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G.R. No. L-44717 August 28, 1985

THE CHARTERED BANK EMPLOYEES ASSOCIATION,petitioner,vs.HON. BLAS F. OPLE, in his capacity as the Incumbent Secretary of Labor, and THECHARTERED BANK,respondents.

GUTIERREZ, JR., J .:

This is a petition for certiorari seeking to annul the decision of the respondent Secretary, nowMinister of Labor which denied the petitioner's claim for holiday pay and its claim for premium andovertime pay differentials. The petitioner claims that the respondent Minister of Labor acted contraryto law and jurisprudence and with grave abuse of discretion in promulgating Sec. 2, Rule IV, Book IIIof the Integrated Rules and in issuing Policy Instruction No. 9, both referring to holidays with pay.

On May 20, 1975, the Chartered Bank Employees Association, in representation of its monthly paidemployees/members, instituted a complaint with the Regional Office No. IV, Department of Labor,now Ministry of Labor and Employment (MOLE) against private respondent Chartered Bank, for thepayment of ten (10) unworked legal holidays, as well as for premium and overtime differentials forworked legal holidays from November 1, 1974.

The memorandum for the respondents summarizes the admitted and/or undisputed facts as follows:

l. The work force of respondent bank consists of 149 regular employees, all of whomare paid by the month;

2. Under their existing collective bargaining agreement, (Art. VII thereof) said monthlypaid employees are paid for overtime work as follows:

Section l. The basic work week for all employees excepting security guards who byvirtue of the nature of their work are required to be at their posts for 365 days peryear, shall be forty (40) hours based on five (5) eight (8) hours days, Monday toFriday.

Section 2. Time and a quarter hourly rate shall be paid for authorized work performedin excess of eight (8) hours from Monday through Friday and for any hour of workperformed on Saturdays subject to Section 5 hereof.

Section 3. Time and a half hourly rate shall be paid for authorized work performed onSundays, legal and special holidays.

xxx xxx xxx

xxx xxx xxx

Section 5. The provisions of Section I above notwithstanding the BANK may revert tothe six (6) days work week, to include Saturday for a four (4) hour day, in the eventthe Central Bank should require commercial banks to open for business on Saturday.


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3. In computing overtime pay and premium pay for work done during regularholidays, the divisor used in arriving at the daily rate of pay is 251 days althoughformerly the divisor used was 303 days and this was when the respondent bank wasstill operating on a 6-day work week basis. However, for purposes of computingdeductions corresponding to absences without pay the divisor used is 365 days.

4. All regular monthly paid employees of respondent bank are receiving salaries waybeyond the statutory or minimum rates and are among the highest paid employees inthe banking industry.

5. The salaries of respondent bank's monthly paid employees suffer no deduction forholidays occurring within the month.

On the bases of the foregoing facts, both the arbitrator and the National Labor RelationsCommission (NLRC) ruled in favor of the petitioners ordering the respondent bank to pay its monthlypaid employees, holiday pay for the ten (10) legal holidays effective November 1, 1974 and to paypremium or overtime pay differentials to all employees who rendered work during said legal holidays.On appeal, the Minister of Labor set aside the decision of the NLRC and dismissed the petitioner's

claim for lack of merit basing its decision on Section 2, Rule IV, Book Ill of the Integrated Rules andPolicy Instruction No. 9, which respectively provide:

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

POLICY INSTRUCTION NO. 9

TO: All Regional Directors

SUBJECT: PAID LEGAL HOLIDAYSThe rules implementing PD 850 have clarified the policy in the implementation of theten (10) paid legal holidays. Before PD 850, the number of working days a year in afirm was considered important in determining entitlement to the benefit. Thus, wherean employee was working for at least 313 days, he was considered definitely alreadypaid. If he was working for less than 313, there was no certainty whether the ten (10)paid legal holidays were already paid to him or not.

The ten (10) paid legal holidays law, to start with, is intended to benefit principallydaily employees. In the case of monthly, only those whose monthly salary did not yetinclude payment for the ten (10) paid legal holidays are entitled to the benefit.

Under the rules implementing PD 850, this policy has been fully clarified to eliminatecontroversies on the entitlement of monthly paid employees. The new determiningrule is this: 'If the monthly paid employee is receiving not less than P240, themaximum monthly minimum wage, and his monthly pay is uniform from January toDecember, he is presumed to be already paid the ten (10) paid legal holidays.However, if deductions are made from his monthly salary on account of holidays inmonths where they occur, then he is still entitled to the ten (10) paid legal holidays.


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These new interpretations must be uniformly and consistently upheld.

This issuance shall take effect immediately.

The issues are presented in the form of the following assignments of errors:

First Error

Whether or not the Secretary of Labor erred and acted contrary to lawin promulgating Sec. 2, Rule IV, Book III of the Integrated Rules andPolicy Instruction No. 9.

Second Error

Whether or not the respondent Secretary of Labor abused hisdiscretion and acted contrary to law in applying Sec. 2, Rule IV of theIntegrated Rules and Policy Instruction No. 9 abovestated to privaterespondent's monthly-paid employees.

Third Error

Whether or not the respondent Secretary of Labor, in not giving duecredence to the respondent bank's practice of paying its employeesbase pay of 100% and premium pay of 50% for work done duringlegal holidays, acted contrary to law and abused his discretion indenying the claim of petitioners for unworked holidays and premiumand overtime pay differentials for worked holidays.

The petitioner contends that the respondent Minister of Labor gravely abused his discretion inpromulgating Section 2, Rule IV, Book III of the Integrated Rules and Policy Instruction No. 9 as

guidelines for the implementation of Articles 82 and 94 of the Labor Code and in applying saidguidelines to this case. It maintains that while it is true that the respondent Minister has the authorityin the performance of his duty to promulgate rules and regulations to implement, construe and clarifythe Labor Code, such power is limited by provisions of the statute sought to be implemented,construed or clarified. According to the petitioner, the so-called "guidelines" promulgated by therespondent Minister totally contravened and violated the Code by excluding the employees/membersof the petitioner from the benefits of the holiday pay, when the Code itself did not provide fortheir expanding the Code's clear and concise conclusion and notwithstanding the Code's clear andconcise phraseology defining those employees who are covered and those who are excluded fromthe benefits of holiday pay.

On the other hand, the private respondent contends that the questioned guidelines did not deprivethe petitioner's members of the benefits of holiday pay but merely classified those monthly paidemployees whose monthly salary already includes holiday pay and those whose do not, and that theguidelines did not deprive the employees of holiday pay. It states that the question to be clarified iswhether or not the monthly salaries of the petitioner's members already includes holiday pay. Thus,the guidelines were promulgated to avoid confusion or misconstruction in the application of Articles82 and 94 of the Labor Code but not to violate them. Respondent explains that the rationale behindthe promulgation of the questioned guidelines is to benefit the daily paid workers who, unlikemonthly-paid employees, suffer deductions in their salaries for not working on holidays. Hence, theHoliday Pay Law was enacted precisely to countervail the disparity between daily paid workers andmonthly-paid employees.


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The decision in Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong (132SCRA 663) resolved a similar issue. Significantly, the petitioner in that case was also a union ofbank employees. We ruled that Section 2, Rule IV, Book III of the Integrated Rules and PolicyInstruction No. 9, are contrary to the provisions of the Labor Code and, therefore, invalid This Courtstated:

It is elementary in the rules of statutory construction that when the language of thelaw is clear and unequivocal the law must be taken to mean exactly what it says. Inthe case at bar, the provisions of the Labor Code on the entitlement to the benefits ofholiday pay are clear and explicit it provides for both the coverage of and exclusionfrom the benefit. In Policy Instruction No. 9, the then Secretary of Labor went as faras to categorically state that the benefit is principally intended for daily paidemployees, when the law clearly states that every worker shall be paid their regularholiday pay. This is flagrant violation of the mandatory directive of Article 4 of theLabor Code, which states that 'All doubts in the implementation and interpretation ofthe provisions of this Code, including its implementing rules and regulations, shall beresolved in favor of labor.' Moreover, it shall always be presumed that the legislatureintended to enact a valid and permanent statute which would have the mostbeneficial effect that its language permits (Orlosky v. Hasken, 155 A. 112)

Obviously, the Secretary (Minister) of Labor had exceeded his statutory authoritygranted by Article 5 of the Labor Code authorizing him to promulgate the necessaryimplementing rules and regulations.

We further ruled:

While it is true that the contemporaneous construction placed upon a statute byexecutive officers whose duty is to enforce it should be given great weight by thecourts, still if such construction is so erroneous, as in the instant case, the samemust be declared as null and void. It is the role of the Judiciary to refine and, whennecessary correct constitutional (and/or statutory) interpretation, in the context of theinteractions of the three branches of the government, almost always in situationswhere some agency of the State has engaged in action that stems ultimately fromsome legitimate area of governmental power (The Supreme Court in Modern Role,C.B. Swisher 1958, p. 36).

xxx xxx xxx

In view of the foregoing, Section 2, Rule IV, Book III of the Rules to implement theLabor Code and Policy Instruction No. 9 issued by the then Secretary of Labor mustbe declared null and void. Accordinglyl public respondent Deputy Minister of Labor

Amado G. Inciong had no basis at all to deny the members of petitioner union theirregular holiday pay as directed by the Labor Code.

Since the private respondent premises its action on the invalidated rule and policy instruction, it isclear that the employees belonging to the petitioner association are entitled to the payment of ten(10) legal holidays under Articles 82 and 94 of the Labor Code, aside from their monthly salary. Theyare not among those excluded by law from the benefits of such holiday pay.

Presidential Decree No. 850 states who are excluded from the holiday provisions of that law. Itstates:


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ART. 82. Coverage . The provision of this Title shall apply to employees in allestablishments and undertakings, whether for profit or not, but not to governmentemployees, managerial employees, field personnel members of the family of theemployer who are dependent on him for support, domestic helpers, persons in the

personal service of another, and workers who are paid by results as determined bythe Secretary of Labor in appropriate regulations. (Emphasis supplied).

The questioned Section 2, Rule IV, Book III of the Integrated Rules and the Secretary's PolicyInstruction No. 9 add another excluded group, namely, "employees who are uniformly paid by themonth." While the additional exclusion is only in the form of a presumption that all monthly paidemployees have already been paid holiday pay, it constitutes a taking away or a deprivation whichmust be in the law if it is to be valid. An administrative interpretation which diminishes the benefits oflabor more than what the statute delimits or withholds is obviously ultra vires.

It is argued that even without the presumption found in the rules and in the policy instruction, thecompany practice indicates that the monthly salaries of the employees are so computed as toinclude the holiday pay provided by law. The petitioner contends otherwise.

One strong argument in favor of the petitioner's stand is the fact that the Chartered Bank, incomputing overtime compensation for its employees, employs a "divisor" of 251 days. The 251working days divisor is the result of subtracting all Saturdays, Sundays and the ten (10) legalholidays from the total number of calendar days in a year. If the employees are already paid for allnon-working days, the divisor should be 365 and not 251.

The situation is muddled somewhat by the fact that, in computing the employees' absences fromwork, the respondent bank uses 365 as divisor. Any slight doubts, however, must be resolved infavor of the workers. This is in keeping with the constitutional mandate of promoting social justiceand affording protection to labor (Sections 6 and 9, Article II, Constitution). The Labor Code, asamended, itself provides:

ART. 4. Construction in favor of labor . All doubts in the implementation andinterpretation of the provisions of this Code, including its implementing rules andregulations, shall be resolved in favor of labor.

Any remaining doubts which may arise from the conflicting or different divisors used in thecomputation of overtime pay and employees' absences are resolved by the manner in which workactually rendered on holidays is paid. Thus, whenever monthly paid employees work on a holiday,they are given an additional 100% base pay on top of a premium pay of 50%. If the employees'monthly pay already includes their salaries for holidays, they should be paid only premium pay butnot both base pay and premium pay.

The contention of the respondent that 100% base pay and 50% premium pay for work actuallyrendered on holidays is given in addition to monthly salaries only because the collective bargainingagreement so provides is itself an argument in favor of the petitioner stand. It shows that theCollective Bargaining Agreement already contemplated a divisor of 251 days for holiday paycomputations before the questioned presumption in the Integrated Rules and the Policy Instructionwas formulated. There is furthermore a similarity between overtime pay, which is computed on thebasis of 251 working days a year, and holiday pay, which should be similarly treated notwithstandingthe public respondents' issuances. In both cases overtime work and holiday work- the employeeworks when he is supposed to be resting. In the absence of an express provision of the CBA or thelaw to the contrary, the computation should be similarly handled.


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We are not unmindful of the fact that the respondent's employees are among the highest paid in theindustry. It is not the intent of this Court to impose any undue burdens on an employer which isalready doing its best for its personnel. we have to resolve the labor dispute in the light of the parties'own collective bargaining agreement and the benefits given by law to all workers. When the lawprovides benefits for "employees in all establishments and undertakings, whether for profit or not"and lists specifically the employees not entitled to those benefits, the administrative agency

implementing that law cannot exclude certain employees from its coverage simply because they arepaid by the month or because they are already highly paid. The remedy lies in a clear redrafting ofthe collective bargaining agreement with a statement that monthly pay already includes holiday payor an amendment of the law to that effect but not an administrative rule or a policy instruction.

WHEREFORE, the September 7, 1976 order of the public respondent is hereby REVERSED andSET ASIDE. The March 24, 1976 decision of the National Labor Relations Commission whichaffirmed the October 30, 1975 resolution of the Labor Arbiter but deleted interest payments isREINSTATED.

SO ORDERED.

G.R. No. 114698 July 3, 1995

WELLINGTON INVESTMENT AND MANUFACTURING CORPORATION,petitioner,vs.CRESENCIANO B. TRAJANO, Under-Secretary of Labor and Employment, ELMER ABADILLA,and 34 others, respondents .

NARVASA, C.J.:

The basic issue raised by petitioner in this case is, as its counsel puts it, "whether or not a monthly-paid employee, receiving a fixed monthly compensation, is entitled to an additional pay aside fromhis usual holiday pay, whenever a regular holiday falls on a Sunday."

The case arose from a routine inspection conducted by a Labor Enforcement Officer on August 6,1991 of the Wellington Flour Mills, an establishment owned and operated by petitioner WellingtonInvestment and Manufacturing Corporation (hereafter, simply Wellington). The officer thereafter drewup a report, a copy of which was "explained to and received by" Wellington's personnel manager, inwhich he set forth his finding of "(n)on-payment of regular holidays falling on a Sunday for monthly-paid employees." 1

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

Wellington's arguments failed to persuade the Regional Director who, in an Order issued on July 28,1992, ruled that "when a regular holiday falls on a Sunday, an extra or additional working day is


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created and the employer has the obligation to pay the employees for the extra day except the lastSunday of August since the payment for the said holiday is already included in the 314 factor," andaccordingly directed Wellington to pay its employees compensation corresponding to four (4) extraworking days. 4

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

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

Every worker should, according to the Labor Code, 10 "be paid his regular daily wage during regularholidays , 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'sDay, Maundy Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth ofJuly, the thirtieth of November, the twenty-fifth of December, and the day designated by law for holding ageneral election (or national referendum or plebiscite). 11

Particularly as regards employees "who are uniformly paid by the month, "the monthly minimumwage shall not be less than the statutory minimum wage multiplied by 365 days divided bytwelve." 12 This monthly salary shall serve as compensation "for all days in the month whether worked ornot," and "irrespective of the number of working days therein." 13In other words, whether the month is ofthirty (30) or thirty-one (31) days' duration, or twenty-eight (28) or twenty-nine (29) (as in February), theemployee is entitled to receive the entire monthly salary. So, too, in the event of the declaration of anyspecial holiday, or any fortuitous cause precluding work on any particular day or days (such astransportation strikes, riots, or typhoons or other natural calamities), the employee is entitled to the salaryfor the entire month and the employer has no right to deduct the proportionate amount corresponding tothe days when no work was done. The monthly compensation is evidently intended precisely to avoidcomputations and adjustments resulting from the contingencies just mentioned which are routinely madein the case of workers paid on daily basis.

In Wellington's case, there seems to be no question that at the time of the inspection conducted bythe Labor Enforcement Officer on August 6, 1991, it was and had been paying its employees "asalary of not less than the statutory or established minimum wage," and that the monthly salary thuspaid was "not . . . less than the statutory minimum wage multiplied by 365 days divided bytwelve," supra . There is, in other words, no issue that to this extent, Wellington complied with the

minimum norm laid down by law. Apparently the monthly salary was fixed by Wellington to provide for compensation for every workingday of the year including the holidays specified by law and excluding only Sundays. In fixing thesalary, Wellington used what it calls the " 314 factor ;" that is to say, it simply deducted 51 Sundaysfrom the 365 days normally comprising a year and used the difference, 314, as basis for determiningthe monthly salary. The monthly salary thus fixed actually covers payment for 314 days of theyear, including regular and special holidays, as well as days when no work is done by reason offortuitous cause, as above specified, or causes not attributable to the employees.


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The Labor Officer who conducted the routine inspection of Wellington discovered that in certainyears, two or three regular holidays had fallen on Sundays. He reasoned that this had precluded theenjoyment by the employees of a non-working day, and the employees had consequently had towork an additional day for that month. This ratiocination received the approval of his RegionalDirector who opined 14 that "when a regular holiday falls on a Sunday, an extra or additional working dayis created and the employer has the obligation to pay its employees for the extra day except the last

Sunday of August since the payment for the said holiday is already included in the 314 factor."15

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

. . . By using said (314) factor, the respondent (Wellington) assumes that all theregular holidays fell on ordinary days and never on a Sunday. Thus, the respondentfailed to consider the circumstance that whenever a regular holiday coincides with aSunday, an additional working day is created and left unpaid. In other words, whilethe said divisor may be utilized as proof evidencing payment of 302 working days, 2special days and the ten regular holidays in a calendar year, the same does notcover or include payment of additional working days created as a result of someregular holidays falling on Sundays.

He pointed out that in 1988 there was "an increase of three (3) working days resulting from regularholidays falling on Sundays;" hence Wellington "should pay for 317 days, instead of 314 days." Bythe same process of ratiocination, respondent Undersecretary theorized that there should beadditional payment by Wellington to its monthly-paid employees for "an increment of three (3)working days" for 1989 and again, for 1990. What he is saying is that in those years, Wellingtonshould have used the "317 factor," not the "314 factor."

The theory loses sight of the fact that the monthly salary in Wellington which is based on the so-called "314 factor" accounts for all 365 days of a year; i.e. , Wellington's "314 factor" leaves no dayunaccounted for; it is paying for all the days of a year with the exception only of 51 Sundays.

The respondents' theory would make each of the years in question (1988, 1989, 1990), a year of 368days. Pursuant to this theory, no employer opting to pay his employees by the month would haveany definite basis to determine the number of days in a year for which compensation should begiven to his work force. He would have to ascertain the number of times legal holidays would fall onSundays in all the years of the expected or extrapolated lifetime of his business. Alternatively, hewould be compelled to make adjustments in his employees' monthly salaries every year, dependingon the number of times that a legal holiday fell on a Sunday.

There is no provision of law requiring any employer to make such adjustments in the monthly salaryrate set by him to take account of legal holidays falling on Sundays in a given year, or, contrary tothe legal provisions bearing on the point, otherwise to reckon a year at more than 365 days. Asearlier mentioned, what the law requires of employers opting to pay by the month is to assure that

"the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365days divided by twelve," 17 and to pay that salary "for all days in the month whether worked or not," and"irrespective of the number of working days therein." 18 That salary is due and payable regardless of thedeclaration of any special holiday in the entire country or a particular place therein, or any fortuitouscause precluding work on any particular day or days (such as transportation strikes, riots, or typhoons orother natural calamities), or cause not imputable to the worker. And as also earlier pointed out, the legalprovisions governing monthly compensation are evidently intended precisely to avoid re-computationsand alterations in salary on account of the contingencies just mentioned, which, by the way, are routinelymade between employer and employees when the wages are paid on daily basis.


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The public respondents argue that their challenged conclusions and dispositions may be justified bySection 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 theCode and the other labor legislations based on the findings of their RegulationsOfficers or Industrial Safety Engineers (Labor Standard and Welfare Officers) andmade in the course of inspection, and to issue writs of execution to the appropriateauthority for the enforcement of his order, in line with the provisions of Article 128 inrelation to Articles 289 and 290 of the Labor Code, as amended. . . .

The respondents beg the question. Their argument assumes that there are some "labor standardsprovisions of the Code and the other labor legislations" imposing on employers the obligation to giveadditional compensation to their monthly-paid employees in the event that a legal holiday should fallon a Sunday in a particular month with which compliance may be commanded by the RegionalDirector 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. Theyhave acted without authority, or at the very least, with grave abuse of their discretion. Their actsmust be nullified and set aside.

WHEREFORE, the orders complained of, namely: that of the respondent Undersecretary datedSeptember 22, 1993, and that of the Regional Director dated July 30, 1992, are NULLIFIED ANDSET ASIDE, and the proceeding against petitioner DISMISSED.

SO ORDERED.

FIRST DIVISION

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

SAN MIGUEL CORPORATION,peti t ioner, vs. THE HONORABLECOURT OF APPEALS-FORMER THIRTEENTH DIVISION, HON.UNDERSECRETARY JOSE M. ESPAOL, JR., Hon.CRESENCIANO B. TRAJANO, and HON. REGIONAL DIRECTORALLAN M. MACARAYA,responden ts .

D E C I S I O NKAPUNAN,J .:

Assailed in the petition before us are the decision, promulgated on 08 May 2000,and the resolution, promulgated on 18 October 2000, of the Court of Appeals in CAG.R. SP-53269.


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The facts of the case are as follows:

On 17 October 1992, the Department of Labor and Employment (DOLE), IliganDistrict Office, conducted a routine inspection in the premises of San MiguelCorporation (SMC) in Sta. Filomena, Iligan City. In the course of the inspection, it wasdiscovered that there was underpayment by SMC of regular Muslim holiday pay to itsemployees. DOLE sent a copy of the inspection result to SMC and it was received byand explained to its personnel officer Elena dela Puerta .[1] SMC contested the findingsand DOLE conducted summary hearings on 19 November 1992, 28 May 1993 and 4and 5 October 1993. Still, SMC failed to submit proof that it was paying regular Muslimholiday pay to its employees. Hence, Alan M. Macaraya, Director IV of DOLE IliganDistrict Office issued a compliance order, dated 17 December 1993, directing SMC toconsider Muslim holidays as regular holidays and to pay both its Muslim and non-Muslim employees holiday pay within thirty (30) days from the receipt of the order.

SMC appealed to the DOLE main office in Manila but its appeal was dismissed forhaving been filed late. The dismissal of the appeal for late filing was later on

reconsidered in the order of 17 July 1998 after it was found that the appeal was filedwithin the reglementary period. However, the appeal was still dismissed for lack of meritand the order of Director Macaraya was affirmed.

SMC went to this Court for reliefvia a petition for certiorari , which this Court referredto the Court of Appeals pursuant to St. Martin Funeral Homes vs. NLRC .[2]

The appellate court, in the now questioned decision, promulgated on 08 May 2000,ruled, as follows:

WHEREFORE, the Order dated December 17, 1993 of Director Macaraya and Orderdated July 17, 1998 of Undersecretary Espaol, Jr. is hereby MODIFIED with regards

the payment of Muslim holiday pay from 200% to 150% of the employee's basicsalary. Let this case be remanded to the Regional Director for the proper computationof the said holiday pay.

SO ORDERED.[3]

Its motion for reconsideration having been denied for lack of merit, SMC filed apetition forcertiorari before this Court, alleging that:

PUBLIC RESPONDENTS SERIOUSLY ERRED AND COMMITTED GRAVE

ABUSE OF DISCRETION WHEN THEY GRANTED MUSLIM HOLIDAY PAYTO NON-MUSLIM EMPLOYEES OF SMC-ILICOCO AND ORDERING SMC TOPAY THE SAME RETROACTIVE FOR ONE (1) YEAR FROM THE DATE OFTHE PROMULGATION OF THE COMPLIANCE ORDER ISSUED ONDECEMBER 17, 1993, IT BEING CONTRARY TO THE PROVISIONS, INTENTAND PURPOSE OF P.D. 1083 AND PREVAILING JURISPRUDENCE.
http://sc.judiciary.gov.ph/jurisprudence/2002/jan2002/146775.htm#_edn1http://sc.judiciary.gov.ph/jurisprudence/2002/jan2002/146775.htm#_edn1http://sc.judiciary.gov.ph/jurisprudence/2002/jan2002/146775.htm#_edn1http://sc.judiciary.gov.ph/jurisprudence/1998/sept%201998/130866.htmhttp://sc.judiciary.gov.ph/jurisprudence/1998/sept%201998/130866.htmhttp://sc.judiciary.gov.ph/jurisprudence/2002/jan2002/146775.htm#_edn2http://sc.judiciary.gov.ph/jurisprudence/2002/jan2002/146775.htm#_edn2http://sc.judiciary.gov.ph/jurisprudence/2002/jan2002/146775.htm#_edn2http://sc.judiciary.gov.ph/jurisprudence/2002/jan2002/146775.htm#_edn3http://sc.judiciary.gov.ph/jurisprudence/2002/jan2002/146775.htm#_edn3http://sc.judiciary.gov.ph/jurisprudence/2002/jan2002/146775.htm#_edn3http://sc.judiciary.gov.ph/jurisprudence/2002/jan2002/146775.htm#_edn3http://sc.judiciary.gov.ph/jurisprudence/2002/jan2002/146775.htm#_edn2http://sc.judiciary.gov.ph/jurisprudence/1998/sept%201998/130866.htmhttp://sc.judiciary.gov.ph/jurisprudence/2002/jan2002/146775.htm#_edn1


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THE ISSUANCE OF THE COMPLIANCE ORDER WAS TAINTED WITHGRAVE ABUSE OF DISCRETION IN THAT SAN MIGUEL CORPORATIONWAS NOT ACCORDED DUE PROCESS OF LAW; HENCE, THE ASSAILEDCOMPLIANCE ORDER AND ALL SUBSEQUENT ORDERS, DECISION ANDRESOLUTION OF PUBLIC RESPONDENTS WERE ALL ISSUED WITH GRAVEABUSE OF DISCRETION AND ARE VOID AB INITIO.

THE HON. COURT OF APPEALS COMMITTED GRAVE ABUSE OFDISCRETION WHEN IT DECLARED THAT REGIONAL DIRECTORMACARAYA, UNDERSECRETARY TRAJANO AND UNDERSECRETARYESPAOL, JR., WHO ALL LIKEWISE ACTED WITH GRAVE ABUSE OFDISCRETION AND WITHOUT OR IN EXCESS OF THEIR JURISDICTION,HAVE JURISDICTION IN ISSUING THE ASSAILED COMPLIANCE ORDERAND SUBSEQUENT ORDERS, WHEN IN FACT THEY HAVE NOJURISDICTION OR HAS LOST JURISDICTION OVER THE HEREIN LABORSTANDARD CASE.[4]

At the outset, petitioner came to this Court via a petition for certiorari under Rule 65instead of an appeal under Rule 45 of the 1997 Rules of Civil Procedure. In NationalIrrigation Administration vs. Court of Appeals ,[5] the Court declared:

x x x (S)ince the Court of Appeals had jurisdiction over the petition under Rule 65,any alleged errors committed by it in the exercise of its jurisdiction would be errors of judgment which are reviewable by timely appeal and not by a special civil actionof certiorari . If the aggrieved party fails to do so within the reglementary period, andthe decision accordingly becomes final and executory, he cannot avail himself of thewrit ofcertiorari , his predicament being the effect of his deliberate inaction.

The appeal from a final disposition of the Court of Appeals is a petition for reviewunder Rule 45 and not a special civil action under Rule 65 of the Rules of Court, nowRule 45 and Rule 65, respectively, of the 1997 Rules of Civil Procedure. Rule 45 isclear that decisions, final orders or resolutions of the Court of Appeals in anycase, i.e., regardless of the nature of the action or proceeding involved, may beappealed to this Court by filing a petition for review, which would be but acontinuation of the appellate process over the original case. Under Rule 45 thereglementary period to appeal is fifteen (15) days from notice of judgment or denial ofmotion for reconsideration.

x x x

For the writ ofcertiorari under Rule 65 of the Rules of Court to issue, a petitionermust show that he has no plain, speedy and adequate remedy in the ordinary course of
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law against its perceived grievance. A remedy is considered "plain, speedy andadequate" if it will promptly relieve the petitioner from the injurious effects of the judgment and the acts of the lower court or agency. In this case, appeal was not onlyavailable but also a speedy and adequate remedy.[6]

Well-settled is the rule that certiorari cannot be availed of as a substitute for a lostappeal .[7] For failure of petitioner to file a timely appeal, the questioned decision of theCourt of Appeals had already become final and executory.

In any event, the Court finds no reason to reverse the decision of the Court of Appeals.

Muslim holidays are provided under Articles 169 and 170, Title I, Book V, ofPresidential Decree No. 1083 ,[8] otherwise known as the Code of Muslim Personal Laws,which states:

Art. 169.Official Muslim holidays. - The following are hereby recognized as legalMuslim holidays:

(a) Amun Jadd (New Year), which falls on the first day of the first lunar monthof Muharram;

(b) Maulid-un- Nab (Birthday of the Prophet Muhammad), which falls on the twelfth dayof the third lunar month of Rabi-ul-Awwal;

(c) Lailatul Isr Wal Mirj (Nocturnal Journey and Ascension of the ProphetMuhammad), which falls on the twenty-seventh day of the seventh lunar monthof Rajab;

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

(e) d -l - Adh (Hari Raya Haji), which falls on the tenth day of the twelfth lunar monthof Dhl -Hijja.

Art. 170. Provinces and cities where officially observed. - (1) Muslim holidays shall be officially observed in the Provinces of Basilan, Lanao del Norte, Lanao del Sur,Maguindanao, North Cotabato, Iligan, Marawi, Pagadian, and Zamboanga and in suchother Muslim provinces and cities as may hereafter be created;

(2) Upon proclamation by the President of the Philippines, Muslim holidays may also be officially observed in other provinces and cities.

The foregoing provisions should be read in conjunction with Article 94 of the LaborCode, which provides:

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

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

Petitioner asserts that Article 3(3) of Presidential Decree No. 1083 provides that(t)he provisions of this Code shall be applicable only to Muslims x x x. However, thereshould be no distinction between Muslims and non-Muslims as regards payment ofbenefits for Muslim holidays. The Court of Appeals did not err in sustainingUndersecretary Espaol who stated:

Assuming arguendo that the respondents position is correct, then by the same token,

Muslims throughout the Philippines are also not entitled to holiday pays on Christianholidays declared by law as regular holidays. We must remind the respondent-appellant that wages and other emoluments granted by law to the working man aredetermined on the basis of the criteria laid down by laws and certainly not on the basisof the workers faith or religion.

At any rate, Article 3(3) of Presidential Decree No. 1083 also declares that x x xnothing herein shall be construed to operate to the prejudice of a non- Muslim.

In addition, the 1999 Handbook on Workers Statutory Benefits , approved by thenDOLE Secretary Bienvenido E. Laguesma on 14 December 1999 categorically stated:

Considering that all private corporations, offices, agencies, and entities orestablishments operating within the designated Muslim provinces and cities arerequired to observe Muslim holidays,both Muslim and Christians working withinthe Muslim areas may not report for work on the days designated by law asMuslim holidays .[9]

On the question regarding the jurisdiction of the Regional Director Allan M.Macaraya, Article 128, Section B of the Labor Code, as amended by Republic Act No.7730, provides:

Article 128. Visitorial and enforcement power. -

x x x(b) Notwithstanding the provisions of Article 129 and 217 of this Code to the contrary,

and in cases where the relationship of employer-employee still exists, the Secretaryof Labor and Employment or his duly authorized representatives shall have thepower to issue compliance orders to give effect to the labor standards provisions of
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this Code and other labor legislation based on the findings of labor employment andenforcement officers or industrial safety engineers made in the course of theinspection. The Secretary or his duly authorized representative shall issue writs ofexecution to the appropriate authority for the enforcement of their orders, except incases where the employer contests the findings of the labor employment andenforcement officer and raises issues supported by documentary proofs which werenot considered in the course of inspection.

x x x

In the case before us, Regional Director Macaraya acted as the duly authorizedrepresentative of the Secretary of Labor and Employment and it was within his power toissue the compliance order to SMC. In addition, the Court agrees with the SolicitorGeneral that the petitioner did not deny that it was not paying Muslim holiday pay to itsnon-Muslim employees. Indeed, petitioner merely contends that its non-Muslimemployees are not entitled to Muslim holiday pay. Hence, the issue could be resolvedeven without documentary proofs. In any case, there was no indication that RegionalDirector Macaraya failed to consider any documentary proof presented by SMC in thecourse of the inspection.

Anent the allegation that petitioner was not accorded due process, we sustain theCourt of Appeals in finding that SMC was furnished a copy of the inspection order and itwas received by and explained to its Personnel Officer. Further, a series of summaryhearings were conducted by DOLE on 19 November 1992, 28 May 1993 and 4 and 5October 1993. Thus, SMC could not claim that it was not given an opportunity todefend itself.

Finally, as regards the allegation that the issue on Muslim holiday pay was alreadyresolved in NLRC CA No. M-000915-92 (Napoleon E. Fernan vs. San MiguelCorporation Beer Division and Leopoldo Zaldarriaga ),[10] the Court notes that the casewas primarily for illegal dismissal and the claim for benefits was only incidental to themain case. In that case, the NLRC Cagayan de Oro City declared, in passing:

We also deny the claims for Muslim holiday pay for lack of factual and legal basis. Muslim holidays are legally observed within the area of jurisdiction of the present Autonomous Region for Muslim Mindanao (ARMM), particularly in the provinces of Maguindanao, Lanao del Sur, Sulu and Tawi-Tawi. It is only uponPresidential Proclamation that Muslim holidays may be officially observed outside theAutonomous Region and generally extends to Muslims to enable them the observesaid holidays.[11]

The decision has no consequence to issues before us, and as aptly declared byUndersecretary Espaol, it can never be a benchmark nor a guideline to the presentcase x x x. [12]

WHEREFORE, in view of the foregoing, the petition is DISMISSED.SO ORDERED.
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FIRST DIVISION

[G.R. No. 118289. December 13, 1999]

TRANS-ASIA PHILS. EMPLOYEES ASSOCIATION (TAPEA) and ARNELGALVEZ , petitioners, vs . NATIONAL LABOR RELATIONSCOMMISSION, TRANS-ASIA (PHILS.) and ERNESTO S. DECASTRO, respondents .

D E C I S I O NKAPUNAN, J.:

This petition forcertiorari under Rule 65 of the Rules of Court seeks to reverse and set asidethe Resolutions, dated 23 November 1993 and 13 September 1994 of the National LaborRelations Commission (NLRC) which dismissed petitioners appeal from the adverse decisionof the labor arbiter and denied petitioners motion for reconsideration, respectively.

The antecedents of this case are as follows:

On 7 July 1988, Trans-Asia Philippines Employees Association (TAPEA), the duly-recognized collective bargaining agent of the monthly-paid rank-and-file employees of Trans-Asia (Phils.), entered into a Collective Bargaining Agreement (CBA) with their employer. TheCBA, which was to be effective from 1 April 1988 up to 31 March 1991, provided for, amongothers, the payment of holiday pay with a stipulation that if an employee is permitted to work ona legal holiday, the said employee will receive a salary equivalent to 200% of the regular dailywage plus a 60% premium pay.

Despite the conclusion of the CBA, however, an issue was still left unresolved with regardto the claim of TAPEA for payment of holiday pay covering the period from January of 1985 upto December of 1987. Thus, the parties underwent preventive mediation meetings with arepresentative from the National Mediation and Conciliation Board in order to settle theirdisagreement on this particular issue. Since the parties were not able to arrive at an amicablesettlement despite the conciliation meetings, TAPEA, led by its President, petitioner ArnieGalvez, filed a complaint before the labor arbiter, on 18 August 1988, for the payment of theirholiday pay in arrears. On 18 September 1988, petitioners amended their complaint to include

the payment of holiday pay for the duration of the recently concluded CBA (from 1988 to1991), unfair labor practice, damages and attorneys fees.

In their Position Paper, petitioners contended that their claim for holiday pay in arrears is based on the non-inclusion of the same in their monthly pay. In this regard, petitioners citedcertain circumstances which, according to them, would support their claim for past due holiday pay. First, petitioners presented Trans-Asias Employees Manual which requires, as a pre -condition for the payment of holiday pay, that the employee should have worked or was onauthorized leave with pay on the day immediately preceding the legal holiday. Petitioners


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argued that if the intention [of Trans -Asia] was not to pay holiday pay in addition to theemployees monthly pay, then there would be no need to impose or specify the pre -condition forthe payment. [1] Second, petitioners proffered as evidence their appointment papers which do notcontain any stipulation on the inclusion of holiday pay in their monthly salary. According to petitioners, the absence of such stipulation is an indication that the mandated holiday pay is not

incorporated in the monthly salary. Third, petitioners noted the inclusion of a provision in theCBA 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. Petitioners claimedthat this very generous provision was the remedy availed of by Trans-Asia to allow itsemployees 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.

Finally, petitioners cited the current CBA provision which obligates Trans-Asia to giveholiday pay. Petitioners asserted that this provision is an acknowledgment by Trans-Asia of itsfailure 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.

With regard to the claim for the payment of holiday pay for the duration of the CBA, theaccusation of unfair labor practice and the claim for damages and attorneys fees, petitionersasserted that Trans-Asia is guilty of bad faith in negotiating and executing the current CBAsince, after it recognized the right of the employees to receive holiday pay, Trans-Asia allegedlyrefused to honor the CBA provision on the same.

In response to petitioners contentions, Trans -Asia refuted the samein seriatim . With regardto the pre-condition for the payment of holiday pay stated in the Employees Manual and theabsence of a stipulation on holiday pay in the employees appointment papers, Trans -Asiaasserted that the above circumstances are not indicative of its non-payment of holiday pay sinceit has always honored the labor law provisions on holiday pay by incorporating the same in the payment of the monthly salaries of its employees. In support of this claim, Trans-Asia pointedout that it has long been the standing practice of the company to use the divisor of 286 days incomputing for itsemployees overtime pay and daily rate deductions for absences. Trans-Asiaexplained that this divisor is arrived at through the following formula:

52 x 44---------- = 286 days

8

Where: 52 = number of weeks in a year

44 = number of work hours per week8 = number of work hours per day

Trans-Asia further clarified that 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 andunpaid 52 Sundays and 26 Saturdays (employees are required to work half-day duringSaturdays). Trans-Asia claimed that if the ten (10) regular holidays were not included in the
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computation of their employees monthly salary, the divisor which they would have used wouldonly be 277 days which is arrived at by subtracting 52 Sundays, 26 Saturdays and the 10 Legalholidays from 365 calendar days. Furthermore, Trans-Asia explained that the 286 days divisoris based on Republic Act No. 6640,[2] wherein the divisor of 262 days (composed of the 252working days and the 10 legal holidays) is used in computing for the monthly rate of workers

who do not work and are not considered paid on Saturdays and Sundays or rest days. Accordingto Trans-Asia, if the additional 26 working Saturdays in a year is factored-in to the divisor provided by Republic Act No. 6640, the resulting divisor would be 286 days.

On petitioners contention with regard to the CBA provision on the allegedly generousholiday pay rate of 260%, Trans-Asia explained that this holiday pay rate was included in theCBA in order to comply with Section 4, Rule IV, Book III of the Omnibus Rules Implementingthe Labor Code. The aforesaid provision reads:

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

On the contention that Trans-Asias acquiescence to the inclusion of a holiday pay provisionin the CBA is an admission of non-payment of the same in the past, Trans-Asia reiterated that itis simply a recognition of the mandate of the Labor Code that employees are entitled to holiday pay. It clarified that the companys firm belief in the payment of holiday pay to employees led itto agree to the inclusion of the holiday pay provision in the CBA.

With regard to the accusation of unfair labor practice because of Trans-Asia s act ofallegedly bargaining in bad faith and refusal to give holiday pay in accordance with the CBA,Trans-Asia explained that what petitioners would like the company to do is to give doubleholiday pay since, as previously stated, the company has already included the same in itsemployees monthly salary and, yet, petitioners want it to pay a second set of holiday pay.

On 13 February 1989, the labor arbiter rendered a decision dismissing the complaint, to wit:

After considering closely the arguments of the parties in support of their respectiveclaims and defenses, this Branch upholds a different view from that espoused by thecomplainants.

Just like in the Chartered Bank Case (L-44717), August 28, 1985, 138 SCRA 273,which is cited by the complainants in their Position Paper, there appears to be no clearagreement between the parties in the instant case, whether verbal or in writing, thatthe monthly salary of the employees included the mandated holiday pay. In theabsence of such agreement, the Supreme Court in said Chartered Bank Case took intoconsideration existing practices in the bank in resolving the issue, such asemployment by the bank of a divisor of 251 days which is the result of subtracting allSaturdays, Sundays and the ten (10) legal holidays from the total number of calendar
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days in a year. Further, the Court took note of the fact that the bank used conflictingor different divisors in computing salary-related benefits as well as the employeesabsence from work. In the case at bar, not only did the CBA between thecomplainants and respondents herein provides (sic) that the ten (10) legal holidays arerecognized by the Company as full holiday with pay. What is more, there can be nodoubt that since 1977 up to the execution of the CBA, the Trans-Asia, unlike thatobtaining in the Chartered Bank Case, never used conflicting or different divisors butconsistently employed the divisor of 286 days, which as earlier pointed out, wasarrived at by subtracting only the unworked 52 Sundays and the 26 half-day-workedSaturdays from the total number of days in a year. The consistency in the established practice of the Trans-Asia, which incidentally is not disputed by complainants, did notgive rise to any doubt which could have been resolved in favor of complainants.

Besides, the respondents unlike the respondent bank in the Chartered Bank EmployeesAssociation vs. Hon. Blas F. Ople, et al. (supra) citing also the case of IBAAEU vs.Hon,. Amado Inciong (132 SCRA 663) which case have (sic) invalidated Section 2,Rule IV, Book III of the Implementing Rules of the Labor Code and PolicyInstruction No. 9, have never relied on the said invalidated rule and Policy Instruction.

The complainants arguments and juxtapositions in claiming that they were denied payment of their holiday pay paled in the face of the prevailing company practices andcircumstances abovestated.

Also, for the reasons adverted to above, the complainants charge of unfair labor practice claiming that respondents in bad faith refused to comply with theircontractual obligation under the CBA by not paying the complainants holiday pay,must fail. Since respondents have nothing more to pay by way of legal holiday pay asit has already been included in their monthly salaries, the provision in the CBArelative to holiday pay is just but a recognition of the complainants right to paymentof legal holiday pay as mandated by the Labor Code.

WHEREFORE, all the foregoing premises being considered, judgment is herebyrendered dismissing the complaint for lack of merit.

SO ORDERED.[3]

Petitioners appealed to the National Labor Relations Commission. In its Resolution, dated23 November 1993, the NLRC dismissed the appeal and affirmed the decision of the laborarbiter, to wit:

We find no cogent reason to change or disturb the decision appealed from, the same being substantially supported by the facts and evidence on record. "It is a well-settled


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rule that findings of facts of administrative bodies, if based on substantial evidence arecontrolling on the reviewing authority. (Planters Products, Inc. vs. NLRC, G. R. No.78524 & 78739, January 20, 1989; 169 SCRA 328).

We find no abuse of discretion and/or error in the assailed decision.

WHEREFORE, the appeal are (sic) hereby DISMISSED for lack of merit and thedecision appealed from is AFFIRMED.

SO ORDERED.[4]

Petitioners motion for reconsideration was, likewise, denied by the NLRC in its Resolution,dated 13 September 1994.

Petitioners are now before us faulting the NLRC with the following assignment of errors: I

PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION INUPHOLDING THE LABOR ARBITERS DECISION DESPITE THE LACK OFSUBSTANTIAL EVIDENCE TO SUPPORT IT

II

IN UPHOLDING THE LABOR ARBITERS DECISION DESPITE THE LACKOF SUBSTANTIAL EVIDENCE TO SUPPORT IT, PUBLIC RESPONDENT NLRC VIOLATED THE CONSTITUTIONAL AND LEGAL MANDATE TORESOLVE ALL DOUBTS IN SOCIAL LEGISLATION IN FAVOR OFLABOR .[5]

Petitioners, in furtherance of their first assignment of error, assert that the NLRC blatantlyan unshamedly disregarded the numerous evidence in support of their claim and relied merelyon the sole evidence presented by Trans-Asia, the 286 days divisor, in dismissing their appealand, in so doing, is guilty of grave abuse of discretion.[6]

We do not agree.

Trans-Asias inclusion of holiday pay in petitioners monthly salary is clearly established byits consistent use of the divisor of 286 days in the computation of its employees benefits anddeductions. The use by Trans-Asia of the 286 days divisor was never disputed by petitioners. A simple application of mathematics would reveal that the ten (10) legal holidays ina year are already accounted for with the use of the said divisor. As explained by Trans-Asia, ifone is to deduct the unworked 52 Sundays and 26 Saturdays (derived by dividing 52 Saturdays inhalf since petitioners are required to work half-day on Saturdays) from the 365 calendar days in ayear, the resulting divisor would be 286 days (should actually be 287 days). Since the ten (10)legal holidays were never included in subtracting the unworked and unpaid days in a calendaryear, the only logical conclusion would be that the payment for holiday pay is already
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incorporated into the said divisor. Thus, when viewed against this very convincing piece ofevidence, the arguments put forward by petitioners to support their claim of non-payment ofholiday pay, i.e., the pre-condition statedin the Employees Manual for entitlement to holiday

pay, the absence of a stipulation in the employees appointment papers for the inclusion ofholiday pay in their monthly salary, the stipulation in the CBA recognizing the entitlement of the

petitioners to holiday pay with a concomitant provision for the granting of an allegedly verygenerous holiday pay rate, would appear to be merely inferences and suppositions which, in theapropos words of the labor arbiter, paled in the face of the prevailing company practices andcircumstances abovestated.

Hence, it is on account of the convincing and legally sound arguments and evidence ofTrans-Asia that the labor arbiter rendered a decision adverse to petitioners. Acknowledging thatthe decision of the labor arbiter was based on substantial evidence, the NLRC affirmed theformers disposition. It is also with this acknowledgment that the Court affirms the questionedresolutions of the NLRC. As aptly put by the Solicitor General, citingSunset ViewCondominium Corporation vs. NLRC ,[7] findings of fact of administrativ e bodies should not bedisturbed in the absence of grave abuse of discretion or unless the findings are not supported bysubstantial evidence. [8] In this regard, the Solicitor General observed:As said above, publicrespondent acted on the basis of substantial evidence, hence, grave abuse of discretion is ruledout.[9]

However, petitioners insist that the agreement of Trans-Asia in the CBA to give a generous260% holiday pay rate to employees who work on a holiday is conclusive proof that the monthly pay of petitioners does not include holiday pay.[10] Petitioners cite as basis the case ofChartered Bank Employees Association vs. Ople ,[11] which reads:

Any remaining doubts which may arise from the conflicting or different divisors usedin the computation of overtime pay and employees absences are resolved by the

manner in which work actually rendered on holidays is paid. Thus, whenevermonthly paid employees work on a holiday, they are given an additional 100% base pay on top of a premium pay of 50%.If the employees monthly pay already includestheir salaries for holidays, they should be paid only premium pay but not both base pay and premium pay.[12]

We are not convinced. The cited case cannot be relied upon by petitioners since the factsobtaining in theChartered Bank case are very different from those in the present case. Inthe Chartered Bank case, the bank used different divisors in computing for its employees benefits and deductions. For computing overtime compensation, the bank used 251 days as itsdivisor. On the other hand, for computing deductions due to absences, the bank used 365 days asdivisor. Due to this confusing situation, the Court declared that there existed a doubt as towhether holiday pay is already incorporated in the employees monthly salary. Since doubtsshould be resolved in favor of labor, the Court in theChartered Bank case ruled in favor of theemployees and further stated that its conclusion is fortified by the manner in which theemployees are remunerated for work rendered on holidays. In the present case, however, there isno confusion with regard to the divisor used by Trans-Asia in computing for petitioners benefitsand deductions. Trans-Asia consistently used a 286 days divisor for all its computations.
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Nevertheless, petitioners cause is not entirely lost. The Court notes that there is a need toadjust the divisor used by Trans-Asia to 287 days, instead of only 286 days, in order to properlyaccount for the entirety of regular holidays and special days in a year as prescribed by ExecutiveOrder No. 203[13] in relation to Section 6 of the Rules Implementing Republic Act 6727.[14]

Section 1 of Executive Order No. 203 provides:

SECTION 1. Unless otherwise modified by law, order or proclamation, the followingregular holidays and special days shall be observed in the country:

A. Regular Holidays

New Years Day - January 1

Maundy Thursday - Movable Date

Good Friday - Movable DateAraw ng Kagitingan - April 9(Bataan and Corregidor Day)

Labor Day - May 1

Independence Day - June 12

National Heroes Day - Last Sunday of August

Bonifacio Day - November 30

Christmas Day - December 25

Rizal Day - December 30

B. Nationwide Special Days

All Saints Day - November 1

Last Day of the Year - December 31

On the other hand, Section 6 of the Implementing Rules and Regulations of Republic Act No. 6727 provides:

Section 6. Suggested Formula in Determining the Equivalent Monthly StatutoryMinimum Wage Rates.- Without prejudice from existing company practices,
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agreements or policies, the following formulas may be used as guides in determiningthe equivalent monthly statutory minimum wage rates:

x x x x x x x x x

d) For those who do not work and are not considered paid on Saturdays and Sundaysor rest days:

Equivalent Monthly = Average Daily Wage Rate x 262 daysRate (EMR) 12

Where 262 days =

250 days Ordinary working days

10 days Regular holidays2 days Special days (If considered paid; if actually worked, this is equivalent to

2.6 days)-----------

262 days Total equivalent number of days

Based on the above, the proper divisor that should be used for a situation wherein theemployees do not work and are not considered paid on Saturdays and Sundays or rest days is 262days. In the present case, since the employees of Trans-Asia are required to work half-day onSaturdays, 26 days should be added to the divisor of 262 days, thus, resulting to 288days. However, due to the fact that the rest days of petitioners fall on a Sunday, the number ofunworked but paid legal holidays should be reduced to nine (9), instead of ten (10), since onelegal holiday under E.O. No. 203 always falls on the last Sunday of August, National HeroesDay. Thus, the divisor that should be used in the present case should be 287 days.

However, the Court notes that if the divisor is increased to 287 days, the resulting daily ratefor purposes of overtime pay, holiday pay and conversions of accumulated leaves would bediminished. To illustrate, if an employee receives P8,000.00 as his monthly salary, his daily ratewould be P334.49, computed as follows:

P8,000.00 x 12 months------------------------- = P334.49/day287 days

Whereas if the divisor used is only286 days, the employees daily rate would be P335.66,computed as follows:

P8,000.00 x 12 months


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------------------------ = P335.66/day286 days

Clearly, this muddled situation would be violative of the proscription on the non-diminution of benefits under Section 100 of the Labor Code. On the other hand, the use of the divisor of 287

days would be to the advantage of petitioners if it is used for purposes of computing fordeductions due to the employees absences. In view of this situation, the Court rules that theadjusted divisor of 287 days should only be used by Trans-Asia for computations which would be advantageous to petitioners, i.e., deductions for absences, and not for computations whichwould diminish the existing benefits of the employees, i.e., overtime pay, holiday and leaveconversions.

For their second assignment of error, petitioners argue that, since they provided the NLRCwith overwhelming proof of their claim against Trans -Asia, the least that the NLRC couldhave done was to declare that there existed an ambiguity with regard to Trans-Asias payment ofholiday pay. Petitioners then posits that if the NLRC had only done so, this ambiguity wouldhave been resolved in their favor because of the constitutional mandate to resolve doubts in favorof labor.

We are not persuaded. As previously stated, the decision of the labor arbiter and theresolutions of the NLRC were based on substantial evidence and, as such, no ambiguity or doubtexists which could be resolved in petitioners favor.

WHEREFORE , premises considered, the Resolutions of the NLRC, dated 23 November1993 and 13 September 1994, are hereby AFFIRMED with the MODIFICATION that Trans-Asia is hereby ordered to adjust its divisor to 287 days and pay the resulting holiday pay inarrears brought about by this adjustment starting from 30 June 1987, the date of effectivity ofE.O. No. 203.

SO ORDERED. Davide, Jr., C.J., (Chairman), Puno, Pardo, and Ynares-Santiago, JJ., concur .

FIRST DIVISION

[G.R. No. 118289. December 13, 1999]

TRANS-ASIA PHILS. EMPLOYEES ASSOCIATION (TAPEA) and ARNELGALVEZ , petitioners, vs . NATIONAL LABOR RELATIONSCOMMISSION, TRANS-ASIA (PHILS.) and ERNESTO S. DECASTRO, respondents .

D E C I S I O NKAPUNAN, J.:


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This petition forcertiorari under Rule 65 of the Rules of Court seeks to reverse and set asidethe Resolutions, dated 23 November 1993 and 13 September 1994 of the National LaborRelations Commission (NLRC) which dismissed petitioners appeal from the adverse decisionof the labor arbiter and denied petitioners motion for reconsideration, respectively.

The antecedents of this case are as follows:

On 7 July 1988, Trans-Asia Philippines Employees Association (TAPEA), the duly-recognized collective bargaining agent of the monthly-paid rank-and-file employees of Trans-Asia (Phils.), entered into a Collective Bargaining Agreement (CBA) with their employer. TheCBA, which was to be effective from 1 April 1988 up to 31 March 1991, provided for, amongothers, the payment of holiday pay with a stipulation that if an employee is permitted to work ona legal holiday, the said employee will receive a salary equivalent to 200% of the regular dailywage plus a 60% premium pay.

Despite the conclusion of the CBA, however, an issue was still left unresolved with regardto the claim of TAPEA for payment of holiday pay covering the period from January of 1985 upto December of 1987. Thus, the parties underwent preventive mediation meetings with arepresentative from the National Mediation and Conciliation Board in order to settle theirdisagreement on this particular issue. Since the parties were not able to arrive at an amicablesettlement despite the conciliation meetings, TAPEA, led by its President, petitioner ArnieGalvez, filed a complaint before the labor arbiter, on 18 August 1988, for the payment of theirholiday pay in arrears. On 18 September 1988, petitioners amended their complaint to includethe payment of holiday pay for the duration of the recently concluded CBA (from 1988 to1991), unfair labor practice, damages and attorneys fees.

In their Position Paper, petitioners contended that their claim for holiday pay in arrears is based on the non-inclusion of the same in their monthly pay. In this regard, petitioners citedcertain circumstances which, according to them, would support their claim for past due holiday

pay. First, petitioners presented Trans-Asias Employees Manual which requires, as a pre -condition for the payment of holiday pay, that the employee should have worked or was onauthorized leave with pay on the day immediately preceding the legal holiday. Petitionersargued that if the intention [of Trans -Asia] was not to pay holiday pay in addition to theemployees monthly pay, then there would be no need to impose or specify the pre -condition forthe payment. [1] Second, petitioners proffered as evidence their appointment papers which do notcontain any stipulation on the inclusion of holiday pay in their monthly salary. According to petitioners, the absence of such stipulation is an indication that the mandated holiday pay is notincorporated in the monthly salary. Third, petitioners noted the inclusion of a provision in theCBA 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. Petitioners claimedthat this very generous provision was the remedy availed of by Trans-Asia to allow itsemployees 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.

Finally, petitioners cited the current CBA provision which obligates Trans-Asia to giveholiday pay. Petitioners asserted that this provision is an acknowledgment by Trans-Asia of itsfailure 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.
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With regard to the claim for the payment of holiday pay for the duration of the CBA, theaccusation of unfair labor practice and the claim for damages and attorneys fees, petitionersasserted that Trans-Asia is guilty of bad faith in negotiating and executing the current CBAsince, after it recognized the right of the employees to receive holiday pay, Trans-Asia allegedlyrefused to honor the CBA provision on the same.

In response to petitioners contentions, Trans -Asia refuted the samein seriatim . With regardto the pre-condition for the payment of holiday pay stated in the Employees Manual and theabsence of a stipulation on holiday pay in the employees appointment papers, Trans -Asiaasserted that the above circumstances are not indicative of its non-payment of holiday pay sinceit has always honored the labor law provisions on holiday pay by incorporating the same in the payment of the monthly salaries of its employees. In support of this claim, Trans-Asia pointedout that it has long been the standing practice of the company to use the divisor of 286 days incomputing for its employees overtime pay and daily rate deductions for absences. Trans-Asiaexplained that this divisor is arrived at through the following formula:

52 x 44---------- = 286 days

8

Where: 52 = number of weeks in a year

44 = number of work hours per week

8 = number of work hours per day

Trans-Asia further clarified that 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 andunpaid 52 Sundays and 26 Saturdays (employees are required to work half-day duringSaturdays). Trans-Asia claimed that if the ten (10) regular holidays were not included in thecomputation of their employees monthly salary, the divisor which they would have used wouldonly be 277 days which is arrived at by subtracting 52 Sundays, 26 Saturdays and the 10 Legalholidays from 365 calendar days. Furthermore, Trans-Asia explained that the 286 days divisoris based on Republic Act No. 6640,[2] wherein the divisor of 262 days (composed of the 252working days and the 10 legal holidays) is used in computing for the monthly rate of workerswho do not work and are not considered paid on Saturdays and Sundays or rest days. Accordingto Trans-Asia, if the additional 26 working Saturdays in a year is factored-in to the divisor

provided by Republic Act No. 6640, the resulting divisor would be 286 days.

On petitioners contention with regard to the CBA provision on the allegedly generousholiday pay rate of 260%, Trans-Asia explained that this holiday pay rate was included in theCBA in order to comply with Section 4, Rule IV, Book III of the Omnibus Rules Implementingthe Labor Code. The aforesaid provision reads:

Sec. 4. Compensation for holiday work. Any employee who is permitted or sufferedto work on any regular holiday, not exceeding eight (8) hours, shall be paid at least


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two hundred percent (200%) of his regular daily wage. If the holiday falls on thescheduled rest day of the employee, he shall be entitled to an additional premium payof at least 30% of his regular holiday rate of 200% based on his regular wage rate.

On the contention that Trans-Asias acquiescence to the inclusion of a holiday pay provisionin the CBA is an admission of non-payment of the same in the past, Trans-Asia reiterated that itis simply a recognition of the mandate of the Labor Code that employees are entitled to holiday pay. It clarified that the companys firm belief in the payment of holiday pay to employees led itto agree to the inclusion of the holiday pay provision in the CBA.

With regard to the accusation of unfair labor practice because of Trans-Asias act ofallegedly bargaining in bad faith and refusal to give holiday pay in accordance with the CBA,Trans-Asia explained that what petitioners would like the company to do is to give doubleholiday pay since, as previously stated, the company has already included the same in itsemployees monthly salary and, yet, petitioners want it to pay a second set of holiday pay.

On 13 February 1989, the labor arbiter rendered a decision dismissing the complaint, to wit:

After considering closely the arguments of the parties in support of their respectiveclaims and defenses, this Branch upholds a different view from that espoused by thecomplainants.

Just like in the Chartered Bank Case (L-44717), August 28, 1985, 138 SCRA 273,which is cited by the complainants in their Position Paper, there appears to be no clearagreement between the parties in the instant case, whether verbal or in writing, thatthe monthly salary of the employees included the mandated holiday pay. In theabsence of such agreement, the Supreme Court in said Chartered Bank Case took intoconsideration existing practices in the bank in resolving the issue, such asemployment by the bank of a divisor of 251 days which is the result of subtracting allSaturdays, Sundays and the ten (10) legal holidays from the total number of calendardays in a year. Further, the Court took note of the fact that the bank used conflictingor different divisors in computing salary-related benefits as well as the employeesabsence from work. In the case at bar, not only did the CBA between thecomplainants and respondents herein provides (sic) that the ten (10) legal holidays arerecognized by the Company as full holiday with pay. What is more, there can be nodoubt that since 1977 up to the execution of the CBA, the Trans-Asia, unlike thatobtaining in the Chartered Bank Case, never used conflicting or different divisors butconsistently employed the divisor of 286 days, which as earlier pointed out, wasarrived at by subtracting only the unworked 52 Sundays and the 26 half-day-workedSaturdays from the total number of days in a year. The consistency in the established practice of the Trans-Asia, which incidentally is not disputed by complainants, did notgive rise to any doubt which could have been resolved in favor of complainants.


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Besides, the respondents unlike the respondent bank in the Chartered Bank EmployeesAssociation vs. Hon. Blas F. Ople, et al. (supra) citing also the case of IBAAEU vs.Hon,. Amado Inciong (132 SCRA 663) which case have (sic) invalidated Section 2,Rule IV, Book III of the Implementing Rules of the Labor Code and PolicyInstruction No. 9, have never relied on the said invalidated rule and Policy Instruction.

The complainants arguments and juxtapositions in claiming that they were denied payment of their holiday pay paled in the face of the prevailing company practices andcircumstances abovestated.

Also, for the reasons adverted to above, the complainants charge of unfair labor practice claiming that respondents in bad faith refused to comply with theircontractual obligation under the CBA by not paying the complainants holiday pay,must fail. Since respondents have nothing more to pay by way of legal holiday pay asit has already been included in their monthly salaries, the provision in the CBArelative to holiday pay is just but a recognition of the complainants right to paymentof legal holiday pay as mandated by the Labor Code.

WHEREFORE, all the foregoing premises being considered, judgment is herebyrendered dismissing the complaint for lack of merit.

SO ORDERED.[3]

Petitioners appealed to the National Labor Relations Commission. In its Resolution, dated23 November 1993, the NLRC dismissed the appeal and affirmed the decision of the labor

arbiter, to wit:

We find no cogent reason to change or disturb the decision appealed from, the same being substantially supported by the facts and evidence on record. "It is a well-settledrule that findings of facts of administrative bodies, if based on substantial evidence arecontrolling on the reviewing authority. (Planters Products, Inc. vs. NLRC, G. R. No.78524 & 78739, January 20, 1989; 169 SCRA 328).

We find no abuse of discretion and/or error in the assailed decision.

WHEREFORE, the appeal are (sic) hereby DISMISSED for lack of merit and thedecision appealed from is AFFIRMED.

SO ORDERED.[4]

Petitioners motion for reconsideration was, likewise, denied by the NLRC in its Resolution,dated 13 September 1994.
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Petitioners are now before us faulting the NLRC with the following assignment of errors: I

PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION INUPHOLDING THE LABOR ARBITERS DECISION DESPITE THE LACK OFSUBSTANTIAL EVIDENCE TO SUPPORT IT

II

IN UPHOLDING THE LABOR ARBITERS DECISION DESPITE THE LACKOF SUBSTANTIAL EVIDENCE TO SUPPORT IT, PUBLIC RESPONDENT NLRC VIOLATED THE CONSTITUTIONAL AND LEGAL MANDATE TORESOLVE ALL DOUBTS IN SOCIAL LEGISLATION IN FAVOR OFLABOR .[5]

Petitioners, in furtherance of their first assignment of error, assert that the NLRC blatantlyan unshamedly disregarded the numerous evidence in support of their claim and relied merelyon the sole evidence presented by Trans-Asia, the 286 days divisor, in dismissing their appealand, in so doing, is guilty of grave abuse of discretion.[6]

We do not agree.

Trans-Asias inclusion of holiday pay in petitioners monthly salary is clearly established byits consistent use of the divisor of 286 days in the computation of its employees benefits andde

labor cases chartered bank to sentinel

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