Patrick Labor Abdul Leyte

1 | L a b o r L a w 1 C a s e D i g e s t ( 4 t h B ATC H )
1. Abduljuahid R. Pigcaulan vs. Security and Credit Investigation,

January 16, 2012
Facts
Canoy and Pigcaulan were both employed by SCII as security guards and were
assigned to SCIIs different clients. Subsequently, however, Canoy and Pigcaulan filed
with the Labor Arbiter separate complaints for underpayment of salaries and nonpayment of overtime, holiday, rest day, service incentive leave and 13th month
pays. Respondents, however, maintained that Canoy and Pigcaulan were paid their just
salaries and other benefits under the law; that the salaries they received were above the
statutory minimum wage and the rates provided by the Philippine Association of
Detective and Protective Agency Operators (PADPAO) for security guards; that their
holiday pay were already included in the computation of their monthly salaries; that
they were paid additional premium of 30% in addition to their basic salary whenever
they were required to work on Sundays and 200% of their salary for work done on
holidays; and, that Canoy and Pigcaulan were paid the corresponding 13 th month pay for
the years 1998 and 1999. Labor arbiter favored to the Petitioner and NLRC affirmed the
decision of the labor arbiter. Respondent appeal to the Court of Appeals set aside the
ruling of the NLRC and Labor Arbiter. Hence, the present Petition for Review
on Certiorari.
Issues
I. The Honorable Court of Appeals erred when it dismissed the
complaint on mere alleged failure of the Labor Arbiter and the NLRC to
observe the prescribed form of decision, instead of remanding the case for
reformation of the decision to include the desired detailed computation.
II. The Honorable Court of Appeals erred when it [made]
complainants suffer the consequences of the alleged non-observance by
the Labor Arbiter and NLRC of the prescribed forms of decisions
considering that they have complied with all needful acts required to
support their claims.
III. The Honorable Court of Appeals erred when it dismissed the
complaint allegedly due to absence of legal and factual [bases] despite
attendance of substantial evidence in the records.
Ruling
The Verification and Certification of Non-Forum Shopping attached to the
petition was executed by Pigcaulan alone, it was plainly and particularly indicated under
the name of the lawyer who prepared the same, Atty. Josefel P. Grageda, that he is
the Counsel for Petitioner Adbuljuahid Pigcaulan only. In view of these, there is
therefore, no doubt, that the petition was brought only on behalf of Pigcaulan. Since no
appeal from the CA Decision was brought by Canoy, same has already become final and
executory as to him. Canoy failed to show any reasonable cause for his failure to join
Pigcaulan to personally sign the Certification of Non-Forum Shopping. It is his duty, as

a litigant, to be prudent in pursuing his claims against SCII, especially so, if he was
indeed suffering from financial distress.
The Labor Arbiter and the NLRC erred in this regard. The handwritten itemized
computations are self-serving, unreliable and unsubstantial evidence to sustain the
grant of salary differentials, particularly overtime pay. Unsigned and unauthenticated
as they are, there is no way of verifying the truth of the handwritten entries stated
therein. Written only in pieces of paper and solely prepared by Canoy and Pigcaulan,
these representative daily time records, as termed by the Labor Arbiter, can hardly be
considered as competent evidence to be used as basis to prove that the two were
underpaid of their salaries. We find nothingcontention that he had rendered service
beyond eight hours to entitle him to overtime pay and during Sundays to entitle him to
restday pay. Hence, in the absence of any in the records which could substantially
support Pigcaulans concrete proof that additional service beyond the normal working
hours and days had indeed been rendered, we cannot affirm the grant of overtime pay to
Pigcaulan.
Pigcaulan is entitled to holiday pay, service incentive leave pay and proportionate
th
13 month pay for year 2000. Article 94 of the Labor Code provides that Every worker
shall be paid his regular daily wage during regular holidays, except in retail and service
establishments regularly employing less than ten (10) workers. While Article 95 of the
Labor Code provides Every employee who has rendered at least one year of service shall
be entitled to a yearly service incentive of five days with pay. Hence for he rendered
service for more than a year already. Furthermore, under Presidential Decree No. 851,
[31]
he should be paid his 13th month pay. As employer, SCII has the burden of proving
that it has paid these benefits to its employees. The CA is not correct in dismissing
Pigcaulans claims in its entirety.
Consistent with the rule that all money claims arising from an employeremployee relationship shall be filed within three years from the time the cause of action
accrued,[34] Pigcaulan can only demand the amounts due him for the period within three
years preceding the filing of the complaint in 2000. Furthermore, since the records are
insufficient to use as bases to properly compute Pigcaulans claims, the case should be
remanded to the Labor Arbiter for a detailed computation of the monetary benefits due
to him.
2. Cebu Institute of Technology vs. Hon. Blass Ople, December 18, 1987
FACTS:
A case was filed against CIT by, Panfilo Canete, et al., teachers of CIT, for non-payment
of: a) cost of living allowances (COLA) under Pres. Dec. Nos. 525, 1123, 1614, 1678 and
1713, b) thirteenth (13th) month pay differentials and c) service incentive leave. CIT
maintained that it had paid the allowances mandated by various decrees but the same
had been integrated in the teacher's hourly rate. It alleged that the payment of
COLA by way of salary increases is in line with Pres. Dec. No. 451. It also claimed in
its position paper that it had paid thirteenth month pay to its employees and that it was
exempt from the payment of service incentive leave to its teachers who were employed
on contract basis. Minister of Labor and Employment issued the assailed Order and
held that the basic hourly rate designated in the Teachers' Program is regarded as the
basic hourly rate of teachers exclusive of the COLA, and that COLA should not be
taken from the 60% incremental proceeds of the approved increase in tuition fee.
In a nutshell, the present controversy was precipitated by the claims of some school
personnel for allowances and other benefits and the refusal of the private schools
concerned to pay said allowances and benefits on the ground that said items should be
deemed included in the salary increases they had paid out of the 60% portion of the
proceeds from tuition fee increases provided for in section 3 (a) of Pres. Decree No. 451.
Petitioner assails the aforesaid Order in this Special Civil Action of certiorari with
Preliminary Injunction and/or Restraining Order. The Court issued a Temporary
Restraining Order on December 7, 1981 against the enforcement of the questioned
Order of the Minister of Labor and Employment.
ISSUE:
Whether or not allowances and other fringe benefits of employees may be charged
against the 60% portion of the incremental proceeds provided for in sec. 3(a) of
Pres. Dec. No. 451.
RESOLUTION:
This Court has consistently held, beginning with the University of the East case, that if
the schools have no resources other than those derived from tuition fee
increases, allowances and benefits should be charged against the proceeds
of tuition fee increases which the law allows for return on investments under section
3(a) of Pres. Dec. No. 451, therefore, not against the 60% portion allocated for increases
in salaries and wages.
In University of Pangasinan Faculty Union v. University of Pangasinan, supra:

... The sixty (60%) percent incremental proceeds from the tuition increase are to be
devoted entirely to wage or salary increases which means increases in basic salary.
The law cannot be construed to include allowances which are benefits over and above
the basic salaries of the employees. To charge such benefits to the 60% incremental
proceeds would be to reduce the increase in basic salary provided by law, an increase
intended also to help the teachers and other workers tide themselves and their families
over these difficult economic times.
While coming to the aid of the private school system by simplifying the procedure for
increasing tuition fees, the Decree imposes as a condition for the approval of any such
increase in fees, the allocation of 60% of the incremental proceeds thereof, to increases
in salaries or wages of school personnel. This condition makes for a quid pro quo of the
approval of any tuition fee hike by a school, thereby assuring the school personnel
concerned, of a share in its proceeds. The condition having been imposed to attain one
of the main objectives of the Decree, which is to help the school personnel cope with the
increasing costs of living, the same cannot be interpreted in a sense that would diminish
the benefit granted said personnel.
3. CBTC Employees Union vs. The Honorable Jacobo C. Clave, January

7, 1986
Petitioner: CBTC EMPLOYEES UNION

Respondent: THE HONORABLE JACOBO C. CLAVE, Presidential Executive Assistant,
and
COMMERCIAL BANK & TRUST COMPANY OF THE PHILIPPINES
Ponente: J. DE LA FUENTE
Facts: Petitioner Commercial Bank and Trust Company Employees' Union (CBTC)
lodged a complaint with the Department of Labor, against private respondent bank
(Comtrust) for non-payment of the holiday pay benefits provided for under Article 95
(now Article 94) of the Labor Code.
Failing to arrive at an amicable settlement at conciliation level, the parties opted
to submit their dispute for voluntary arbitration. On 22 April 1976, the Arbitrator
handed down an award on the dispute in favor of petitioner union. The next day, 23
April 1976, the Department of Labor released Policy Instructions No. 9, a policy
regarding the implementation of the ten (10) paid legal holidays. Said bank interposed
an appeal to the National Labor Relations Commission (NLRC), contending that the
Arbitrator demonstrated gross incompetence and/or grave abuse of discretion when he
failed to apply Policy Instructions No. 9. This appeal was dismissed on 16 August 1976.
Private respondent then appealed to the Secretary of Labor. On 30 June 1977, the Acting
Secretary of Labor reversed the NLRC decision. On the principal issue of holiday pay,
the Acting Secretary, guided by Policy Instructions No. 9, applied the same
retrospectively, among other things.
Issue: Whether or not the monthly pay of the covered employees already includes what
Article 94 of the Labor Code requires as regular holiday pay benefit in the amount of his
regular daily wage.
Held: In excluding the union members the benefits of the holiday pay law, public
respondent predicated his ruling on Section 2, Rule IV, Book III of the Rules to
implement Article 94 of the Labor Code promulgated by the then Secretary of Labor and
Policy Instructions No. 9. In Insular Bank of Asia and America Employees' Union
(IBAAEU) vs. Inciong, this Court's Second Division, speaking through former Justice
Makasiar, expressed the view and declared that the section and interpretative bulletin
are null and void, having been promulgated by the then Secretary of Labor in excess of
his rule-making authority. The questioned Section 2, Rule IV, Book III of the Integrated
Rules and the Secretary's Policy Instruction No. 9 add another excluded group, namely,
'employees who are uniformly paid by the month'. While the additional exclusion is only
in the form of a presumption that all monthly paid employees have already been paid
holiday pay, it constitutes a taking away or a deprivation which must be in the law if it is
to be valid. An administrative interpretation which diminishes the benefits of labor
more than what the statute delimits or withholds is obviously ultra vires. Ruled in favor
of the petitioners. Presidential Executive Assistant and the Acting Secretary of labor are
set aside, and the award of the Arbitrator reinstated.
4. Asian Transmission Corporation vs. The Hon. Court of Appeals,

March 15, 2004
FACTS:
The Department of Labor and Employment (DOLE), through Undersecretary
Cresenciano B. Trajano, issued an Explanatory Bulletin, wherein it clarified, that
employees are entitled to 200% of their basic wage, which, apart from being Good
Friday, and, therefore, a legal holiday, is also Araw ng Kagitingan, which is also a legal
holiday, even if unworked. Despite the explanatory bulletin, petitioner Asian
Transmission Corporation opted to pay its daily paid employees only 100% of their basic
pay. Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested. In
accordance with Step 6 of the grievance procedure of the Collective Bargaining
Agreement existing between petitioner and BATLU, the controversy was submitted for
voluntary arbitration. The Office of the Voluntary Arbitrator rendered a decision
directing petitioner to pay its covered employees "200% and not just 100% of their
regular daily wages for the unworked.
In deciding in favor of the Bisig ng Asian Transmission Labor Union (BATLU),

the Voluntary Arbitrator held that Article 94 of the Labor Code provides for holiday pay
for every regular holiday, the computation of which is determined by a legal formula
which is not changed by the fact that there are two holidays falling on one day; and that
that the law, as amended, enumerates 12 regular holidays for every year, and should not
be interpreted as authorizing a reduction to nine the number of paid regular holidays
"just because April 9 (Araw ng Kagitingan) in certain years, is also Holy Friday or
Maundy Thursday."
The Court of Appeals upheld the findings of the Voluntary Arbitrator, holding
that the Collective Bargaining Agreement between petitioner and BATLU, the law
governing the relations between them, clearly recognizes their intent to consider Araw
ng Kagitingan and Maundy Thursday, on whatever date they may fall in any calendar
year, as paid legal holidays during the effectivity of the CBA and that "there is no
condition, qualification or exception for any variance from the clear intent that all
holidays shall be compensated.
The Court of Appeals further held that "in the absence of an explicit provision in
law which provides for [a] reduction of holiday pay if two holidays happen to fall on the
same day, any doubt in the interpretation and implementation of the Labor Code
provisions on holiday pay must be resolved in favor of labor."
Hence, this petition.
ISSUE:
whether or not daily-paid employees are entitled to be paid for two regular
holidays which fall on the same day
RULING:
Holiday pay is a legislated benefit enacted as part of the Constitutional
imperative that the State shall afford protection to labor. Its purpose is not merely "to
prevent diminution of the monthly income of the workers on account of work
interruptions. In other words, although the worker is forced to take a rest, he earns what
he should earn, that is, his holiday pay. It is 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.
As reflected above, Art. 94 of the Labor Code, as amended, afford a worker the
enjoyment of 12 paid regular holidays. The provision is mandatory, regardless of
whether an employee is paid on a monthly or daily basis.
Since a worker is entitled to the enjoyment of 12 paid regular holidays, the fact that two
holidays fall on the same date should not operate to reduce to 11 the 12 holiday pay
benefits a worker is entitled to receive.
It is elementary, under the rules of statutory construction, that when the

language of the law is clear and unequivocal, the law must be taken to mean exactly
what it says. In the case at bar, there is nothing in the law which provides or indicates
that the entitlement to 12 days of holiday pay shall be reduced to 11 when two holidays
fall on the same day.
In any event, Art. 4 of the Labor Code provide that all doubts in the
implementation and interpretation of its provisions, including its implementing rules
and regulations, shall be resolved in favor of labor. For the working mans welfare
should be the primordial and paramount consideration. Moreover, Sec. 11, Rule IV,
Book III of the Omnibus Rules to Implement the Labor Code provides that "Nothing in
the law or the rules shall justify an employer in withdrawing or reducing any benefits,
supplements or payments for unworked regular holidays as provided in existing
individual or collective agreement or employer practice or policy. From the pertinent
provisions of the CBA entered into by the parties, petitioner had obligated itself to pay
for the legal holidays as required by law.
5. San Miguel Corporation vs. The Honorable Court of Appeals, January

30, 2002
SAN MIGUEL CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS-FORMER THIRTEENTH DIVISION, HON.
UNDERSECRETARY JOSE M. ESPAOL, JR., Hon. CRESENCIANO B. TRAJANO, and
HON. REGIONAL DIRECTOR ALLAN M. MACARAYA, respondents.
Facts:
The Department of Labor and Employment conducted a routine inspection in San
Miguel Corporation, Iligan City and it was discovered that there was underpayment by
SMC of regular Muslim holiday pay to its employees. DOLE sent a copy of inspection
result to SMC which the latter contested the findings. SMC failed to submit proof and
hence the Director of DOLE of Iligan District Office issued a compliance order to pay
both its Muslim and non-Muslim employees the Muslim Holidays. SMC appealed to
DOLE main office but dismissed for having been filed late but later on reconsidered
because it is within reglementary period but still dismissed for lack of merit. Hence, this
present petition for certiorari.
Issue:
Whether or not non-Muslim employees working in Muslim areas is entitled to Muslim
Holiday Pay.
Held:
The Supreme Court dismissed the petition and ordered the petitioner to pay its nonMuslim employees. The basis for this decision were Articles 169 and 170 of P.D. No.
1083 Code of Muslim Personal Laws which listed all official Muslim holidays and
provincies and cities where officially observed. In this case, SMC is located in Iligan
which is covered in the those provisions. Also Article 169 and 170 of PD No. 1083 should
be read in conjunction with Article 94 of Labor Code which provides for the right of
every worker to be paid of holiday pay.
Petitioner asserts Art.3(3) of PD No. 1083 provides that it shall be applicable only to
Muslims. However, the Court said that said article declares that nothing herein shall be
construed to operate to the prejudice of a non-Muslim. There should be no distinction
between Muslims and non-Muslims as regards payment of benefits for Muslim
holidays.
It was said also that the The Court of Appeals did not err in sustaining Undersecretary
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 Christian holidays declared by law as regular holidays. We must remind the
respondent-appellant that wages and other emoluments granted by law to the working
man are determined on the basis of the criteria laid down by laws and certainly not on
the basis of the workers faith or religion.
6. Trans-Asia Phils. Employees vs. NLRC, December 13, 1999 (FULL

CASE)
TRANS-ASIA PHILS. EMPLOYEES ASSOCIATION (TAPEA) and ARNEL
GALVEZ,
petitioners,
vs.
NATIONAL
LABOR
RELATIONS
COMMISSION, TRANS-ASIA (PHILS.) and ERNESTO S. DE
CASTRO, respondents.
DECISION
KAPUNAN, J.:
This petition for certiorari under Rule 65 of the Rules of Court seeks to reverse and
set aside the Resolutions, dated 23 November 1993 and 13 September 1994 of the
National Labor Relations Commission (NLRC) which dismissed petitioners appeal from
the adverse decision of 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 dulyrecognized 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. The CBA, which was to be effective from 1 April 1988 up to 31 March 1991,
provided for, among others, the payment of holiday pay with a stipulation that if an
employee is permitted to work on a legal holiday, the said employee will receive a salary
equivalent to 200% of the regular daily wage plus a 60% premium pay.
Despite the conclusion of the CBA, however, an issue was still left unresolved with
regard to the claim of TAPEA for payment of holiday pay covering the period from
January of 1985 up to December of 1987. Thus, the parties underwent preventive
mediation meetings with a representative from the National Mediation and Conciliation
Board in order to settle their disagreement on this particular issue. Since the parties
were not able to arrive at an amicable settlement despite the conciliation meetings,
TAPEA, led by its President, petitioner Arnie Galvez, filed a complaint before the labor
arbiter, on 18 August 1988, for the payment of their holiday 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 to 1991), 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 cited certain 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 on authorized leave with pay on the day
immediately preceding the legal holiday. Petitioners argued that if the intention [of
Trans-Asia] was not to pay holiday pay in addition to the employees monthly pay, then
there would be no need to impose or specify the pre-condition for the payment.
[1]
Second, petitioners proffered as evidence their appointment papers which do not
contain 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 the CBA for the payment of an amount equivalent to 200% of the regular
daily wage plus 60% premium pay to employees who are permitted to work on a regular
holiday. Petitioners claimed that this very generous provision was the remedy availed of
by Trans-Asia to allow its employees to recoup the holiday pay in arrears and, as such, is
a tacit admission of the non-payment of the same during the period prior to the current
CBA.
Finally, petitioners cited the current CBA provision which obligates Trans-Asia to
give holiday pay. Petitioners asserted that this provision is an acknowledgment by
Trans-Asia of its failure to pay the same in the past since, if it was already giving holiday
pay prior to the CBA, there was no need to stipulate on the said obligation in the current
CBA.
With regard to the claim for the payment of holiday pay for the duration of the CBA,
the accusation of unfair labor practice and the claim for damages and attorneys fees,
petitioners asserted that Trans-Asia is guilty of bad faith in negotiating and executing
10 | L a b o r L a w 1 C a s e D i g e s t ( 4 t h B A T C H )
the current CBA since, after it recognized the right of the employees to receive holiday
pay, Trans-Asia allegedly refused to honor the CBA provision on the same.
In response to petitioners contentions, Trans-Asia refuted the same in
seriatim. With regard to the pre-condition for the payment of holiday pay stated in the
Employees Manual and the absence of a stipulation on holiday pay in the employees
appointment papers, Trans-Asia asserted that the above circumstances are not
indicative of its non-payment of holiday pay since it has always honored the labor law
provisions on holiday pay by incorporating the same in the payment of the monthly
salaries of its employees. In support of this claim, Trans-Asia pointed out that it has long
been the standing practice of the company to use the divisor of 286 days in computing
for its employees overtime pay and daily rate deductions for absences. Trans-Asia
explained 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 and unpaid 52 Sundays and 26 Saturdays (employees are required to work
half-day during Saturdays). Trans-Asia claimed that if the ten (10) regular holidays were
not included in the computation of their employees monthly salary, the divisor which
they would have used would only be 277 days which is arrived at by subtracting 52
Sundays, 26 Saturdays and the 10 Legal holidays from 365 calendar days. Furthermore,
Trans-Asia explained that the 286 days divisor is based on Republic Act No. 6640,
[2]
wherein the divisor of 262 days (composed of the 252 working 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. According to 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
generous holiday pay rate of 260%, Trans-Asia explained that this holiday pay rate was
included in the CBA in order to comply with Section 4, Rule IV, Book III of the Omnibus
Rules Implementing the Labor Code. The aforesaid provision reads:
Sec. 4. Compensation for holiday work. Any employee who is permitted or suffered to
work on any regular holiday, not exceeding eight (8) hours, shall be paid at least two
hundred percent (200%) of his regular daily wage. If the holiday falls on the scheduled
rest day of the employee, he shall be entitled to an additional premium pay of at least
30% of his regular holiday rate of 200% based on his regular wage rate.
On the contention that Trans-Asias acquiescence to the inclusion of a holiday pay

provision in the CBA is an admission of non-payment of the same in the past, TransAsia reiterated that it is 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 it to 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 of
allegedly 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
double holiday pay since, as previously stated, the company has already included the
same in its employees 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 respective
claims and defenses, this Branch upholds a different view from that espoused by the
complainants.
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 clear
agreement between the parties in the instant case, whether verbal or in writing, that the
monthly salary of the employees included the mandated holiday pay. In the absence of
such agreement, the Supreme Court in said Chartered Bank Case took into
consideration existing practices in the bank in resolving the issue, such as employment
by the bank of a divisor of 251 days which is the result of subtracting all Saturdays,
Sundays and the ten (10) legal holidays from the total number of calendar days in a
year. Further, the Court took note of the fact that the bank used conflicting or different
divisors in computing salary-related benefits as well as the employees absence from
work. In the case at bar, not only did the CBA between the complainants and
respondents herein provides (sic) that the ten (10) legal holidays are recognized by the
Company as full holiday with pay. What is more, there can be no doubt that since 1977
up to the execution of the CBA, the Trans-Asia, unlike that obtaining in the Chartered
Bank Case, never used conflicting or different divisors but consistently employed the
divisor of 286 days, which as earlier pointed out, was arrived at by subtracting only the
unworked 52 Sundays and the 26 half-day-worked Saturdays 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 not give rise to any doubt which could
have been resolved in favor of complainants.
Besides, the respondents unlike the respondent bank in the Chartered Bank Employees
Association 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 Policy Instruction 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 and
circumstances 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 their contractual
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 as it has already been
included in their monthly salaries, the provision in the CBA relative to holiday pay is
just but a recognition of the complainants right to payment of legal holiday pay as
mandated by the Labor Code.
WHEREFORE, all the foregoing premises being considered, judgment is hereby
rendered dismissing the complaint for lack of merit.
SO ORDERED.[3]
Petitioners appealed to the National Labor Relations Commission. In its Resolution,
dated 23 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-settled
rule that findings of facts of administrative bodies, if based on substantial evidence are
controlling 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 the
decision 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 IN
UPHOLDING THE LABOR ARBITERS DECISION DESPITE THE LACK OF
SUBSTANTIAL EVIDENCE TO SUPPORT IT
II
IN UPHOLDING THE LABOR ARBITERS DECISION DESPITE THE LACK OF

SUBSTANTIAL EVIDENCE TO SUPPORT IT, PUBLIC RESPONDENT NLRC
VIOLATED THE CONSTITUTIONAL AND LEGAL MANDATE TO RESOLVE ALL
DOUBTS IN SOCIAL LEGISLATION IN FAVOR OF LABOR.[5]
Petitioners, in furtherance of their first assignment of error, assert that the NLRC
blatantly an unshamedly disregarded the numerous evidence in support of their claim
and relied merely on the sole evidence presented by Trans-Asia, the 286 days divisor, in
dismissing their appeal and, 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 by its consistent use of the divisor of 286 days in the computation of its
employees benefits and deductions. 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 in a year are already accounted for with the use of the said
divisor. As explained by Trans-Asia, if one is to deduct the unworked 52 Sundays and 26
Saturdays (derived by dividing 52 Saturdays in half since petitioners are required to
work half-day on Saturdays) from the 365 calendar days in a year, 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 calendar year, the only
logical conclusion would be that the payment for holiday pay is already incorporated
into the said divisor. Thus, when viewed against this very convincing piece of evidence,
the arguments put forward by petitioners to support their claim of non-payment of
holiday 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 of holiday 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 very generous holiday pay rate, would appear to be merely
inferences and suppositions which, in the apropos words of the labor arbiter, paled in
the face of the prevailing company practices and circumstances abovestated.
Hence, it is on account of the convincing and legally sound arguments and evidence
of Trans-Asia that the labor arbiter rendered a decision adverse to
petitioners. Acknowledging that the decision of the labor arbiter was based on
substantial evidence, the NLRC affirmed the formers disposition. It is also with this
acknowledgment that the Court affirms the questioned resolutions of the NLRC. As
aptly put by the Solicitor General, citing Sunset View Condominium Corporation vs.
NLRC,[7] findings of fact of administrative bodies should not be disturbed in the absence
of grave abuse of discretion or unless the findings are not supported by substantial
evidence.[8] In this regard, the Solicitor General observed: As said above, public
respondent acted on the basis of substantial evidence, hence, grave abuse of discretion is
ruled out.[9]
However, petitioners insist that the agreement of Trans-Asia in the CBA to give a
generous 260% 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 of Chartered Bank Employees Association vs. Ople,[11] which reads:
Any remaining doubts which may arise from the conflicting or different divisors used in
the computation of overtime pay and employees absences are resolved by the manner in
which work actually rendered on holidays is paid.Thus, whenever monthly paid
employees work on a holiday, they are given an additional 100% base pay on top of a
premium pay of 50%. If the employees monthly pay already includes their salaries for
holidays, they should be paid only premium pay but not both base pay and premium
pay.[12]
We are not convinced. The cited case cannot be relied upon by petitioners since the
facts obtaining in the Chartered Bank case are very different from those in the present
case. In the 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 its divisor. On the other hand, for computing deductions due to
absences, the bank used 365 days as divisor. Due to this confusing situation, the Court
declared that there existed a doubt as to whether holiday pay is already incorporated in
the employees monthly salary. Since doubts should be resolved in favor of labor, the
Court in the Chartered Bank case ruled in favor of the employees and further stated that
its conclusion is fortified by the manner in which the employees are remunerated for
work rendered on holidays. In the present case, however, there is no confusion with
regard to the divisor used by Trans-Asia in computing for petitioners benefits and
deductions. Trans-Asia consistently used a 286 days divisor for all its computations.
Nevertheless, petitioners cause is not entirely lost. The Court notes that there is a
need to adjust the divisor used by Trans-Asia to 287 days, instead of only 286 days, in
order to properly account for the entirety of regular holidays and special days in a year
as prescribed by Executive Order 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 following
regular 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 Date
Araw 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 Statutory
Minimum Wage Rates.- Without prejudice from existing company practices, agreements
or policies, the following formulas may be used as guides in determining the equivalent
monthly statutory minimum wage rates:
xxxxxxxxx
d) For those who do not work and are not considered paid on Saturdays and Sundays or
rest days:
Equivalent Monthly = Average Daily Wage Rate x 262 days
Rate (EMR) 12
Where 262 days =
250 days Ordinary working days
10 days Regular holidays
2 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
the employees do not work and are not considered paid on Saturdays and Sundays or
rest days is 262 days. In the present case, since the employees of Trans-Asia are
required to work half-day on Saturdays, 26 days should be added to the divisor of 262
days, thus, resulting to 288 days. However, due to the fact that the rest days of
petitioners fall on a Sunday, the number of unworked but paid legal holidays should be
reduced to nine (9), instead of ten (10), since one legal holiday under E.O. No. 203
always falls on the last Sunday of August, National Heroes Day. 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 rate for purposes of overtime pay, holiday pay and conversions of accumulated
leaves would be diminished. To illustrate, if an employee receives P8,000.00 as his
monthly salary, his daily rate would be P334.49, computed as follows:
P8,000.00 x 12 months
------------------------- = P334.49/day
287 days
Whereas if the divisor used is only 286 days, the employees daily rate would be P335.66,
computed as follows:
P8,000.00 x 12 months
------------------------ = P335.66/day
286 days
Clearly, this muddled situation would be violative of the proscription on the nondiminution 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 for deductions due to the employees absences. In view of this
situation, the Court rules that the adjusted 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 which would diminish the existing
benefits of the employees, i.e., overtime pay, holiday and leave conversions.
For their second assignment of error, petitioners argue that, since they provided the
NLRC with overwhelming proof of their claim against Trans-Asia, the least that the
NLRC could have done was to declare that there existed an ambiguity with regard to
Trans-Asias payment of holiday pay. Petitioners then posits that if the NLRC had only
done so, this ambiguity would have been resolved in their favor because of the
constitutional mandate to resolve doubts in favor of labor.
We are not persuaded. As previously stated, the decision of the labor arbiter and the
resolutions of the NLRC were based on substantial evidence and, as such, no ambiguity
or doubt exists which could be resolved in petitioners favor.
WHEREFORE, premises considered, the Resolutions of the NLRC, dated 23
November 1993 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 in arrears brought about by this adjustment starting from
30 June 1987, the date of effectivity of E.O. No. 203.
SO ORDERED.
7. Producers Bank of the Philippines vs. NLRC, March 28, 2001 (FULL
CASE)
PRODUCERS BANK OF THE PHILIPPINES, petitioner, vs. NATIONAL
LABOR RELATIONS COMMISSION and PRODUCERS BANK
EMPLOYEES ASSOCIATION,[1]respondents.
DECISION
GONZAGA-REYES, J.:
Before us is a special civil action for certiorari with prayer for preliminary
injunction and/or restraining order seeking the nullification of (1) the decision of public
respondent in NLRC-NCR Case No. 02-00753-88, entitled Producers Bank Employees
Association v. Producers Bank of the Philippines, promulgated on 30 April 1991,
reversing the Labor Arbiters dismissal of private respondents complaint and (2) public
respondents resolution dated 18 June 1991 denying petitioners motion for partial
reconsideration.
The present petition originated from a complaint filed by private respondent on 11
February 1988 with the Arbitration Branch, National Capital Region, National Labor
Relations Commission (NLRC), charging petitioner with diminution of benefits, noncompliance with Wage Order No. 6 and non-payment of holiday pay. In addition,
private respondent prayed for damages.[2]
On 31 March 1989, Labor Arbiter Nieves V. de Castro found private respondents
claims to be unmeritorious and dismissed its complaint. [3] In a complete reversal,
however, the NLRC[4] granted all of private respondents claims, except for damages.
[5]
The dispositive portion of the NLRCs decision provides
WHEREFORE, premises considered, the appealed Decision is, as it is hereby, SET
ASIDE and another one issued ordering respondent-appellee to pay complainantappellant:
1. The unpaid bonus (mid-year and Christmas bonus) and 13th month pay;
2. Wage differentials under Wage Order No. 6 for November 1, 1984 and the
corresponding adjustment thereof; and
3. Holiday pay under Article 94 of the Labor Code, but not to exceed three (3) years.
The rest of the claims are dismissed for lack of merit.
SO ORDERED.
Petition filed a Motion for Partial Reconsideration, which was denied by the NLRC
in a Resolution issued on 18 June 1991. Hence, recourse to this Court.
Petitioner contends that the NLRC gravely abused its discretion in ruling as it did
for the succeeding reasons stated in its Petition
1. On the alleged diminution of benefits, the NLRC gravely abused its discretion when
(1) it contravened the Supreme Court decision in Traders Royal Bank v. NLRC, et al.,
G.R. No. 88168, promulgated on August 30, 1990, (2) its ruling is not justified by law
and Art. 100 of the Labor Code, (3) its ruling is contrary to the CBA, and (4) the socalled company practice invoked by it has no legal and moral bases (p. 2, Motion for
Partial Reconsideration, Annex H);
2. On the alleged non-compliance with Wage Order No. 6, the NLRC again gravely
abused its discretion when it patently and palpably erred in holding that it is more
inclined to adopt the stance of appellant (private respondent UNION) in this issue since
it is more in keeping with the law and its implementing provisions and the intendment
of the parties as revealed in their CBA without giving any reason or justification for such
conclusions as the stance of appellant (private respondent UNION) does not traverse
the clear and correct finding and conclusion of the Labor Arbiter.
Furthermore, the petitioner, under conservatorship and distressed, is exempted under
Wage Order No. 6.
Finally, the wage differentials under Wage Order No. 6 for November 1, 1984 and the
corresponding adjustment thereof (par. 2, dispositive portion, NLRC Decision), has
prescribed (p. 12, Motion for Partial Reconsideration, Annex H).
3. On the alleged non-payment of legal holiday pay, the NLRC again gravely abused its
discretion when it patently and palpably erred in approving and adopting the position of
appellant (private respondent UNION) without giving any reason or justification
therefor which position does not squarely traverse or refute the Labor Arbiters correct
finding and ruling (p. 18, Motion for Partial Reconsideration, Annex H). [6]
On 29 July 1991, the Court granted petitioners prayer for a temporary restraining
order enjoining respondents from executing the 30 April 1991 Decision and 18 June
1991 Resolution of the NLRC.[7]
Coming now to the merits of the petition, the Court shall discuss the issues ad
seriatim.
Bonuses
As to the bonuses, private respondent declared in its position paper [8] filed with the
NLRC that
1. Producers Bank of the Philippines, a banking institution, has been providing several
benefits to its employees since 1971 when it started its operation. Among the benefits it
had been regularly giving is a mid-year bonus equivalent to an employees one-month
basic pay and a Christmas bonus equivalent to an employees one whole month salary
(basic pay plus allowance);
2. When P.D. 851, the law granting a 13th month pay, took effect, the basic pay previously
being given as part of the Christmas bonus was applied as compliance to it (P.D. 851),
the allowances remained as Christmas bonus;
3. From 1981 up to 1983, the bank continued giving one month basic pay as mid-year
bonus, one month basic pay as 13th month pay but the Christmas bonus was no longer
based on the allowance but on the basic pay of the employees which is higher;
4. In the early part of 1984, the bank was placed under conservatorship but it still
provided the traditional mid-year bonus;
5. By virtue of an alleged Monetary Board Resolution No. 1566, the bank only gave a
one-half (1/2) month basic pay as compliance of the 13th month pay and none for the
Christmas bonus. In a tabular form, here are the banks violations:
CHRISTMAS
BONUS
one mo. basic
13TH MO. PAY
previous
years
1984
MID-YEAR
BONUS
one mo. basic
[one mo. basic]
- none -
1985
one-half mo. basic
- none -
1986
1987
one-half mo. basic one-half mo. basic

one-half mo. basic one-half mo. basic
one-half mo.
basic
one-half mo.
basic
one mo. basic
one mo. basic
YEAR
one mo. basic
Private respondent argues that the mid-year and Christmas bonuses, by reason of
their having been given for thirteen consecutive years, have ripened into a vested right
and, as such, can no longer be unilaterally withdrawn by petitioner without violating
Article 100 of Presidential Decree No. 442 [9] which prohibits the diminution or
elimination of benefits already being enjoyed by the employees. Although private
respondent concedes that the grant of a bonus is discretionary on the part of the
employer, it argues that, by reason of its long and regular concession, it may become
part of the employees regular compensation.[10]
On the other hand, petitioner asserts that it cannot be compelled to pay the alleged
bonus differentials due to its depressed financial condition, as evidenced by the fact that
in 1984 it was placed under conservatorship by the Monetary Board. According to
petitioner, it 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 does not provide for the payment of any
mid-year or Christmas bonus. On the contrary, section 4 of the collective bargaining
agreement states that
Acts of Grace. Any other benefits or privileges which are not expressly provided in this
Agreement, even if now accorded or hereafter accorded to the employees, shall be
deemed purely acts of grace dependent upon the sole judgment and discretion of the
BANK to grant, modify or withdraw.[11]
A bonus is an amount granted and paid to an employee for his industry and loyalty
which contributed to the success of the employers business and made possible the
realization of profits. It is an act of generosity granted by an enlightened employer to
spur the employee to greater efforts for the success of the business and realization of
bigger profits.[12] The granting of a bonus is a management prerogative, something given
in 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.
From 1979-1985, the bonuses were less because the income of the Bank had
decreased. In 1986, the income of the Bank was only 20.2 million pesos, but the Bank
still gave out the usual two (2) months basic mid-year and two months gross year-end
bonuses. The petitioner pointed out, however, that the Bank weakened considerably
after 1986 on account of political developments in the country. Suspected to be a
Marcos-owned or controlled bank, it was placed under sequestration by the present
administration and is now managed by the Presidential Commission on Good
Government (PCGG).
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 respondents 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. NLRC[17] wherein the Court made the following pronouncements
By definition, a bonus is a gratuity or act of liberality of the giver which the recipient has
no right to demand as a matter of right. It is something given in addition to what is
ordinarily received by or strictly due the recipient. The granting of a bonus is basically a
management prerogative which cannot be forced upon the employer who may not be
obliged to assume the onerous burden of granting bonuses or other benefits aside from
the employees basic salaries or wages, especially so if it is incapable of doing so.
xxx xxx xxx

Clearly then, a bonus is an amount given ex gratia to an employee by an employer on
account of success in business or realization of profits. How then can an employer be
made liable to pay additional benefits in the nature of bonuses to its employees when it
has been operating on considerable net losses for a given period of time?
Records bear out that petitioner Manilabank was already in dire financial straits in the
mid-80s. As early as 1984, the Central Bank found that Manilabank had been suffering
financial losses. Presumably, the problems commenced even before their discovery in
1984. As earlier chronicled, the Central Bank placed petitioner bank under
comptrollership in 1984 because of liquidity problems and excessive interbank
borrowings. In 1987, it was placed under receivership and ordered to close operation. In
1988, it was ordered liquidated.
It is evident, therefore, that petitioner bank was operating on net losses from the years
1984, 1985 and 1986, thus, resulting to its eventual closure in 1987 and liquidation in
1988. Clearly, there was no success in business or realization of profits to speak of that
would warrant the conferment of additional benefits sought by private respondents. No
company should be compelled to act liberally and confer upon its employees additional
benefits over and above those mandated by law when it is plagued by economic
difficulties and financial losses. No act of enlightened generosity and self-interest can be
exacted from near empty, if not empty coffers.
It was established by the labor arbiter[18] and the NLRC[19] and admitted by both
parties[20] that petitioner was placed under conservatorship by the Monetary Board,
pursuant to its authority under Section 28-A of Republic Act No. 265, [21] as amended by
Presidential Decree No. 72,[22] which provides
Sec. 28-A. Appointment of conservator. - Whenever, on the basis of a report submitted
by the appropriate supervising and examining department, the Monetary Board finds
that a bank is in a state of continuing inability or unwillingness to maintain a condition
of solvency and liquidity deemed adequate to protect the interest of depositors and
creditors, the Monetary Board may appoint a conservator to take charge of the assets,
liabilities, and the management of that banking institution, collect all monies and debts
due said bank and exercise all powers necessary to preserve the assets of the bank,
reorganize the management thereof and restore its viability. He shall have the power to
overrule or revoke the actions of the previous management and board of directors of the
bank, any provision of law to the contrary notwithstanding, and such other powers as
the Monetary Board shall deem necessary.
xxx xxx xxx
Under Section 28-A, the Monetary Board may place a bank under the control of a
conservator when it finds that the bank is continuously unable or unwilling to maintain
a condition of solvency or liquidity. In Central Bank of the Philippines v. Court of
Appeals,[23] the Court declared that the order placing petitioner herein under
conservatorship had long become final and its validity could no longer be litigated
upon. Also, in the same case, the Court found that sometime in August, 1983, some news
items triggered a bank-run in petitioner which resulted in continuous over-drawings on

petitioners demand deposit account with the Central Bank; the over-drawings reached
P143.955 million by 17 January 1984; and as of 13 February 1990, petitioner had overdrawings of up to P1.233 billion, which evidences petitioners continuing inability to
maintain a condition of solvency and liquidity, thus justifying the conservatorship. Our
findings in the Central Bank case coincide with petitioners claims that it continuously
suffered losses from 1984 to 1988 as follows YEAR NET LOSSES IN MILLIONS OF PESOS
1984 P 144.418
1985 P 144.940
1986 P 132.940
1987 P 84.182
January-February 1988 P 9.271
These losses do not include the interest expenses on the overdraft loan of the petitioner
to the Central Bank, which interest as of July 31, 1987, amounted to P610.065 Million,
and penalties on reserve deficiencies which amounted to P89.029 Million. The principal
balance of the overdraft amounted to P971.632 Million as of March 16, 1988. [24]
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 petitioners 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
petitioners closure whereby employees would lose not only their benefits, but their jobs
as well.
13th Month Pay
With regard to the 13th month pay, the NLRC adopted the position taken by private
respondent and held that the conservator was not justified in diminishing or not paying
the 13th month pay and that petitioner should have instead applied for an exemption, in
accordance with section 7 of Presidential Decree No. 851 (PD 851), as amended by
Presidential Decree No. 1364, but that it did not do so. [25] The NLRC held that the
actions of the conservator ran counter to the provisions of PD 851.
In its position paper,[26] private respondent claimed that petitioner made the
following payments to its members
YEAR MID-YEAR
BONUS
13th MONTH PAY CHRISTMAS

BONUS
1984 1 month basic

month basic
None
1985 month basic
month basic
None
1986 month basic
1 month basic
month basic
1987 month basic
1 month basic
month basic
However, in its Memorandum[27] filed before this Court, private respondent revised its
claims as follows
YEARMID-YEAR 13th MONTH PAY CHRISTMAS
BONUS
BONUS
1984 1 month
None
month basic
basic
1985 month basic None
month basic
1986 month basic month basic
1 month basic
1 month basic
1 month basic
Petitioner argues that it is not covered by PD 851 since the mid-year and Christmas
bonuses it has been giving its employees from 1984 to 1988 exceeds the basic salary for
one month (except for 1985 where a total of one month basic salary was given). Hence,
this amount should be applied towards the satisfaction of the 13 th month pay, pursuant
to Section 2 of PD 851.[28]
PD 851, which was issued by President Marcos on 16 December 1975, requires all
employers to pay their employees receiving a basic salary of not more than P1,000 a
month,[29] regardless of the nature of the employment, a 13th month pay, not later than
December 24 of every year.[30] However, employers already paying their employees a
13th month pay or its equivalent are not covered by the law. Under the Revised
Guidelines on the Implementation of the 13 th-Month Pay Law,[31] the term equivalent
shall be construed to include Christmas bonus, mid-year bonus, cash bonuses and other
payments amounting to not less than 1/12 of the basic salary. The intention of the law
was to grant some relief not to all workers but only to those not actually paid a
13th month salary or what amounts to it, by whatever name called. It was not envisioned
that a double burden would be imposed on the employer already paying his employees a
13th month pay or its equivalent whether out of pure generosity or on the basis of a
binding agreement. To impose upon an employer already giving his employees the
equivalent of a 13th month pay would be to penalize him for his liberality and in all
probability, the employer would react by withdrawing the bonuses or resist further
voluntary grants for fear that if and when a law is passed giving the same benefits, his
prior concessions might not be given due credit. [32]
In the case at bar, even assuming the truth of private respondents claims as
contained in its position paper or Memorandum regarding the payments received by its
members in the form of 13th month pay, mid-year bonus and Christmas bonus, it is
noted that, for each and every year involved, the total amount given by petitioner would
still exceed, or at least be equal to, one month basic salary and thus, may be considered
as an equivalent of the 13th month pay mandated by PD 851. Thus, petitioner is justified
in crediting the mid-year bonus and Christmas bonus as part of the 13 th month pay.
Wage Order No. 6
Wage Order No. 6, which came into effect on 1 November 1984, increased the
statutory minimum wage of workers, with different increases being specified for
agricultural plantation and non-agricultural workers. The bone of contention, however,
involves Section 4 thereof which reads All wage increase in wage and/or allowance granted by employers between June 17,
1984 and the effectivity of this Order shall be credited as compliance with the minimum
wage and allowance adjustments prescribed herein provided that where the increases
are less than the applicable amount provided in this Order, the employer shall pay the
difference. Such increases shall not include anniversary wage increases provided in
collective bargaining agreements unless the agreement expressly provide otherwise.
On 16 November 1984, the parties entered into a collective bargaining agreement
providing for the following salary adjustments
Article VIII. Section 1. Salary Adjustments. Cognizant of the effects of, among others,
price increases of oil and other commodities on the employees wages and earnings, and
the certainty of continued governmental or statutory actions adjusting employees
minimum wages, earnings, allowances, bonuses and other fringe benefits, the parties
have formulated and agreed on the following highly substantial packaged increases in
salary and allowance which take into account and cover (a) any deflation in income of
employees because of such price increases and inflation and (b) the expected
governmental response thereto in the form of statutory adjustments in wages,
allowances and benefits, during the next three (3) years of this Agreement:
(i) Effective March 1, 1984 P225.00 per month as salary increase plus P100.00 per
month as increase in allowance to employees within the bargaining unit on March 1,
1984.
(ii) Effective March 1, 1985 P125.00 per month as salary increase plus P100.00 per
1985.
(iii) Effective March 1, 1986 P125.00 per month as salary increase plus P100.00 per
1986.
In addition, the collective bargaining agreement of the parties also included a
provision on the chargeability of such salary or allowance increases against governmentordered or legislated income adjustments
Section 2. Pursuant to the MOLE Decision dated October 2, 1984 and Order dated
October 24, 1984, the first-year salary and allowance increases shall be chargeable
against adjustments under Wage Order No. 5, which took effect on June 16, 1984. The
chargeability of the foregoing salary increases against government-ordered or legislated
income adjustments subsequent to Wage Order No. 5 shall be determined on the basis
of the provisions of such government orders or legislation.
Petitioner argues that it complied with Wage Order No. 6 because the first year
salary and allowance increase provided for under the collective bargaining agreement
can be credited against the wage and allowance increase mandated by such wage
order. Under Wage Order No. 6, all increases in wages or allowances granted by the
employer between 17 June 1984 and 1 November 1984 shall be credited as compliance
with the wage and allowance adjustments prescribed therein. Petitioner asserts that
although the collective bargaining agreement was signed by the parties on 16 November
1984, the first year salary and allowance increase was made to take effect retroactively,
beginning from 1 March 1984 until 28 February 1985. Petitioner maintains that this
period encompasses the period of creditability provided for under Wage Order No. 6
and that, therefore, the balance remaining after applying the first year salary and
allowance increase in the collective bargaining agreement to the increase mandated by
Wage Order No. 5, in the amount of P125.00, should be made chargeable against the
increase prescribed by Wage Order No. 6, and if not sufficient, petitioner is willing to
pay the difference.[33]
On the other hand, private respondent contends that the first year salary and
allowance increases under the collective bargaining agreement cannot be applied
towards the satisfaction of the increases prescribed by Wage Order No. 6 because the
former were not granted within the period of creditability provided for in such wage
order. According to private respondent, the significant dates with regard to the granting
of the first year increases are 9 November 1984 the date of issuance of the MOLE
Resolution, 16 November 1984 the date when the collective bargaining agreement was
signed by the parties and 1 March 1984 the retroactive date of effectivity of the first year
increases.Private respondent points out that none of these dates fall within the period of
creditability under Wage Order No. 6 which is from 17 June 1984 to 1 November
1984. Thus, petitioner has not complied with Wage Order No. 6.[34]
The creditability provision in Wage Order No. 6 is based on important public policy,
that is, the encouragement of employers to grant wage and allowance increases to their
employees higher than the minimum rates of increases prescribed by statute or
administrative regulation. Thus, we held in Apex Mining Company, Inc. v. NLRC[35] that
[t]o obliterate the creditability provisions in the Wage Orders through interpretation
or otherwise, and to compel employers simply to add on legislated increases in
salaries or allowances without regard to what is already being paid, would be to
penalize employers who grant their workers more than the statutorily prescribed
minimum rates of increases. Clearly, this would be counter-productive so far as
securing the interest of labor is concerned. The creditability provisions in the Wage
Orders prevent the penalizing of employers who are industry leaders and who do
not wait for statutorily prescribed increases in salary or allowances and pay their
workers more than what the law or regulations require.
Section 1 of Article VIII of the collective bargaining agreement of the parties states
that the parties have formulated and agreed on the following highly substantial
packaged increases in salary and allowance which take into account and cover (a) any
deflation in income of employees because of such price increases and inflation and (b)
the expected governmental response thereto in the form of statutory adjustments in
wages, allowances and benefits, during the next three (3) years of this Agreement The
unequivocal wording of this provision manifests the clear intent of the parties to apply
the wage and allowance increases stipulated in the collective bargaining agreement to
any statutory wage and allowance adjustments issued during the effectivity of such
agreement - from 1 March 1984 to 28 February 1987. Furthermore, contrary to private
respondents contentions, there is nothing in the wording of Section 2 of Article VIII of
the collective bargaining agreement that would prevent petitioner from crediting the
first year salary and allowance increases against the increases prescribed by Wage Order
No. 6.
It would be inconsistent with the abovestated rationale underlying the creditability
provision of Wage Order No. 6 if, after applying the first year increase to Wage Order
No. 5, the balance was not made chargeable to the increases under Wage Order No. 6 for
the fact remains that petitioner actually granted wage and allowance increases sufficient
to cover the increases mandated by Wage Order No. 5 and part of the increases
mandated by Wage Order No. 6.
Holiday Pay
Article 94 of the Labor Code provides that every worker shall be paid his regular
daily wage during regular holidays[36] and that the employer may require an employee to
work on any holiday but such employee shall be paid a compensation equivalent to twice
his regular rate. In this case, the Labor Arbiter found that the divisor used by petitioner
in arriving at the employees daily rate for the purpose of computing salary-related
benefits is 314.[37] This finding was not disputed by the NLRC. [38] However, the divisor
was reduced to 303 by virtue of an inter-office memorandum issued on 13 August 1986,
to wit To increase the rate of overtime pay for rank and filers, we are pleased to inform that
effective August 18, 1986, the acting Conservator approved the use of 303 days as divisor
in the computation of Overtime pay. The present Policy of 314 days as divisor used in
the computation for cash conversion and determination of daily rate, among others, still
remain, Saturdays, therefore, are still considered paid rest days.
Corollarily, the Acting Convservator also approved the increase of meal allowance from
P25.00 to P30.00 for a minimum of four (4) hours of work for Saturdays.
Proceeding from the unambiguous terms of the above quoted memorandum, the
Labor Arbiter observed that the reduction of the divisor to 303 was for the sole purpose
of increasing the employees overtime pay and was not meant to replace the use of 314 as
the divisor in the computation of the daily rate for salary-related benefits. [39]
Private respondent admits that, prior to 18 August 1986, petitioner used a divisor of
314 in arriving at the daily wage rate of monthly-salaried employees. Private respondent
also concedes that the divisor was changed to 303 for purposes of computing overtime
pay only. In its Memorandum, private respondent states that
49. The facts germane to this issue are not debatable. The Memorandum Circular issued
by the Acting Conservator is clear. Prior to August 18, 1986, the petitioner bank used a
divisor of 314 days in arriving at the daily wage rate of the monthly-salaried
employees. Effective August 18, 1986, this was changed. It adopted the following
formula:
Basic salary x 12 months = Daily Wage Rate
303 days
50. By utilizing this formula even up to the present, the conclusion is inescapable that
the petitioner bank is not actually paying its employees the regular holiday pay
mandated by law. Consequently, it is bound to pay the salary differential of its
employees effective November 1, 1974 up to the present.
xxx xxx xxx
54. Since it is a question of fact, the Inter-office Memorandum dated August 13, 1986
(Annex E) provides for a divisor of 303 days in computing overtime pay. The clear
import of this document is that from the 365 days in a year, we deduct 52 rest days
which gives a total of 313 days. Now, if 313 days is the number of working days of the
employees then, there is a disputable presumption that the employees are paid their
holiday pay. However, this is not so in the case at bar. The bank uses 303 days as its
divisor. Hence, it is not paying its employees their corresponding holiday pay. [40]
In Union of Filipro Employees v. Vivar, Jr.[41] the Court held that [t]he divisor
assumes an important role in determining whether or not holiday pay is already
included in the monthly paid employees salary and in the computation of his daily rate.
This was also our ruling in Chartered Bank Employees Association v. Ople,[42] as follows
It is argued that even without the presumption found in the rules and in the policy
instruction, the company practice indicates that the monthly salaries of the employees
are so computed as to include the holiday pay provided by law.The petitioner contends
otherwise.
One strong argument in favor of the petitioners stand is the fact that the Chartered
Bank, in computing overtime compensation for its employees, employs a divisor of 251
days. The 251 working days divisor is the result of subtracting all Saturdays, Sundays
and the ten (10) legal holidays form the total number of calendar days in a year. If the
employees are already paid for all non-working days, the divisor should be 365 and not
251.
Apparently, the divisor of 314 is arrived at by subtracting all Sundays from the total
number of calendar days in a year, since Saturdays are considered paid rest days, as
stated in the inter-office memorandum. Thus, the use of 314 as a divisor leads to the
inevitable conclusion that the ten legal holidays are already included therein.
We agree with the labor arbiter that the reduction of the divisor to 303 was done for
the sole purpose of increasing the employees overtime pay, and was not meant to
exclude holiday pay from the monthly salary of petitioners employees. In fact, it was
expressly stated in the inter-office memorandum - also referred to by private respondent
in its pleadings - that the divisor of 314 will still be used in the computation for cash
conversion and in the determination of the daily rate. Thus, based on the records of this
case and the parties own admissions, the Court holds that petitioner has complied with
the requirements of Article 94 of the Labor Code.
Damages
As to private respondents claim for damages, the NLRC was correct in ruling that
there is no basis to support the same.
WHEREFORE, for the reasons above stated, the 30 April 1991 Decision of public
respondent in NLRC-NCR Case No. 02-00753-88, entitled Producers Bank Employees
Association v. Producers Bank of the Philippines, and its 18 June 1991 Resolution issued
in the same case are hereby SET ASIDE, with the exception of public respondents ruling
on damages.
SO ORDERED.
8. Leyte IV Electric Cooperative, Inc. vs. Layeco IV, October 19, 2007
ALU (2007) G.R. 157775Facts:

On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees UnionALU(respondent) entered into a Collective Bargaining Agreement (CBA) covering
petitioner rank-and-fileemployees, for a period of five (5) years effective January 1,
1998. On June 7, 2000, respondent, through itsRegional Vice-President, Vicente P. Casilan,
sent a letter to petitioner demanding holiday pay for allemployees, as provided for in the
CBA.Petitioner, on the other hand, in its Position Paper, insisted payment of the holiday pay in
compliance withthe CBA provisions, stating that payment was presumed since the formula used in
determining the daily rateof pay of the covered employees is Basic Monthly Salary divided by 30 days
or Basic Monthly Salarymultiplied by 12 divided by 360 days, thus with said formula, the
employees are already paid their regularand special days, the days when no work is
done, the 51 un-worked Sundays and the 51 un-worked Saturdays.
Issue:
WON Leyte IV Electric Cooperative is liable for underpayment of holiday pay.
Held:
Leyte IV Electric Cooperative is not liable for underpayment of holiday pay.
The Voluntary Arbitrator gravely abused its discretion in giving a strict or literal
interpretation of the CBAprovisions that the holiday pay be reflected in the payroll slips.
Such literal interpretation ignores theadmission of respondent in its Position Paper that the
employees were paid all the days of the month even ifnot worked. In light of such admission,
petitioner's submission of its 360 divisor in the computation ofemployees' salaries gains
significance.This ruling was applied in Wellington Investment and Manufacturing
Corporation v. Trajano, 43 ProducersBank of the Philippines v. National Labor
Relations Commission. In this case, the monthly salary was fixed byWellington to
provide for compensation for every working day of the year including the holidays
specified bylaw
and excluding only Sundays. In fixing the salary, Wellington used what it called the "314
factor"; thatis, it simply deducted 51 Sundays from the 365 days normally comprising a year and
used the difference, 314,as basis for determining the monthly salary. The monthly salary thus fixed
actually covered payment for 314days of the year, including regular and special holidays, as well as
days when no work was done by reason offortuitous cause, such as transportation strike, riot,
or typhoon or other natural calamity, or cause notattributable to the employees.It was also
applied in Odango v. National Labor Relations Commission, where Court ruled that the use of adivisor
that was less than 365 days cannot make the employer automatically liable for underpayment
ofholiday pay. In said case, the employees were required to work only from Monday to
Friday and half ofSaturday. Thus, the minimum allowable divisor is 287, which is the result of 365
days, less 52 Sundays andless 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days meant
that the employees were deprivedof their holiday pay for some or all of the ten legal holidays. The 304day divisor used by the employer wasclearly above the minimum of 287 days. In this case, the
employees are required to work only from Monday to Friday. Thus, the minimum allowable divisor
is 263, which is arrived at by deducting 51 un-worked Sundays and 51 un-worked
Saturdays from 365 days. Considering that petitioner used the 360-day divisor, which is
clearly above the minimum, indubitably, petitioner's employees are being given their
holiday pay. Thus, the Voluntary Arbitrator should not have simply brushed aside
petitioner's divisor formula. In granting respondent's claim of non-payment of holiday
pay, a "double burden" was imposed upon petitioner because it was being made to pay
twice for its employees' holiday pay when payment thereof had already been included in
the computation of their monthly salaries.

Patrick Labor Abdul Leyte

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1 | L a b o r L a w 1 C a s e D i g e s t ( 4 t h B ATC H )

1. Abduljuahid R. Pigcaulan vs. Security and Credit Investigation,

Pigcaulan to personally sign the Certification of Non-Forum Shopping. It is his duty, as

In University of Pangasinan Faculty Union v. University of Pangasinan, supra:

3. CBTC Employees Union vs. The Honorable Jacobo C. Clave, January

Petitioner: CBTC EMPLOYEES UNION

4. Asian Transmission Corporation vs. The Hon. Court of Appeals,

In deciding in favor of the Bisig ng Asian Transmission Labor Union (BATLU),

It is elementary, under the rules of statutory construction, that when the

5. San Miguel Corporation vs. The Honorable Court of Appeals, January

6. Trans-Asia Phils. Employees vs. NLRC, December 13, 1999 (FULL

On the contention that Trans-Asias acquiescence to the inclusion of a holiday pay

IN UPHOLDING THE LABOR ARBITERS DECISION DESPITE THE LACK OF

Bonifacio Day - November 30

13TH MO. PAY

one-half mo. basic

one-half mo. basic one-half mo. basic

one mo. basic

xxx xxx xxx

items triggered a bank-run in petitioner which resulted in continuous over-drawings on

13th MONTH PAY CHRISTMAS

1984 1 month basic

ALU (2007) G.R. 157775Facts:

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