also intended to enable the worker to
participate in the national celebrations held during
the days identified as with great historical and
cultural significance.

Independence Day (June 12), Araw ng
Kagitingan (April 9), National Heroes Day (last
Sunday of August), Bonifacio Day (November 30) and
Rizal Day (December 30) were declared national
holidays to afford Filipinos with a recurring
opportunity to commemorate the heroism of the
Filipino people, promote national identity, and
deepen the spirit of patriotism. Labor Day (May 1) is
a day traditionally reserved to celebrate the
contributions of the working class to the
development of the nation, while the religious
holidays designated in Executive Order No. 203 allow
the worker to celebrate his faith with his family.
SAN MIGUEL CORPORATION VS COURT OF Art. 170 provides the provinces and cities where
APPEALS officially observed. — (1) Muslim holidays shall be
officially observed in the Provinces of Basilan, Lanao
FACTS: On 17 October 1992, the Department of del Norte, Lanao del Sur, Maguindanao, North
Labor and Employment conducted a routine Cotabato, Iligan, Marawi, Pagadian, and Zamboanga
inspection in the premises of San Miguel Corporation and in such other Muslim provinces and cities as may
in Sta. Filomena, Iligan City. In the course of the hereafter be created; (2) Upon proclamation by the
inspection, it was discovered that there was President of the Philippines, Muslim holidays may
underpayment by SMC of regular Muslim holiday pay also be officially observed in other provinces and
to its employees. DOLE sent a copy of the inspection cities.
result to SMC and it was received by and explained to
its personnel officer Elena dela Puerta. The foregoing provisions should be read in
conjunction with Article 94 of the Labor Code, which
SMC contested the findings and DOLE conducted provides: Right to holiday pay. (a) Every worker shall
summary hearings on 19 November 1992, 28 May be paid his regular daily wage during regular
1993 and 4 and 5 October 1993. Still, SMC failed to holidays, except in retail and service establishments
submit proof that it was paying regular Muslim regularly employing less than ten (10) workers; (b)
holiday pay to its employees. Hence, Director IV of The employer may require an employee to work on
DOLE Iligan District Office issued a compliance order any holiday but such employee shall be paid a
directing SMC to consider Muslim holidays as regular compensation equivalent to twice his regular rate;
holidays and to pay both its Muslim and non-Muslim
employees holiday pay within thirty (30) days from However, there should be no distinction between
the receipt of the order. SMC appealed but it was Muslims and non-Muslims as regards payment of
dismissed. benefits for Muslim holidays. The Court reminds the
respondent-appellant that wages and other
ISSUE: Whether or not the employees are entitled emoluments granted by law to the working man are
with regular Muslim holiday pay. determined on the basis of the criteria laid down by
laws and certainly not on the basis of the worker's
RULING: The employees are entitled to regular faith or religion.
Muslim holiday pay. Muslim holidays are provided
under Articles 169 and 170, Title I, Book V, of At any rate, Article 3(3) of Presidential Decree No.
Presidential Decree No. 1083, otherwise known as 1083 also declares that ". . . nothing herein shall be
the Code of Muslim Personal Laws, which states: construed to operate to the prejudice of a non-
Official Muslim holidays. — The following are hereby Muslim." In addition, the 1999 Handbook on
recognized as legal Muslim holidays: Workers' Statutory Benefits states considering that
all private corporations, offices, agencies, and entities
(a) 'Amun Jadîd (New Year), which falls on the first or establishments operating within the designated
day of the first lunar month of Muharram; Muslim provinces and cities are required to observe
Muslim holidays, both Muslim and Christians
(b) Maulid-un-Nabî (Birthday of the Prophet working within the Muslim areas may not report for
Muhammad), which falls on the twelfth day of the work on the days designated by law as Muslim
third lunar month of Rabi-ul-Awwal, holidays.

(c) Lailatul Isrâ Wal Mi'râj (Nocturnal Journey and
Ascension of the Prophet Muhammad), which falls on
the twenty-seventh day of the seventh lunar month of
Rajab:

(d) 'Îd-ul-Fitr (Hari Raya Puasa), which falls on the
first day of the tenth lunar month of Shawwal,
commemorating the end of the fasting season; and

(e) 'Îd-ul-Adhâ (Hari Raya Haji),which falls on the
tenth day of the twelfth lunar month of Dhû'l-Hijja.

UNION OF FILIPRO EMPLOYEES VS VIVAR, JR their duties away from the principal place of business
or branch office of the employer and whose actual
FACTS: On November 8, 1985, respondent Filipro, hours of work in the field cannot be determined with
Inc. (now Nestle Philippines, Inc.) filed with the reasonable certainty.”
National Labor Relations Commission (NLRC) a
petition for claims of its monthly paid employees for The law requires that the actual hours of work in the
holiday pay. field be reasonably ascertained. The company has no
Abitrator Vivar: Filipro to pay its monthly paid way of determining whether or not these sales
employees holiday pay pursuant to Art 94 of Labor personnel, even if they report to the office before
Code, subject to exclusions and limitations in Art 82. 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
Filipro filed a motion for clarification seeking (1) the work.
limitation of the award to three years, (2)
the exclusion of salesmen, sales representatives, Moreover, the requirement that “actual hours of work
truck drivers, merchandisers and medical in the field cannot be determined with reasonable
representatives (hereinafter referred to as sales certainty” must be read in conjunction with Rule IV,
personnel) from the award of the holiday pay, and (3) Book III of the Implementing Rules which provides:
deduction from the holiday pay award of
overpayment for overtime, night differential, Rule IV Holidays with Pay
vacation and sick leave benefits due to the use of 251 Sec. 1. Coverage — This rule shall apply to all
divisor. employees except:
Petitioner UFE answered that the award should be xxx xxx xxx
made effective from the date of effectivity of the (e) Field personnel and other employees whose time
Labor Code, that their sales personnel are not field and performance is unsupervised by the employer . . .
personnel and are therefore entitled to holiday pay, (Emphasis supplied)
and that the use of 251 as divisor is an established Hence, in deciding whether or not an employee’s
employee benefit which cannot be diminished. actual working hours in the field can be determined
Arbitrator Vivar: On January 14, 1986, the with reasonable certainty, query must be made as to
respondent arbitrator issued an order declaring that whether or not such employee’s time and
the effectivity of the holiday pay award shall retroact performance is constantly supervised by the
to November 1, 1974, the date of effectivity of the employer.
Labor Code. He adjudged, however, that the
company’s sales personnel are field personnel and, as 2. The divisor in computing the award of holiday
such, are not entitled to holiday pay. He likewise pay should still be 251 days.
ruled that with the grant of 10 days’ holiday pay, the While in that case the issue was whether or not
divisor should be changed from 251 to 261 and salesmen were entitled to overtime pay, the same
ordered the reimbursement of overpayment for rationale for their exclusion as field personnel from
overtime, night differential, vacation and sick leave holiday pay benefits also applies.
pay due to the use of 251 days as divisor.
The petitioner union also assails the respondent
ISSUES: arbitrator’s ruling that, concomitant with the award
1) Whether or not Nestle’s sales personnel are of holiday pay, the divisor should be changed from
entitled to holiday pay; and 251 to 261 days to include the additional 10 holidays
and the employees should reimburse the amounts
2) Whether or not, concomitant with the award of overpaid by Filipro due to the use of 251 days’
holiday pay, the divisor should be changed from 251 divisor.
to 261 days and whether or not the previous use of
251 as divisor resulted in overpayment for overtime, The 251 working days divisor is the result of
night differential, vacation and sick leave pay. subtracting all Saturdays, Sundays and the ten (10)
legal holidays from the total number of calendar days
Held: in a year. If the employees are already paid for all
1. Sales personnel are not entitled to holiday pay. non-working days, the divisor should be 365 and not
Under Article 82, field personnel are not entitled to 251.
holiday pay. Said article defines field personnel as
“non-agritultural employees who regularly perform
In the petitioner’s case, its computation of daily ratio pay as above directed shall be computed from
since September 1, 1980, is as follows: October 23, 1984. In all other respects, the order of
the respondent arbitrator is hereby AFFIRMED.
monthly rate x 12 months / 251 days

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.

SC RULING: 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 (Insular Bank of Asia and America
Employees’ Union (IBAAEU) v. Inciong, where the court
declared that Sec 2, Rule IV, Book III of IRR which
excluded monthly paid employees from holiday pay
benefits, are null and void).

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
WELLINGTON INVESTMENT AND motion was treated as an appeal and was acted on by
MANUFACTURING CORP VS TRAJANO respondent Undersecretary. By Order dated
September 22, the latter affirmed the challenged
The basic issue raised by petitioner in this case is, as order of the Regional Director, holding that "the
its counsel puts it, "whether or not a monthly-paid divisor being used by the respondent (Wellington)
employee, receiving a fixed monthly compensation, is does not reliably reflect the actual working days in a
entitled to an additional pay aside from his usual year," and consequently commanded Wellington to
holiday pay, whenever a regular holiday falls on a pay its employees the "six additional working days
Sunday."cralaw virtua1aw library resulting from regular holidays falling on Sundays in
1988, 1989 and 1990." 6 Again, Wellington moved for
The case arose from a routine inspection conducted reconsideration, 7 and again was rebuffed. 8
by a labor Enforcement Officer on August 6, 1991 of
the Wellington Flour Mills, an establishment owned Wellington then instituted the special civil action
and operated by petitioner Wellington Investment of certiorari at bar in an attempt to nullify the orders
and Manufacturing Corporation (hereafter, simply above mentioned. By Resolution dated July 4, 1994,
Wellington). The officer thereafter drew up a report, this Court authorized the issuance of a temporary
a copy of which was "explained to and received by" restraining order enjoining the respondents from
Wellington’s personnel manager, in which he set enforcing the questioned orders. 9
forth his finding of" (n)on-payment of regular
holidays falling on a Sunday for monthly-paid Every worker should, according to the Labor Code, 10
employees." 1 "be paid his regular daily wage during regular
holidays, except in retail and service establishments
Wellington sought reconsideration of the Labor regularly employing less than ten (10) workers;" this,
Inspector’s report, by letter dated August 10, 1991. It of course, even if the worker does no work on these
argued that "the monthly salary of the company’s holidays. The regular holidays include: "New Year’s
monthly-salaried employees already includes holiday Day, Maundy Thursday, Good Friday, the ninth of
pay for all regular holidays . . . (and hence) there is no April, the first of May, the twelfth of June, the fourth
legal basis for the finding of alleged non-payment of of July, the thirtieth of November, the twenty-fifth of
regular holidays falling on a Sunday." 2 It expounded December, and the day designed by law for holding a
on this thesis in a position paper subsequently general election (or national referendum or
submitted to the Regional Director, asserting that it plebiscite). 11
pays its monthly-paid employees a fixed monthly
compensation "using the 314 factor which Particularly as regards employees "who are
undeniably covers and already includes payment for uniformly paid by the month, "the monthly minimum
all the working days in a month as well as all the 10 wage shall not be less than the statutory minimum
unworked regular holidays within a year." 3 wage multiplied by 365 days divided by twelve." 12
This monthly salary shall serve as compensation "for
Wellington’s arguments failed to persuade the all days in the month whether worked or not," and
Regional Director who, in an Order issued on July 28, "irrespective of the number of working days therein."
1992, ruled that "when a regular holiday falls on a 13 In other words, whether the month is of thirty
Sunday, an extra or additional working day is created (30) or thirty-one (31) days’ duration, or twenty-
and the employer has the obligation to pay the eight (28) or twenty-nine (29) (as in February), the
employees for the extra day except last Sunday of employee is entitled to receive the entire monthly
August since the payment for the said holiday is salary. So, too, in the event of the declaration of any
already included in the 314 factor," and accordingly special holiday, or any fortuitous cause precluding
directed Wellington to pay its employees work on any particular day or days (such as
compensation corresponding to four (4) extra transportation strikes, riots, or typhoons or other
working days. 4 natural calamities), the employee is entitled to the
salary for the entire month and the employer has no
Wellington timely filed a motion for reconsideration right to deduct the proportionate amount
of this Order of August 10, 1992, pointing out that it corresponding to the days when no work was done.
was in effect being compelled to "shell out an The monthly compensation is evidently intended
additional pay for an alleged extra working day" precisely to avoid computations and adjustments
despite its complete payment of all compensation resulting from the contingencies just mentioned
lawfully due its workers, using the 314 factor. 5 Its which are routinely made in the case of workers paid
on daily basis. as proof evidencing payment of 302 working days, 2
special days and the ten regular holidays in a
In Wellington’s case, there seems to be no question calendar year, the same does not cover or include
that at the time of the inspection conducted by the payment of additional working days created as a
Labor Enforcement Officer on August 6, 1991, it was result of some regular holidays falling on Sundays."
and had been paying its employees "a salary of not
less than the statutory or established minimum He pointed out that in 1988 there was "an increase of
wage," and that the monthly salary thus paid was three (3) working days resulting from regular
"not . . . less than the statutory minimum wage holidays falling on Sundays;" hence Wellington
multiplied by 365 days divided by twelve," supra. "should pay for 317 days, instead of 314 days." By the
There is, in other words, no issue that to this extent, same process of ratiocination, respondent
Wellington complied with the minimum norm laid Undersecretary theorized that there should be
down by law. additional payment by Wellington to its monthly-paid
employees for "an increment of three (3) working
Apparently the monthly salary was fixed by days" for 1989 and again, for 1990. What he is saying
Wellington to provide for compensation for every is that in those years, Wellington should have used
working day of the year including the holidays the "317 factor," not the "314 factor."cralaw
specified by law — and excluding only Sundays. In virtua1aw library
fixing the salary, Wellington used what it calls the
"314 factor;" that is to say, it simply deducted 51 The theory loses sight of the fact that the monthly
Sundays from the 365 days normally comprising a salary in Wellington — which is based on the so-
year and used the difference, 314, as basis for called "314 factor" — accounts for all 365 days of a
determining the monthly salary. The monthly salary year; i.e., Wellington’s "314 factor" leaves no day
thus fixed actually covers payment for 314 days of unaccounted for; it is paying for all the days of a year
the year, including regular and special holidays, as with the exception only of 51 Sundays.
well as days when no work is done by reason of
fortuitous cause, as above specified, or causes not The respondents’ theory would make each of the
attributable to the employees. years in question (1988, 1989, 1990), a year of 368
days. Pursuant to this theory, no employer opting to
The Labor Officer was conducted the routine pay his employees by the month would have any
inspection of Wellington discovered that in certain definite basis to determine the number of days in a
years, two or three regular holidays had fallen on year for which compensation should be given to his
Sundays. He reasoned that this had precluded the work force. He would have to ascertain the number of
enjoyment by the employees of a non-working day, times legal holidays would fall on Sundays in all the
and the employees had consequently had to work an years of the expected or extrapolated lifetime of his
additional day for that month. This ratiocination business. Alternatively, he would be compelled to
received the approval of his Regional Director who make adjustments in his employees’ monthly salaries
opined 14 that "when a regular holiday falls on a every year, depending on the number of times that a
Sunday, an extra or additional working day is created legal holiday fell on a Sunday.
and the employer has the obligation to pay its
employees for the extra day except the last Sunday of There is no provision of law requiring any employer
August since the payment for the said holiday is to make such adjustments in the monthly salary rate
already included in the 314 factor." 15 set by him to take account of legal holidays falling on
Sundays in a given year, or, contrary to the legal
This ingenuous theory was adopted and further provisions bearing on the point, otherwise to reckon
explained by respondent Labor Undersecretary, to a year at more than 365 days. As earlier mentioned,
whom the matter was appealed, as follows: 16 what the law requires of employers opting to pay by
the month is to assure that "the monthly minimum
". . . By using said (314) factor, the respondent wage shall not be less than the statutory minimum
(Wellington) assumes that all the regular holidays fell wage multiplied by 365 days divided by twelve," 17
on ordinary days and never on a Sunday. Thus, the and to pay that salary "for all days in the month
respondent failed to consider the circumstance that whether worked or not," and "irrespective of the
whenever a regular holiday coincides with a Sunday, number of working days therein." 18 That salary is
an additional working day is created and left unpaid. due and payable regardless of the declaration of any
In other words, while the said divisor may be utilized 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.

PRODUCERS BANK VS NLRC Christmas bonus was no longer based on the
allowance but on the basic pay of the employees
FACTS: The present petition originated from a which is higher;
complaint filed by private respondent on 11 February 4. In the early part of 1984, the bank was placed
1988 with the Arbitration Branch, NLRC, charging under conservatorship but it still provided the
petitioner with diminution of benefits, non- traditional mid-year bonus;
compliance with Wage Order No. 6 and non-payment 5. By virtue of an alleged Monetary Board
of holiday pay. In addition, private respondent Resolution No. 1566, bank only gave a one-half
prayed for damages. (1/2) month basic pay as compliance of the
13thmonth pay and none for the Christmas
Labor arbiter dismissed the complaint for lack of bonus.
merit. NLRC, however, granted all of private
respondent’s claims, except for damages. Petition Respondent’s Contention: that the mid-year and
filed a Motion for Partial Reconsideration, which was Christmas bonuses, by reason of their having been
denied by the NLRC. Hence, recourse to this Court. given for thirteen consecutive years, have ripened
into a vested right and, as such, can no longer be
Petitioner contends: that the NLRC gravely abused its unilaterally withdrawn by petitioner without
discretion in ruling as it did for the succeeding violating Article 100 of Presidential Decree No. 4429
reasons stated: (1) it contravened the Supreme Court which prohibits the diminution or elimination of
decision in Traders Royal Bank v. NLRC, et al., G.R. benefits already being enjoyed by the
No. 88168, promulgated on August 30, 1990, (2) its employees. Although private respondent concedes
ruling is not justified by law and Art. 100 of the Labor that the grant of a bonus is discretionary on the part
Code, (3) its ruling is contrary to the CBA, and (4) the of the employer, it argues that, by reason of its long
so-called “company practice invoked by it has no and regular concession, it may become part of the
legal and moral bases” (4) petitioner, employee’s regular compensation.
under conservatorship and distressed, is exempted
under Wage Order No. 6. Petitioner asserts: that it cannot be compelled to
pay the alleged bonus differentials due to its
ISSUE: WON respondent is entitled for the payment depressed financial condition, as evidenced by the
of the above-mentioned monetary claims, fact that in 1984 it was placed under conservatorship
particularly BONUS.[Hindi ko na po sinama ung ibang by the Monetary Board. According to petitioner, it
issues] sustained losses in the millions of pesos from 1984 to
1988, an assertion which was affirmed by the labor
arbiter. Moreover, petitioner points out that
the collective bargaining agreement of the parties
HELD: As to the bonuses, private respondent
does not provide for the payment of any mid-year or
declared in its position papers filed with the NLRC
Christmas bonus. On the contrary, section 4 of the
that – collective bargaining agreement states that –
Acts of Grace. Any other benefits or privileges which
1. Producers Bank of the Philippines, a banking are not expressly provided in this Agreement, even if
institution, has been providing several benefits now accorded or hereafter accorded to the
to its employees since 1971 when it started its employees, shall be deemed purely acts of grace
operation. Among the benefits it had been dependent upon the sole judgment and discretion of
regularly giving is a mid-year bonus equivalent the BANK to grant, modify or withdraw.
to an employee’s one-month basic pay and a
Christmas bonus equivalent to an employee’s one A bonus is an amount granted and paid to an
whole month salary (basic pay plus allowance); employee for his industry and loyalty which
2. When P.D. 851, the law granting a 13thmonth contributed to the success of the employer’s business
pay, took effect, the basic pay previously being and made possible the realization of profits. It is an
given as part of the Christmas bonus was applied act of generosity granted by an enlightened employer
as compliance to it (P.D. 851), the allowances to spur the employee to greater efforts for the
remained as Christmas bonus; success of the business and realization of bigger
3. From 1981 up to 1983, the bank continued giving profits.12 The granting of a bonus is a
one month basic pay as mid-year bonus, one management prerogative, something given in
month basic pay as 13thmonth pay but the addition to what is ordinarily received by or
strictly due the recipient.13 Thus, a bonus is not a
demandable and enforceable obligation,14 except
when it is made part of the wage, salary or
compensation of the employee.15
However, an employer cannot be forced to
distribute bonuses which it can no longer afford
to pay. To hold otherwise would be to penalize
the employer for his past generosity. Thus,
in Traders Royal Bank v. NLRC,16 we held that –
It is clear x x x that the petitioner may not be obliged
to pay bonuses to its employees. The matter of giving
them bonuses over and above their lawful salaries
and allowances is entirely dependent on the profits, if
any, realized by the Bank from its operations during
the past year.
xxx
In light of these submissions of the petitioner, the
contention of the Union that the granting of bonuses
to the employees had ripened into a company
practice that may not be adjusted to the prevailing
financial condition of the Bank has no legal and moral
bases. Its fiscal condition having declined, the Bank
may not be forced to distribute bonuses which it can
no longer afford to pay and, in effect, be penalized for
its past generosity to its employees.

Private respondent’s contention, that the decrease in
the mid-year and year-end bonuses constituted a
diminution of the employees’ salaries, is not correct,
for bonuses are not part of labor standards in the
same class as salaries, cost of living allowances,
holiday pay, and leave benefits, which are provided
by the Labor Code.

This doctrine was reiterated in the more recent case
of Manila Banking Corporation v. NLR1
Petitioner was not only experiencing a decline in
its profits, but was reeling from tremendous
losses triggered by a bank-run which began in
1983. In such a depressed financial condition,
petitioner cannot be legally compelled to
continue paying the same amount of bonuses to
its employees. Thus, the conservator was justified
in reducing the mid-year and Christmas bonuses
of petitioner’s employees. To hold otherwise
would be to defeat the reason for the
conservatorship which is to preserve the assets
and restore the viability of the financially
precarious bank. Ultimately, it is to the
employees’ advantage that the conservatorship
achieve its purposes for the alternative would be
petitioner’s closure whereby employees would
lose not only their benefits, but their jobs as well.

JRC VS NLRC ISSUE:

This is a petition for certiorari with prayer for the
Whether the school faculty who according to their
issuance of a writ of preliminary injunction, seeking
contracts are paid per lecture hour are entitled to
the annulment of the decision of the National Labor
Relations Commission modifying the decision of the unworked holiday pay.
Labor Arbiter, “ that teaching personnel paid by the
hour are hereby declared to be entitled to holiday HELD: Subject holiday pay is provided for in the
pay” Labor Code (Presidential Decree No. 442, as
amended), which reads:
FACTS: The factual background of this case which
is undisputed is as follows:
Art. 94. Right to holiday pay — (a) Every worker
Petitioner is a non-stock, non-profit educational shall be paid his regular daily wage during regular
institution duly organized and existing under the holidays, except in retail and service establishments
laws of the Philippines. It has three groups of regularly employing less than ten (10) workers;
employees categorized as follows: (a) personnel on (b) The employer may require an employee to work
monthly basis, who receive their monthly salary on any holiday but such employee shall be paid a
uniformly throughout the year, irrespective of the compensation equivalent to twice his regular rate; …
actual number of working days in a month without ”
deduction for holidays; (b) personnel on daily basis and in the Implementing Rules and Regulations, Rule
who are paid on actual days worked and they receive IV, Book III, which reads:
unworked holiday pay and (c) collegiate faculty who SEC. 8. Holiday pay of certain employees. — (a)
are paid on the basis of student contract hour. Before Private school teachers, including faculty members of
the start of the semester they sign contracts with the colleges and universities, may not be paid for the
college undertaking to meet their classes as per regular holidays during semestral vacations. They
schedule. shall, however, be paid for the regular holidays
during Christmas vacations
Unable to receive their corresponding holiday pay, as
claimed, from 1975 to 1977, private respondent Under the foregoing provisions, apparently, the
National Alliance of Teachers and Office Workers petitioner, although a non-profit institution is under
(NATOW) in behalf of the faculty and personnel of obligation to give pay even on unworked regular
Jose Rizal College filed with the Ministry of Labor holidays to hourly paid faculty members subject to
a complaint against the college for said alleged the terms and conditions provided for therein.
non-payment of holiday pay. Due to the failure of
the parties to settle their differences on conciliation, We believe that the aforementioned
the case was certified for compulsory arbitration. implementing rule is not justified by the
provisions of the law which after all is silent with
After the parties had submitted their respective respect to faculty members paid by the hour who
position papers, the Labor Arbiter ** rendered a because of their teaching contracts are obliged to
decision: “that Collegiate faculty of the respondent work and consent to be paid only for work
Jose Rizal College who by contract are paid actually done (except when an emergency or a
compensation per student contract hour are not fortuitous event or a national need calls for the
entitled to unworked regular holiday pay considering declaration of special holidays). Regular holidays
that these regular holidays have been excluded in the specified as such by law are known to both school
programming of the student contact hours”. and faculty members as no class days;” certainly the
latter do not expect payment for said unworked days,
On appeal, respondent National Labor Relations and this was clearly in their minds when they entered
Commission in a decision , modified the decision into the teaching contracts.
appealed from, in the sense that teaching
personnel paid by the hour are declared to be On the other hand, both the law and the
entitled to holiday pay. Implementing Rules governing holiday pay are silent
Hence, this petition. as to payment on Special Public Holidays.

Wherefore, 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.

RODRIGUEZ VS PARK N RIDE claims for moral and exemplary damages and
attorney's fees against Park N Ride, Vicest Phils.,
FACTS: On January 30,1984, Lourdes Rodriguez was Grand Leisure, and the Javier Spouses.
hired by spouses Vicente & Estelita B. Javier as
Restaurant Supervisor for their restaurant at Vicest The Labor Arbiter dismissed the complaint and
Phils. Later, when the restaurant closed, she was deemed her resigned. The NLRC reversed the ruling
transferred to do office work and became an of the LA. On appeal, the Court of Appeals reinstated
Administrative and Finance assistant to Estelita the decision of the Labor Arbiter.
Javier.
ISSUE:
As the spouses ventured into other businesses, Whether or not complainant was constructively
establishing more companies, petitioner’s duties dismissed.
extended to handling personnel, finance and
administrative matters of these companies without RULING: Affirming the decision of the Court of
additional compensation. Even substituting as appeals with modifications, the Supreme Court ruled
cashier at their Park N Ride business when the Head that petitioner was not constructively dismissed.
Cashier would be on day-off. She was also tasked to
take care of the household concerns of the Javier There is constructive dismissal when an employer's
spouses, such as preparing payrolls for drivers and act of clear discrimination, insensibility or disdain
helpers, shopping for household needs, and looking becomes so unbearable on the part of the employee
after the spouses’ house whenever they travelled so as to foreclose any choice on his part except to
abroad. resign from such employment.71 It exists where
there is involuntary resignation because of the harsh,
She allegedly worked from 8:00 a.m. to 7:00 p.m., hostile and unfavorable conditions set by the
Mondays to Saturdays; was on call on Sundays; and employer.
worked during Christmas and other holidays. She
was deducted an equivalent of two (2) days' wage for Strong words may sometimes be exchanged as the
every day of absence and was not paid any service employer describes her expectations or as the
incentive leave pay. Tasked with so much duties and employee narrates the conditions of her work
responsibilities and unable to bear the spouses’ environment and the obstacles she encounters as she
treatment of her, she filed a resignation letter accomplishes her assigned tasks. As in every human
effective April 25, 2009 however the spouses did not relationship, there are bound to be disagreements.
accept her resignation and convinced her to stay on. However, when these strong words from the
However her experience became worse as Estelita employer happen without palpable reason or are
allegedly became more unreasonable, hot-headed expressed only for the purpose of degrading the
and would belittle and embarrass her in the presence dignity of the employee, then a hostile work
of co-workers. environment will be created.

On September 29, 2009, when she was late in This is not the situation in this case.
opening the Makati office after going on her usual
“pamalengke” for the spouses, Estelita called her on Complainant was not pressured into resigning. It
the phone and scolded her for it, once again berating seems that the complainant was not comfortable
her and telling her that if she did not want to anymore with the fact that she was always at the
continue work, the company could manage without beck and call of the respondent Javier spouses. Her
her. Thus, On September 29, 2009, she wrote a letter supervisory and managerial functions appear to be
to the spouses expressing her grievances at them. She impeding her time with her family to such extent that
intimated that they were always finding fault with she was always complaining of her extended hours
her to push her to resign. with the company. It is of no moment that respondent
spouses in many occasions reprimanded complainant
On October 6, 2009, the Javier spouses replied to her as long as it was reasonably connected and an
letter, allegedly accepting her resignation. offshoot of the work or business of respondents.

On October 7, 2009, Rodriguez filed a Complaint for From the representation of petitioner, what triggered
constructive illegal dismissal, non-payment of service her resignation was the incident on September 22,
incentive leave pay and 13th month pay, including 2009 when Estelita told her "Kung ayaw mo na ng
ginagawa mo, we can manage! " These words, demand of commutation or upon termination of the
however, are not sufficient to make the continued employee's services, as the case may be.
employment of petitioner impossible, unreasonable,
or unlikely. Thus, the prescriptive period with respect to
petitioner's claim for her entire service incentive
Petitioner was neither terminated on September 22, leave pay commenced only from the time of her
2009 nor was she constructively dismissed. There resignation or separation from employment. Since
was no showing of bad faith or malicious design by petitioner had filed her complaint on October 7,
the respondents that would make her work 2009, or a few days after her resignation in
conditions unbearable. On the other hand, it is a fact September 2009, her claim for service incentive leave
that petitioner enjoyed the privilege of working pay has not prescribed. Accordingly, petitioner must
closely with the Javier Spouses and having their full be awarded service incentive leave pay for her entire
trust and confidence. Spontaneous expressions of an 25 years of service-from 1984 to 2009-and not only
employer do not automatically render a hostile work three (3) years' worth (2006 to 2009) as determined
atmosphere. The circumstances in this case negate its by the Court of Appeals.
presence.

On the monetary claims, petitioner is not entitled to
moral and exemplary damages considering that she
was not illegally dismissed.

On the other hand, with respect to service incentive
leave pay, the Court of Appeals limited the award
thereof to three (3) years (2006 to 2009) only due to
the prescriptive period under Article 291 of the
Labor Code. It held:

Article 95 of the Labor Code provides that every
employee who has rendered at least one year of
service shall be entitled to a yearly service incentive
leave pay of five days with pay, subject to exceptions
(i.e.: when the employee is already enjoying vacation
leave with pay of at least five days; and when the
employee is employed in an establishment regularly
employing less than ten employees).

It was not shown here that petitioner Rodriguez was
enjoying vacation leave with pay of at least five days
while being employed by private respondents
Spouses Javier; it was not shown that private
respondents Spouses Javier were merely employing
less than 10 employees (on the contrary, private
respondent spouses Javier stated that they were
employing less than 15 employees). Hence, the award
of service incentive leave pay to petitioner Rodriguez
was proper.

Applying Article 291 of the Labor Code in light of this
peculiarity of the service incentive leave, we can
conclude that the three (3)-year prescriptive period
commences, not at the end of the year when the
employee becomes entitled to the commutation of his
service incentive leave, but from the time when the
employer refuses to pay its monetary equivalent after