Regular Holidays Service Incentive Leave Pay | Labor Standards

5. Regular Holidays

salary of not less than the statutory or established minimum wage shall
be presumed to be paid for all days in the month whether worked or
not." (132 SCRA 663, 672-673).

f. Monthly-paid employees
MANTRADE v. BACUNGAN
FACTS: This is a petition for Certiorari and Mandamus filed by
petitioner against arbitrator Froilan M. Bacungan and Mantrade
Development Corporation arising from the decision of respondent
arbitrator, the dispositive part of which reads as follows:
"CONSIDERING ALL THE ABOVE, We rule that Mantrade
Development Corporation is not under legal obligation to pay holiday
pay (as provided for in Article 94 of the Labor Code in the third official
Department of Labor edition) to its monthly paid employees who are
uniformly paid by the month, irrespective of the number of working
days therein, with a salary of not less than the statutory or established
minimum wage, and this rule is applicable not only as of March 2, 1976
but as of November 1, 1974."
Petitioner (MANTRADE/FMMC DIVISION EMPLOYEES AND
WORKERS UNION) questions the validity of the pertinent section of
the Rules and Regulations Implementing the Labor Code as amended
on which respondent arbitrator based his decision.
In denying petitioners claim for holiday pay, respondent arbitrator
stated that although monthly salaried employees are not among those
excluded from receiving such additional pay under Article 94 of the
Labor Code of the Philippines, they appear to be excluded under Sec.
2, Rule IV, Book III of the Rules and Regulations implementing said
provision.
ISSUE: Whether or not employees who are uniformly paid by the
month, irrespective of the number of working days therein, are
excluded from holiday pay.
HELD: NO. They are not excluded from receiving holiday pay.
As ruled in the case of Bank of Asia and America Employees Union
(IBAAEU) v. Inciong:
"WE agree with the petitioners contention that Section 2, Rule IV,
Book III of the implementing rules and Policy Instruction No. 9, issued
by the then Secretary of Labor are null and void since in the guise of
clarifying the Labor Codes provisions on holiday pay, they in effect
amended them by enlarging the scope of their exclusion (p. 11, rec.)
"Article 94 of the Labor Code, as amended by P.D. 850, provides:
Art. 94. Right to holiday pay. (a) 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 . . .
"The coverage and scope of exclusion of the Labor Codes holiday pay
provisions is spelled out under Article 82 thereof which
reads:chanrob1es virtual 1aw library
Art. 82. Coverage. The provision of this Title shall apply to
employees in all establishments and undertakings, whether for profit or
not, but not to government employees, managerial employees, field
personnel, members of the family of the employer 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 by the
Secretary of Labor in appropriate regulations.
x

"From the above-cited provisions, it is clear that monthly paid

employees are not excluded from the benefits of holiday pay. However,
the implementing rules on holiday pay promulgated by the then
Secretary of Labor excludes monthly paid employees from the said
benefits by inserting under Rule IV, Book III of the implementing rules,
Section 2, which provides that: employees who are uniformly paid by
the month, irrespective of the number of working days therein, with a

This ruling was reiterated by the Court en banc on August 28, 1985 in
the case of Chartered Bank Employees Association v. Ople, wherein it
added that:
"The questioned Sec. 2, Rule IV, Book III of the Integrated Rules and
the Secretarys 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." (138 SCRA 273, 282. See also CBTC
Employees Union v. , Clave, January 7, 1986, 141 SCRA 9.)
WHEREFORE, the questioned decision of respondent arbitrator is SET
ASIDE and respondent corporation is ordered to GRANT holiday pay
to its monthly salaried employees.

OCEANIC PHARMACAL EMPLOYEES UNION vs. HON. AMADO G.

INCIONG
Facts: Oceanic Pharmacal Employees Union and Oceanic Pharmacal,
Inc. had a collective bargaining agreement (CBA) good from March 1,
1976 to February 28, 1979. On April 27, 1976 a letter was sent to the
union president. The last paragraph stated: Please be informed too
that we shall continue to extend the said benefits unless otherwise
directed by other new requirements, rules, laws, decrees, etc. on the
subject.
On October 25, 1976, the Company posted on its bulletin
board a memorandum for the discontinuance of the payment to regular
employees of regular holiday pays. As to the reason for
discontinuance, it took into consideration Section 2, Rule IV, Book III of
the Rules and Regulation Implementing the Labor Code and Policy
Instructions No. 9 of the Minister of Labor and the last paragraph of its
letter to the union president.
The Union objected to the discontinuance of the holiday pay
and when an amicable settlement could not be reached, the Union filed
a complaint against the Company for unfair labor practice and violation
of the CBA regarding holiday pay.
Issue: W/N the Company may discontinue the holiday pay
No. The company may not discontinue the holiday pay to its
employees.
The pertinent issuances are:
~ Section 2. Status of employees paid by the
month. Employees who are uniformly paid by
the month, irrespective of the number of working
days therein, with a salary of not less than the
statutory or established minimum wages shall be
presumed to be paid for all days in the month
whether worked or not.
For this purpose, the monthly minimum wage shall
not be less than the statutory minimum wage

Regular Holidays Service Incentive Leave Pay | Labor Standards

multiplied by 365 days divided by twelve. (Issued
in February 16, 1976.)
~ Policy Instructions No. 9 The rules
implementing PD 850 have clarified the policy in
the implementation of the ten (10) paid legal
holidays. Before PD 850, the number of working
days a year in a firm was considered important in
determining entitlement to the benefit. Thus,
where an employee was working for at least 313
days, he was considered definitely already paid. 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 principally daily employees.
ln the case of monthly, only those whose monthly
salary did not yet include 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 eliminate
controversies on the entitlement of monthly
paid employees. The new determining rule is
this: If the monthly paid employee is receiving
not less than P240, the maximum monthly
minimum wage, and his monthly pay is
uniform from January to December, 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 in months where they occur, then he
is still entitled to the ten (10) paid legal
holidays.
The Solicitor General argued, and the Supreme Court held
that Section 2, Rule IV, Book Ill of the Rules and Regulations
Implementing the Labor Code was promulgated on February 16, 1976.
On the other hand, Policy Instructions No. 9 was issued on February
23, 1976. Since the said rules and policy instructions were already
existing and effective prior to the execution of the Supplementary
Agreement on April 27, 1976, it is clear that respondent company
agreed to continue giving holiday pay to its monthly paid
employees knowing fully well that said employees are not
covered by the law requiring payment of holiday pay. When
respondent company, therefore, interposed the condition that it "shall
continue to extend the said benefits unless otherwise directed by other
new requirements, rules, laws, decrees, etc. on the subject," it was
referring to laws, decrees, rules, etc. other than the abovecited
issuances.
Even granting arguendo that the said issuance were
promulgated after the execution of the agreement, there is still no
justification for withdrawal of holiday pay benefits by respondent.
company, in view of Section 11, Rule IV, Book III of the Implementing
Rules and Regulations, which explicitly provides:
Sec. 11. Relation to agreements. Nothing in this
Rule shall justify an employer in withdrawing or
reducing any benefits, supplements or payments
for unworked holidays as provided it) existing
individual or collective agreement or employer
practice or policy."

There is no legal basis for the withdrawal of holiday benefits

by the Company. Consequently, its violation of the Supplementary
Agreement constitutes unfair labor practice.

CITIBANK PHILS. EMPLOYEES UNION NATU vs.MINISTER OF

LABOR and CITIBANK, N. A
FACTS:
Petitioner (Citibank Phils Employee Union) filed a case for
payment of regular holiday pay pursuant to Article 208 (a) of the Labor
Code. Upon failure of concilation efforts to settle the case, the parties
agreed to submit their dispute to voluntary arbitration.
After hearing, the Voluntary Arbitrator rendered an Award
ordering respondent to pay the employees their holiday pay on the
basis of his finding that the monthly salary of said employees
does not include their pay for unworked holidays. The award was
partially implemented by the respondent when it paid to the employees
concerned their accrued holiday pay benefits covering the period
November 1974 to December 1975.
However, when the promulgation of the Integrated
Implementing Rules of the Labor Code, pursuant to P. D. 850 on 16
February 1976 and the issuance by the Secretary of Labor on 23 April
1976 of Policy Instructions No. 9, the respondent stopped such
payment.
Hence, petitioner filed a motion for execution to enforce the
award of the Voluntary Arbitrator.
ISSUE: WON Citibank employees are legally entitled of regular
holiday pay provided under Article 208 of the Labor Code, considering
their contractual wage scale
RULING:
Yes. The CBA between the parties provides that monthly
paid employees shall be entitled to the additional holiday pay. This
provision under the CBA cannot be impaired by a subsequent rule of
the Minister of Labor who refused to further implement the Arbitrator's
award. It should be clear that the terms and conditions of a
collective bargaining agreement constitute the sacred law
between the parties as long as they do not contravene public
order, interest or policy. We might say that the prohibition in the
Constitution's Bill of Rights against the passage or promulgation of any
law impairing the obligation of contracts applies with perhaps greater
force to collective bargaining agreements, considering that these deal
with the rights and interests of labor to which the charter explicitly
affords protection. (Sec. 9, Article II.)
The award of the arbitrator in this case is not to be equated
with a judicial decision. In effect, when in relation to a controversy as to
working conditions, which necessarily include the amount of wages,
allowances, bonuses, overtime pay, holiday pay, etc., the parties
submit their differences to arbitration, they do not seek any judicial
pronouncement technically as such they are merely asking the
arbitrator to fix for them what would be the fair and just condition
or term regarding the matter in dispute that should govern further
collective bargaining relations between them.

Regular Holidays Service Incentive Leave Pay | Labor Standards

Stated differently, the arbitrator's award when stipulated
by the parties to be conclusive becomes part and parcel of the
CBA. Viewed in this sense, which We are fully convinced is most
consistent with the principles of collective bargaining, the subsequent
or supervening facts referred to by the Solicitor General consisting of
acts of none other than the respondent Minister may not be invoked to
alter, modify, reform, much less abrogate, the new terms, so to speak,
of the collective bargaining inserted by virtue of the award of the
arbitrator. To do otherwise would violate the proscription of the
Constitution against impairment of the obligation of contracts.

However, the Minister of Labor (Ople) set aside the decision of the
NLRC citing Section 2, Rule IV, Book Ill of the Integrated Rules and
Policy Instruction No. 9, which respectively provide:

CHARTERED BANK EMPLOYEES ASSOCIATION VS. OPLE

Facts:
On May 20, 1975, the Chartered Bank Employees Association, in
representation of its monthly paid employees/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 the payment of ten (10) unworked legal holidays,
as well as for premium and overtime differentials for worked legal
holidays from November 1, 1974.
The respondent bank admitted that its work force consists of 149
regular employees, all of whom are paid by the month. Also, in their
collective bargaining agreement (Article VII thereof) said monthly paid
employees are paid overtime work as follows:
a.

b.

c.

d.

e.

f.

Section 1. The basic work week for all employees excepting

security guards who by virtue of the nature of their work are
required to be at their posts for 365 days per year, shall be
forty (40) hours based on five (5) eight (8) hours days,
Monday to Friday.
Section 2. Time and a quarter hourly rate shall be paid for
authorized work performed in excess of eight (8) hours from
Monday through Friday and for any hour of work performed
on Saturdays subject to Section 5 hereof.
Section 3. Time and a half hourly rate shall be paid for
authorized work performed on Sundays, legal and special
holidays.
Section 5 (3). In computing overtime pay and premium pay
for work done during regular holidays, the divisor used in
arriving at the daily rate of pay is 251 days although formerly
the divisor used was 303 days and this was when the
respondent bank was still operating on a 6-day work week
basis. However, for purposes of computing deductions
corresponding to absences without pay the divisor used is
365 days.
Section 5 (4). All regular monthly paid employees of
respondent bank are receiving salaries way beyond the
statutory or minimum rates and are among the highest paid
employees in the banking industry.
Section 5 (5). The salaries of respondent bank's monthly
paid employees suffer no deduction for holidays occurring
within the month.

Based on the foregoing both the Arbitrator and the NLRC Commission
ruled in favor of the petitioners ordering the respondent bank to pay its
monthly paid employees, holiday pay for the ten (10) legal holidays
effective November 1, 1974 and to pay premium or overtime pay
differentials to all employees who rendered work during said legal
holidays.

Sec. 2. Status of employees paid by the month. Employees

who are uniformly paid by the month, irrespective of the
number of working days therein, with a salary of not less
than the statutory or established minimum wage shall be
presumed to be paid for all days in the month whether
worked or not.
Policy Instruction No. 9. The ten (10) paid legal holidays
law, to start with, is intended to benefit principally daily
employees. In the case of monthly, only those whose
monthly salary did not yet include payment for the ten
(10) paid legal holidays are entitled to the benefit. And
that the new determining rule is this: 'if the monthly paid
employee is receiving not less than P240, the maximum
monthly minimum wage, and his monthly pay is uniform
from January to December, 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 in months where they occur, then
he is still entitled to the ten (10) paid legal holidays.

Petitioners contention:
The respondent Minister of Labor gravely abused his discretion in
promulgating 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 said guidelines to this
case.
According to the petitioner, the so-called "guidelines" promulgated by
the respondent Minister totally contravened and violated the Code by
excluding the employees/members of the petitioner from the benefits of
the holiday pay, when the Code itself did not provide for their
expanding the Code's clear and concise conclusion and
notwithstanding the Code's clear and concise phraseology defining
those employees who are covered and those who are excluded from
the benefits of holiday pay.
Respondents contention:
The questioned guidelines did not deprive the petitioner's members of
the benefits of holiday pay but merely classified those monthly paid
employees whose monthly salary already includes holiday pay and
those whose do not, and that the guidelines did not deprive the
employees of holiday pay.
Issue:
W/N the monthly salary of the petitioners members already
includes holiday pay. NO
Ruling:
Citing Insular Bank of Asia and America Employees' Union (IBAAEU) v.
Inciong which involves similar issue, the SC said that in Policy
Instruction No. 9, the then Secretary of Labor went as far as to
categorically state that the benefit is principally intended for daily paid
employees, when the law clearly states that every worker shall be paid
their regular holiday pay. This is flagrant violation of the mandatory
directive of Article 4 of the Labor Code, which states that 'All doubts in
the implementation and interpretation of the provisions of this Code,
including its implementing rules and regulations, shall be resolved in
favor of labor.' In view of the foregoing, Section 2, Rule IV, Book III of

Regular Holidays Service Incentive Leave Pay | Labor Standards

the Rules to implement the Labor Code and Policy Instruction No. 9
issued by the then Secretary of Labor must be declared null and void.
In this case, the private respondent premises its action on the
invalidated rule and policy instruction, hence, it is clear 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. They are not among
those excluded by law from the benefits of such holiday pay.

LABOR ARBITERS DECISION

The Labor Arbiter ruled in favor of Lebatique. Uy was ordered to
reinstate Lebatique and at the same time to pay Lebatique his
13th month pay, back wages (time when case was pending), service
incentive leave pay and OT pay all amounting to P196,659.72.

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."
NLRCS DECISION
One strong argument in favor of the petitioner's 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 from 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.
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.
g.

On appeal, the NLRC reversed the Labor Arbiter and dismissed the
complaint for lack of merit. The NLRC held that there was no dismissal
to speak of since Lebatique was merely suspended. Further, it found
that Lebatique was a field personnel, hence, not entitled to overtime
pay and service incentive leave pay.

CA DECISION
CA reinstated the Labor Arbiters decision finding that Lebatique was
not merely suspended but dismissed. The court also held that
Lebatique is a regular employee, thus, entitled to overtime pay and
service incentive leave pay.

Field Personnel

FAR EAST AGRICULTURAL SUPPLY, INC. and/or ALEXANDER

UY, Petitioners, vs.
JIMMY LEBATIQUE and THE HONORABLE COURT OF
APPEALS, Respondents.
FACTS
On March 4 1996, Lebatique was hired as a driver by FAR EAST
AGRICULTURAL SUPPLY, INC. with a daily wage of P223.50. His job
as a driver includes the delivery of animal feeds to the clients of the
company. He must report either in the morning or in the afternoon to
make the deliveries.
On January 24, 2000, Lebatique complained of nonpayment of
overtime work particularly on January 22, 2000, when he was required
to make a second delivery in Novaliches, Quezon City. That same day,
Manuel Uy, brother of Far Easts General Manager and petitioner
Alexander Uy, suspended Lebatique apparently for illegal use of
company vehicle. Even so, Lebatique reported for work the next day
but he was prohibited from entering the company premises.
Uy summoned Lebatique and asked why he was claiming overtime
pay. Lebatique said since he started working with the company he has
never been paid OT pay. After consulting Manuel, Alexander fired
Lebatique and told him to look for another job.
Lebatique then filed an Illegal Dismissal case and nonpayment of
overtime pay against the company.

UYS MAIN ARGUMENT

Uy argued that (1) Lebatique was not dismissed from service but
merely suspended for a day due to violation of company rules; (2)
Lebatique was not barred from entering the company premises since
he never reported back to work; (3) and that Lebatique was a
field personnel whose time outside the company premises cannot be
determined with reasonable certainty, and as such, he is not entitled to
overtime pay and service incentive leave.
ISSUE
Whether or not Lebatique is a field personnel.
HELD
No. Lebatique is a regular employee.
Uy illegally dismissed Lebatique when he told him to look for another
job. Judging at the sequence of events, Lebatique earned the ire of Uy
when he filed a complaint for nonpayment of OT pay on the day
Lebatique was suspended by Manuel Uy. Such is not a valid reason for
dismissing Lebatique. Uy cannot therefore claim that he
merely suspended Lebatique.
Further, Lebatique did not abandon his job. His filing of this case is
proof enough that he had no intention to abandon his job. To constitute
abandonment as a just cause for dismissal, there must be:

Regular Holidays Service Incentive Leave Pay | Labor Standards

(a) absence without justifiable reason; and
(b) a clear intention, as manifested by some overt act, to sever the
employer-employee relationship.
None of the above was proven by Uy.
Also, Lebatique is not a field personnel as defined above for the
following reasons:
(1) company drivers, including Lebatique, are directed to deliver the
goods at a specified time and place;
(2) they are not given the discretion to solicit, select and contact
prospective clients; and
(3) Far East issued a directive that company drivers should stay at the
clients premises during truck-ban hours which is from 5:00 to 9:00
a.m. and 5:00 to 9:00 p.m.
Drivers, like Lebatique, are under the control and supervision of
management officers. Lebatique, therefore, is a regular employee
whose tasks are usually necessary and desirable to the usual trade
and business of the company. Thus, he is entitled to the benefits
accorded to regular employees of Far East, including overtime pay and
service incentive leave pay.
The Supreme Court affirmed the Labor Arbiters decision but remanded
the case for properly computing Lebatiques OT pay taking in to
consideration the companys time keeping records.

Field Personnel Defined citing the case of Auto Bus Transport

Systems, Inc. v. Bautista
Field personnel are those who regularly perform their duties away from
the principal place of business of the employer and whose actual hours
of work in the field cannot be determined with reasonable certainty. A
"field personnel" is not merely concerned with the location where the
employee regularly performs his duties but also with the fact that the
employees performance is unsupervised by the employer.

h.

Private School Teachers

PRIVATE SCHOOL TEACHERS JOSE RIZAL COLLEGE, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION AND NATIONAL
ALLIANCE OF TEACHERS/OFFICE WORKERS, respondents.
FACTS: Petitioner is a non-stock, non-profit educational institution duly
organized and existing under the laws of the Philippines. It has three
groups of employees categorized as follows: (a) personnel on monthly
basis, who receive their monthly salary uniformly throughout the year,
irrespective of the actual number of working days in a month without
deduction for holidays; (b) personnel on daily basis who are paid on
actual days worked and they receive unworked holiday pay and (c)

collegiate faculty who are paid on the basis of student contract hour.
Before the start of the semester they sign contracts with the college
undertaking to meet their classes as per schedule.
Unable to receive their corresponding holiday pay, as claimed, from
1975 to 1977, private respondent National Alliance of Teachers and
Office Workers (NATOW) in behalf of the faculty and personnel of Jose
Rizal College filed with the Ministry of Labor a complaint against the
college for said alleged non-payment of holiday pay.
LAbor Arbiter:
1. The faculty who are paid their salary by the month uniformly in a
school year, irrespective of the number of working days in a month,
without deduction for holidays, are presumed to be already paid the 10
paid legal holidays and are no longer entitled to separate payment for
the said regular holidays;
2. The personnel who are paid their wages daily are entitled to be paid
the 10 unworked regular holidays according to the pertinent provisions
of the Rules and Regulations Implementing the Labor Code;
3. Collegiate faculty who by contract are paid compensation per
student contract hour are not entitled to unworked regular holiday pay
considering that these regular holidays have been excluded in the
programming of the student contact hours.
On appeal, respondent National Labor Relations Commission in a
decision promulgated on June 2, 1982, modified the decision appealed
from, in the sense that teaching personnel paid by the hour are
declared to be entitled to holiday pay.
PETITIONER: maintains the position among others, that it is not
covered by Book V of the Labor Code on Labor Relations considering
that it is a non- profit institution and that its hourly paid faculty
members are paid on a "contract" basis because they are required to
hold classes for a particular number of hours. In the programming of
these student contract hours, legal holidays are excluded and labelled
in the schedule as "no class day. " On the other hand, if a regular week
day is declared a holiday, the school calendar is extended to
compensate for that day. Thus petitioner argues that the advent of any
of the legal holidays within the semester will not affect the faculty's
salary because this day is not included in their schedule while the
calendar is extended to compensate for special holidays. Thus the
programmed number of lecture hours is not diminished.
SG: argues that under Article 94 of the Labor Code (P.D. No. 442 as
amended), holiday pay applies to all employees except those in retail
and service establishments. To deprive therefore employees paid at an
hourly rate of unworked holiday pay is contrary to the policy
considerations underlying such presidential enactment, and its
precursor, the Blue Sunday Law (Republic Act No. 946) apart from the
constitutional mandate to grant greater rights to labor (Constitution,
Article II, Section 9).
NLRC: ruled that the purpose of a holiday pay is obvious; that is 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 no
excuse therefore that the school calendar is extended whenever
holidays occur, because such happens only in cases of special
holidays.
ISSUE: WON the school faculty who according to their contracts are
paid per lecture hour are entitled to unworked holiday pay.

Regular Holidays Service Incentive Leave Pay | Labor Standards

RULING: YES
Subject holiday pay is provided for in the Labor Code (Presidential
Decree No. 442, as amended), which reads:
Art. 94. Right to holiday pay (a) 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;
(b) 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; ... "

Wellington v. Trajano
FACTS:
The Labor Enforcement Officer conducted a routine inspection of
Wellington Flour Mills on August 6, 1991, and thereafter drew up a
report with a finding of "non-payment of regular holidays falling on a
Sunday for monthly-paid employees."
Wellington argued that the monthly salary of the company's monthlysalaried employees already includes holiday pay for all regular
holidays, and hence there is no legal basis for the finding of alleged
non-payment of regular holidays falling on a Sunday.

and in the Implementing Rules and Regulations, Rule IV, Book III,
which reads:
SEC. 8. Holiday pay of certain employees. (a) Private school
teachers, including faculty members of colleges and universities, may
not be paid for the regular holidays during semestral vacations. They
shall, however, be paid for the regular holidays during Christmas
vacations. ...

Particularly as regards employees who are uniformly paid by the

month, the monthly minimum wage shall not be less than the
statutory minimum wage multiplied by 365 days divided by
twelve." This monthly salary shall serve as compensation "for all days
in the month whether worked or not," and "irrespective of the number
of working days therein."

Petitioner, although a non-profit institution is under obligation to give

pay even on unworkedregular holidays to hourly paid faculty members
subject to the terms and conditions provided for therein.
Regularholidays specified as such by law are known to both school
and faculty members as no class days;" certainly the latter do not
expect payment for said unworked days, and this was clearly in their
minds when they entered into the teaching contracts.
On the other hand, both the law and the Implementing Rules governing
holiday pay are silent as to payment on Special Public Holidays.
It is readily apparent that the declared purpose of the holiday pay
which is the prevention of diminution of the monthly income of the
employees on account of work interruptions is defeated when a regular
class day is cancelled on account of a special public holiday and class
hours are held on another working day to make up for time lost in the
school calendar. Otherwise stated, the faculty member, although forced
to take a rest, does not earn what he should earn on that day. Be it
noted that when a special public holiday is declared, the faculty
member paid by the hour is deprived of expected income, and it does
not matter that the school calendar is extended in view of the days or
hours lost, for their income that could be earned from other sources is
lost during the extended days. Similarly, when classes are called off or
shortened on account of typhoons, floods, rallies, and the like, these
faculty members must likewise be paid, whether or not extensions are
ordered.
SC decision:
(a) exempting petitioner from paying hourly paid faculty members their
pay for regular holidays, whether the same be during the
regularsemesters of the school year or during semestral, Christmas, or
Holy Week vacations;
(b) but ordering petitioner to pay said faculty members their regular
hourly rate on days declared as special holidays or for some reason
classes are called off or shortened for the hours they are supposed to
have taught, whether extensions of class days be ordered or not; in
case of extensions said faculty members shall likewise be paid their
hourly rates should they teach during said extensions.
k. Holiday on a Sunday

In other words, whether the month is of 30 or 31 days' duration, or 28

or 29 (as in February), the employee is entitled to receive the entire
monthly salary. So in the event of the declaration of any special
holiday, or any fortuitous cause precluding work on any particular day
(such as transportation strikes, riots, or typhoons or other natural
calamities), the employee is entitled to the salary for the entire month
and the employer has no right to deduct the proportionate amount
corresponding to the days when no work was done.

In Wellington's case, there seems to be no question that at the time of

the inspection, it had been paying its employees "a salary of not less
than the statutory or established minimum wage," and that the monthly
salary thus paid was "not less than the statutory minimum wage
multiplied by 365 days divided by twelve." There is 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 working day of the year including the holidays
specified by law and excluding only Sundays.

In fixing the salary, Wellington used what it calls the 314 factor:

365 days of the year 51 Sundays = 314 days, as basis for

determining the monthly salary.

Regular Holidays Service Incentive Leave Pay | Labor Standards

The monthly salary thus fixed actually covers payment for 314 days of
the year, including regular and special holidays, as well as days
when no work is done by reason of fortuitous cause, as above
specified, or causes not attributable to the employees.

Theory of the Labor Officer:

The Labor Officer discovered that in certain years, two or three regular
holidays had fallen on Sundays. According to him, this had precluded
the enjoyment by the employees of a non-working day, and the
employees had consequently had to work an additional day for that
month.

He said that by using said (314) factor, Wellington assumes that all the
regular holidays fell on ordinary days and never on a Sunday. Thus,
they failed to consider the circumstance that whenever a regular
holiday coincides with a Sunday, an additional working day is created
and left unpaid. In other words, while the said divisor (314) may be
utilized as proof evidencing payment 314 days in a calendar year, the
same does not cover payment of additional working days created as a
result of some regular holidays falling on Sundays.

He pointed out that in 1988 there was an increase of three (3) working
days resulting from regular holidays falling on Sundays; hence
Wellington should pay for 317 days, instead of 314 days.

Thus, there should be additional payment by Wellington to its monthlypaid employees for "an increment of three (3) working days" for 1989
and again, for 1990. What he is saying is that in those years,
Wellington should have used the "317 factor," not the "314 factor."

ISSUE:
WON a monthly-paid employee, receiving a fixed monthly
compensation, is entitled to an additional pay aside from his usual
holiday pay, whenever a regular holiday falls on a Sunday. NO
HELD:
The theory of the Labor Officer 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 day unaccounted 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 368 days. Pursuant to this theory, no
employer opting to pay his employees by the month would have any
definite basis to determine the number of days in a year for which
compensation should be given to his work force. He would have to
ascertain the number of times legal holidays would fall on Sundays in
all the years of the expected lifetime of his business. Alternatively, he
would be compelled to make adjustments in his employees' monthly
salaries every year, depending on 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 salary rate set by him to take account of
legal holidays falling on Sundays in a given year, or, contrary to the
legal provisions bearing on the point, otherwise to reckon a year at
more than 365 days.

Therefore, Wellington is not obliged to pay additional compensation

whenever a regular holiday falls on a Sunday.

As earlier 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 365 days divided
by twelve," and to pay that salary "for all days in the month whether
worked or not," and "irrespective of the number of working days
therein." That salary is due and payable regardless of the declaration
of any special holiday in the entire country or a particular place therein,
or any fortuitous cause precluding work on any particular day or days
(such as transportation strikes, riots, or typhoons or other natural
calamities), or cause not imputable to the worker. And as also earlier
pointed out, the legal provisions governing monthly compensation are
evidently intended precisely to avoid re-computations and alterations in
salary on account of the contingencies just mentioned, which, by the
way, are routinely made between employer and employees when the
wages are paid on daily basis.

6. Service Incentive Leave Pay

Labor Congress of the Philippines (LCP) for and in behalf of its
members, Ana Marie Ocampo et al
Vs
NLRC, Empire Food Products
FACTS:

The 99 persons (Ana Marie Ocampo, Mary Intal, et al) as

petitioners, represented by the Labor Congress of the
Philippines (LCP) were rank-and-file employees of private
respondent Empire Food Products (a food and fruit
processing company). Petitioners worked as food repackers
(cheese curls) for private respondent.

Ocampo et al filed against private respondent a complaint

before the NLRC for payment of money claims and for
violation of labor standards laws.

They also filed a petition for direct certification for the Labor
Congress of the Philippines (LCP) to be their bargaining
representative.

LCP and Empire Food Products entered into a Memorandum

of Agreement, recognizing the following:
a) Status of LCP as sole and exclusive Bargaining
Agent and Representative for all rank and file
employees of the Empire Food Products regarding
"wages, hours of work, and other terms and
conditions of employment";

Regular Holidays Service Incentive Leave Pay | Labor Standards

b)

With regard to the NLRC complaint, all parties

agree to resolve the issues during the Collective
Bargaining Agreement;
c) Proper adjustment of wages, and withdrawal of
NLRC case(money claims and violation of labor
laws).
In an order, the Mediator Arbiter approved the memorandum
and certified LCP as the sole and exclusive bargaining agent
for the rank-and-file employees of Empire.
Petitioners (Ana Marie et al) filed a complaint for: Unfair
Labor Practices via Illegal Lockout and Dismissal; UnionBusting through harassment, threats and interference to the
right for self-organization; Violation of the MOA; and
Underpayment of wages
Labor Arbiter (1st decision): Absolved private respondent
of the charges but however directed reinstatement of
complainants, due to the fact that Empire did not keep its
payroll records as per requirement of the DOLE.
NLRC: Remanded case to Labor Arbiter for further
proceedings due to overlooking the testimonies of some
of the individual complainants.
Labor Arbiter (2nd decision): Complainants failed to present
with definiteness and clarity the particular act or acts
constitutive of unfair labor practice. As regards the issue of
harassment, threats and interference with the rights of
employees to self-organization which is actually an
ingredient of unfair labor practice, complainants failed to
specify what type of threats or intimidation was committed
and who committed the same.
NLRC: Affirmed LA 2nd decision.
Petitioners contend that the fact that they are piece workers
does not imply that they are not regular employees entitled
for reinstatement. LA and NLRC decisions were not
supported by substantial evidence; Abandonment of work
was not proved by substantial evidence;
Respondents contend petitioner (Ana Marie, et al) were
piece workers hence they are exempt from labor standards
benefits.

ISSUES:
1. WON the petitioners are entitled to labor standard benefits,
considering their status as piece rate workers.
2. WON the actions of Ana Marie, et al constituted
abandonment of work.
HELD:
1.

YES, petitioners are entitled to labor standards benefits,

namely, holiday pay, premium pay, 13th month pay and
service incentive leave.

Supreme Court decision cites that despite petitioners being

pakyao or piece workers does not imply that they are not regular
employees entitled to reinstatement. 3 factors lead to the conclusion
that petitioners, although piece-rate workers, were regular employees
of private respondents:
a) The nature of the tasks of petitioners of repacking snack
food items was NECESSARY and DESIRABLE in the usual
business of Empire Foods, which is a food and fruit
processing company. According to Tabas vs California
Manufacturing, merchandisers of processed food who
coordinates for sales of processed food was a necessity and
was desirable for the day-to-day operations of a food
processing company. With more reason would the job of
food packers be necessary for the day-to-day operations of a
food processing plant.
b) Petitioners worked throughout the year, with their
employment not being dependent from a specific project or
season.
c) The length of time that petitioners worked for private
respondents.
Petitioners are entitled to holiday pay, premium pay, 13th month pay
and SIL( with regard to SIL the LA failed to rule on)

Holiday pay
The Rules Implementing the Labor Code exclude certain
employees from receiving benefits such as nighttime pay, holiday pay,
service incentive leave and 13th month pay, inter alia, "field personnel
and other employees whose time and performance is unsupervised by
the employer, including those who are engaged on task or contract
basis, purely commission basis, or those who are paid a fixed amount
for performing work irrespective of the time consumed in the
performance thereof."
However, petitioners as piece-rate workers do not fall within
this group. Not only did the employees labor under the control of
Empire, the employees also worked throughout the year to fulfil their
quota as basis for compensation.
Further, in Section 8 (b), Rule IV, Book III, piece workers are
specifically mentioned as being entitled to holiday pay.
Sec. 8. Holiday pay of certain employees.
(b)
Where a covered employee is paid by results or
output, such as payment on piece work, his holiday pay shall
not be less than his average daily earnings for the last seven
(7) actual working days preceding the regular holiday:
Provided, however, that in no case shall the holiday pay be
less than the applicable statutory minimum wage rate.
13th month pay
In addition, the Revised Guidelines on the Implementation of
the 13th Month Pay Law, in view of the modifications to P.D. No. 851
by Memorandum Order No. 28, clearly excludes the employer of piece
rate workers from those exempted from paying 13th month pay, to wit:
2.
EXEMPTED EMPLOYERS - The following
employers are still not covered by P.D. No. 851:
d.
Employers of those who are paid on
purely commission, boundary or task basis, and
those who are paid a fixed amount for performing
specific work, irrespective of the time consumed in
the performance thereof, except where the
workers are paid on piece-rate basis in which case
the employer shall grant the required 13th month
pay to such workers.
However, the Revised Guidelines as well as the Rules and Regulations
identify those workers who fall under the piece-rate category as those
who are paid a standard amount for every piece or unit of work
produced that is more or less regularly replicated, without regard to the
time spent in producing the same.
Overtime pay
They should also be paid for overtime pay, even though Sec. 2(e),
Rule I, Book III of the Implementing Rules states that:
workers who are paid by results including those who are
paid on piece-work, takay, pakiao, or task basis, if their
output rates are in accordance with the standards prescribed
under Sec. 8, Rule VII, Book III, of these regulations, or
where such rates have been fixed by the Secretary of Labor
in accordance with the aforesaid section, are not entitled to
receive overtime pay.
In this case, Empire Foods did not allege that they adheredtothe
standardsset forthin Sec. 8, Rule VII, Book III, norwiththerates
prescribedbytheSecretaryofLabor. Therefore, even though they are
piece workers, they are entitled to overtime pay.

2.

NO, failure to appear to work did not constitute

abandonment.

SC cited the Office of Solicitor Generals observations:

In finding that petitioner employees abandoned their work,
the Labor Arbiter and the NLRC relied on the testimony of
Security Guard Rolando Cairo that on January 21, 1991,
petitioners refused to work. As a result of their failure to

Regular Holidays Service Incentive Leave Pay | Labor Standards

work, the cheese curls ready for repacking on said date
were spoiled

The failure to work for one day, which resulted in the

spoilage of cheese curls does not amount to abandonment
of work. In fact two (2) days after the reported abandonment
of work or on January 23, 1991, petitioners filed a complaint
for, among others, unfair labor practice, illegal lockout and/or
illegal dismissal.
Furthermore, the SC stressed that the burden of proving the existence
of just cause for dismissing an employee, such as abandonment, rests
on the employer. According to the SC, Empire Foods failed to
discharge this burden as basis for dismissing the employees.

SERVICE INCENTIVES: Petitioners are deemed entitled to

service incentive leave
---------------------------------------------Private respondents also claim that petitioners are not
entitled to service incentive leave inasmuch as
establishments employing less than ten (10) employees
are exempted by the Labor Code and the Implementing
Rules from paying service incentive leave. Attention is called
to the complaint where petitioners alleged that there were
only six (6) employees in Sun Valley Subdivision "excluding
others."
Petitioners' allegation that there were six (6) employees in
Sun Valley Subdivision "excluding others" in effect stated
that there were other employees of the corporation, except
that they were not stationed in Sun Valley Subdivision.

Also, the SC considered that, in terminating the employees for

abandonment of work, Empire failed to serve to the employees a
written notice of termination (as required by the Two-Notice rule and
Section 2, Rule XIV, Book V of the Omnibus Rules), violating the
employees right to security of tenure and the constitutional right to due
process.

SC Ruling: Note, however, that the clear policy of the Labor

Code is to include all establishments, except a few
classes, under the coverage of the provision granting service
incentive leave to workers.

BONIFACIO MURILLO, JOSE DOMINGO, ARSENIO TAGURA,

NICASIO CANETE, and MARIO VELASQUEZ, petitioners,
vs.
SUN VALLEY REALTY, INC

Private respondents' claim is that they fell within the

exception. Hence, it was incumbent upon them to prove that
they belonged to a class excepted by law from the general
rule.

Petitioners were employed in April 1967 as maintenance men tasked

with the upkeep of the roads and water system of the Sun Valley
Subdivision.

Specifically, it was the duty of respondents, not of

petitioners, to prove that there were less than ten (10)
employees in the company. Having failed to discharge its
task, private respondents must be deemed to be covered by
the general rule, notwithstanding the failure of petitioners to
allege the exact number of employees of the corporation. In
other words, petitioners must be deemed entitled to
service incentive leave.

On January 11, 1980, they were notified by State Realty and

Investment Corporation that their services would be
terminated effective January 31, 1980 in view, allegedly, of
the termination of the contract between Sun Valley
Realty, Inc. and State Realty and Investment
Corporation.
Thus, on January 31, 1980, petitioners' employment was
terminated without private respondents having filed any
application for clearance to terminate much less a prior
clearance from the Ministry of Labor.
On February 26, 1980, petitioners filed their complaint for illegal
dismissal, emergency living allowance and payment of service
incentive leave.
December 5, 1980, the Labor Arbiter rendered a decision declaring
petitioners' dismissal illegal.
February 24, 1984, the NLRC reversed the decision of the Labor
Arbiter, solely on the ground that Petitioner's Position Paper-Affidavit
was not verified, and therefore "cannot be legally considered as
evidence.
PRIMARY ISSUE: WON the Petitioners are entitled to statutory
benefits and payments and SERVICE INCENTIVE LEAVE?
Suffice it to say that whether or not the benefits were paid is a question
of fact. Since there is substantial evidence to support the findings of
the Labor Arbiter that petitioners were underpaid, this Court will not
disturb the conclusions of the Labor Arbiter.

PRESCRIPTION: Petitioners are hereby awarded only those

claims accruing within three years prior to February 26, 1980.
-----------------------------------------------There is merit, however, in respondents' contention that
claims that accrued more than three years before the
complaint was filed on February 26, 1980 had
prescribed. Article 292 of the Labor Code is clear.
We thus rule that all claims which accrued more than three
(3) years prior to February 26, 1980 are no longer
recoverable.

The Decision of the Labor Arbiter is hereby REINSTATED with the

modification that petitioners are hereby awarded only those claims
accruing within three years prior to February 26, 1980.
OTHER TOPICS:

WON the lack of verification was material?

SC: The lack of verification of the Position Paper-Affidavit of
petitioners is a formal, rather than a substantial, defect. It is not
fatal in this case. It could have been easily corrected by requiring
an oath

WON the petitioners were illegally dismissed?

NOTE: The Court notes that at the time of petitioners' dismissal,
Article 278 of the Labor Code as implemented by Rule XIV
(Clearance to Shut Down or to Dismiss), Book V, of the Rules and
Regulations Implementing the Labor Code, was still in force.
Article 278 read:
Xxxxx no employer may shut down his establishment or terminate
the employment of employees with at least one year of service
during the last two years, whether such service is continuous or
broken, without prior authority issued in accordance with such
rules and regulations as the Secretary may promulgate. Xxxxx..

It is undisputed that no clearance to terminate was ever secured by

private respondents prior to the termination of employment of
petitioners. In fact, even as petitioners were terminated on January 31,
1980, it was only on February 14, 1980 that an application for
clearance was filed by private respondents. Hence, petitioners'
dismissal must be conclusively presumed to be without just cause.
The Rules cited above are clear that clearance was likewise required
before one could shut down his business. There is no showing that
private respondent applied for a clearance to shut down prior to
petitioners' dismissal from work.

Regular Holidays Service Incentive Leave Pay | Labor Standards 10

DAVAO INTEGRATED PORT STEVEDORING SERVICES, petitioner,
vs.
RUBEN V. ABARQUEZ, in his capacity as an accredited Voluntary
Arbitrator and THE ASSOCIATION OF TRADE UNIONS (ATUTUCP), respondents.

Beltran who misinterpreted Sections 1 and 3 of CBA, it was well within

petitioner-company's rights to rectify the error it had committed and
stop the payment of the said sick leave with pay benefits. An error in
payment, according to petitioner-company, can never ripen into a
practice.

FACTS: Davao Integrated Port Stevedoring Services and ATU-TUCP

(Union), CB agent of the rank and file workers, entered into a CBA
which provide for sick leave with pay benefits each year to its
employees who have rendered at least one (1) year of service with the
company

ISSUE: Whether the workers are entitled to the benefits under the
CBA. YES

Section 1. Sick Leaves The Company agrees to grant 15 days sick

leave with pay each year to every regular non-intermittent worker who
already rendered at least one year of service with the company.
However, such sick leave can only be enjoyed upon certification by a
company designated physician, and if the same is not enjoyed within
one year period of the current year, any unenjoyed portion thereof,
shall be converted to cash and shall be paid at the end of the said one
year period. And provided however, that only those regular workers of
the company whose work are not intermittent, are entitled to the herein
sick leave privilege.
Section 3. All intermittent field workers of the company who are
members of the Regular Labor Pool shall be entitled to vacation and
sick leaves per year of service with pay under the following schedule
based on the number of hours rendered including overtime, to wit:
During the effectivity of the CBA, all the field workers of DAVAO who
are members of the regular labor pool and the present regular extra
labor pool who had rendered at least 750 hours up to 1,500 hours were
extended sick leave with pay benefits. Any unenjoyed portion thereof at
the end of the current year was converted to cash and paid at the end
of the said one-year period pursuant to the CBA.
The commutation of the unenjoyed portion of the sick leave with pay
benefits of the intermittent workers or its conversion to cash was,
however, discontinued or withdrawn when DAVAO under a new
assistant manager, Mr. Benjamin Marzo stopped the payment of its
cash equivalent on the ground that they are not entitled to the said
benefits under Sections 1 and 3 of the 1989 CBA.
The Union objected to the said discontinuance of commutation or
conversion to cash of the unenjoyed sick leave with pay benefits of
petitioner's intermittent workers contending that it is a deviation from
the true intent of the parties that negotiated the CBA; that it would
violate the principle in labor laws that benefits already extended shall
not be taken away and that it would result in discrimination between
the non-intermittent and the intermittent workers of the petitionercompany.
Ruben Abarquez, Jr. issued on September 10, 1991 an Award in favor
of the Union ruling that the regular intermittent workers are entitled to
commutation of their unenjoyed sick leave with pay benefits under
Sections 1 and 3 of the 1989 CBA, the dispositive portion of which
reads:
DAVAO contended that it is clear from the language and intent of the
last sentence of Section 1 CBA that only the regular workers whose
work are not intermittent are entitled to the benefit of conversion to
cash of the unenjoyed portion of sick leave, and that while the
intermittent workers were paid the cash equivalent of their unenjoyed
sick leave with pay benefits during the previous management of Mr.

HELD: While the terms and conditions of a CBA constitute the law
between the parties, it is not, however, an ordinary contract to which is
applied the principles of law governing ordinary contracts. A CBA is not
merely contractual in nature but impressed with public interest, thus, it
must yield to the common good. As such, it must be construed liberally
rather than narrowly and technically, and the courts must place a
practical and realistic construction upon it, giving due consideration to
the context in which it is negotiated and purpose which it is intended to
serve.
Sick leave benefits, like other economic benefits stipulated in the CBA
such as maternity leave and vacation leave benefits, among others,
are by their nature, intended to be replacements for regular income
which otherwise would not be earned because an employee is not
working during the period of said leaves. They are non-contributory in
nature, in the sense that the employees contribute nothing to the
operation of the benefits. By their nature, upon agreement of the
parties, they are intended to alleviate the economic condition of the
workers.
In this case, the last sentence of Section 1 CBA does not bar the
regular intermittent workers from the privilege of commutation or
conversion to cash of the unenjoyed portion of their sick leave with pay
benefits, if qualified. For the phrase "herein sick leave privilege," as
used in the last sentence of Section 1, refers to the privilege of having
a fixed 15-day sick leave with pay which, as mandated by Section 1,
only the non-intermittent workers are entitled to. This fixed 15-day sick
leave with pay benefit should be distinguished from the variable
number of days of sick leave, not to exceed 15 days, extended to
intermittent workers under Section 3 depending on the number of
hours of service rendered to the company, including overtime pursuant
to the schedule provided therein. It is only fair and reasonable for
petitioner-company not to stipulate a fixed 15-day sick leave with pay
for its regular intermittent workers since, as the term "intermittent"
implies, there is irregularity in their work-days.
Public respondent correctly observed that the parties to the CBA
clearly intended the same sick leave privilege to be accorded the
intermittent workers in the same way that they are both given the same
treatment with respect to vacation leaves - non-commutable and noncumulative. If they are treated equally with respect to vacation leave
privilege, with more reason should they be on par with each other with
respect to sick leave privileges.
Well-settled is it that the said privilege of commutation or conversion to
cash, being an existing benefit, the petitioner-company may not
unilaterally withdraw, or diminish such benefits. It is a fact that
petitioner-company had, on several instances in the past, granted and
paid the cash equivalent of the unenjoyed portion of the sick leave
benefits of some intermittent workers. Under the circumstances, these
may be deemed to have ripened into company practice or policy which
cannot be peremptorily withdrawn.
MARK ROCHE INTERNATIONAL AND/OR EDUARDO DAYOT and
SUSAN DAYOT vs.

Regular Holidays Service Incentive Leave Pay | Labor Standards 11

NLRC, MARK ROCHE WORKERS UNION and WILMA PATACAY,
EILEEN RUFON, LILIA BRIONES, BEATRIZ MANAGAYTAY, DELIA
ARELLANO, ANITA MARCELO, RIO MARIANO, MARISSA SADILI,
ESTRELLA MALLARI, DELIA LAROYA, and DIVINA VILLARBA

Petitioners Contention: Private respondents voluntarily abandoned

their jobs without justifiable reason nor prior notice. They incurred
numerous absences by reason of their preoccupation to the union. It
was without prior notice and clearance as evidenced by several
company memos sent to them. Hence, there is no constructive or
illegal dismissal.

Facts: Mark Roche International (MRI) is a corporation engaged in the

garments business. Eduardo Dayot and Susan Dayot were its
President and Vice President, respectively. Private respondents Rufon,
Briones, Managaytay, Arellano, Marcelo, Mariano, Sadili, Patacay,
Mallari, Laroya and Villarba were employed as sewers of MRI with
lengths of service varying from 3 to 9 years.

Issue: WON there was constructive dismissal or illegal dismissal.

There was illegal dismissal.

On different dates private respondents filed separate complaints for

underpayment of wages and non-payment of overtime pay against
MRI, Eduardo Dayot and Susan Dayot.
Private respondents alleged that they usually worked 11 to 12 hours
daily, except on Mondays during which they worked 8 hours, and were
paid wages on a piece-rate basis amounting to P450.00 to P600.00
per week. They likewise asserted that sometime in 1992 they found
out, the company did not remit their contributions to the SSS.
On 11 October 1992 Mark Roche Workers Union (MRWU) was
organized. They registered the union with the DOLE-NCR and filed a
Petition for Certification Election before the Med-Arbitration Board.
The company ordered private respondents to withdraw the petition and
threatened them that should they insist in the org of a union they would
be dismissed. Unfazed, private respondents refused resulting to their
discharge from work.
On 30 October 1992 private respondents amended their complaints to
illegal dismissal, unfair labor practice, non-payment of 13th month pay,
underpayment for legal holidays, and for damages.
Labor Arbiter rendered his decision declaring as illegal the constructive
dismissal. It ordered the payment of back wages, 13th month pay,
service incentive leave pay, and wage differentials.
On appeal the NLRC affirmed the reinstatement of private respondents
and the payment of back wages, salary differentials and proportionate
13th month pay but set aside the award of service incentive leave pay.
Petitioners Contention: they have already paid all the amounts and
benefits due them except OT pay since they not entitled being piece
rate worker.
Issue: WON the private respondents are entitled for the service
incentive leave pay. NO.
The employer bears the burden to prove that employees have received
their wages and benefits and that the same were paid in accordance
with law. In their position paper, petitioners failed to present necessary
documentary evidence to substantiate their allegation that private
respondents money claims were fully paid.
Private respondents as piece-rate employees are NOT entitled to
service incentive leave pay as well as holiday pay even if they are
entitled to other benefits like COLA and 13th month pay. Service
incentive leave pay shall not apply to employees whose performance is
unsupervised by the employer, including those who are paid in a fixed
amount for performing work irrespective of the time consumed in the
performance thereof.

Abandonment, as a just and valid ground for dismissal, means the

deliberate and unjustified refusal of an employee to resume his
employment. The burden of proof is on the employer to show an
unequivocal intent on the part of the employee to discontinue
employment. These are not obtaining in the instant case. No overt act
was established by petitioners from which to infer the clear intention of
private respondents to desist from their employment. The company
memos could not be the basis of such intention since the absences
incurred was long before their dismissal. There is lack of proximity of
those absences to the actual dismissal rendered. Moreover, it was
unlikely for them to abandon their jobs considering their lengths of
service and difficulty in finding similar employment.
An employee who forthwith takes steps to protest his layoff cannot by
any logic be said to have abandoned his work.
However, it must be made clear here that the dismissal of private
respondents was not a constructive dismissal but an illegal dismissal.
Constructive dismissal or a constructive discharge has been defined as
a quitting because continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in rank and a
diminution in pay. The formation of a labor union has never been a
ground for valid termination, and where there is an absence of clear,
valid and legal cause, the law considers the termination illegal.
Petitioners Contention: it is capricious and arbitrary to award back
wages
Issue: WON back wages should be awarded. YES
Article 279 of the Labor Code provides that an illegally dismissed
employee is entitled to reinstatement without loss of seniority rights
and other privileges and to his full back wages from the time his
compensation was withheld from him up to the time of his actual
reinstatement. Back wages are granted on grounds of equity for
earnings which a worker or employee has lost due to his illegal
dismissal. Petitioners are however given the alternative of paying
separation pay to illegally dismissed employees where reinstatement is
no longer possible.
Petitioners Contention: had the Labor Arbiter conducted trial on the
merits, they could have presented documents proving their claim to be
true
On due process. The holding of a hearing is discretionary with the LA.
It can decide a case based on mere position papers and supporting
documents without a formal trial or hearing. In the case at bar, the req
of due process are satisfied when the parties are given the opportunity
to submit position papers.
WHEREFORE, the private respondents were reinstated with back
wages, salary differentials and 13th month pay. The service incentive
leave pay was DELETED.

Regular Holidays Service Incentive Leave Pay | Labor Standards 12

AUTO BUS TRANSPORT SYSTEMS, INC. v. ANTONIO BAUTISTA

FACTS: Since May 24, 1995, respondent Bautista has been employed
by petitioner as driver-conductor. He was paid on a commission basis
of 7% of the total gross income per travel twice a month. Respondent
met an accident on Jan. 3, 2000 after hitting the rear portion of another
bus (Auto Bus No. 124), as the latter hit a sudden stop at a corner
without any warning.
Respondent claimed that the accident happened because he was
compelled by petitioner to return to Isabela despite him not getting any
sleep at all after his trip back to Manila. He also claimed that he was
not allowed to work unless he pays Php 75, 551.50 or 30% of the
damage caused by the accident. He was later terminated by petitioner,
prompting him to file a case for illegal dismissal with money claims
(nonpayment of 13th month pay and service incentive leave) against
the latter.
On the other hand, petitioner averred that respondent Bautista was
terminated because of his fault, as evidenced by several letters,
memos and the like pertaining to serious reckless imprudence and
negligence on the part of respondent. Additionally, petitioner also
averred that Bautista was given a chance to explain his side prior to his
termination.
While the complaint was initially dismissed, the LA ruled that
respondent should be entitled to 13th month pay (Php 78,117.87) and
service incentive leave (Php 13,788.05). The NLRC later on deleted
respondents entitlement to 13th month pay upon appeal.

The question actually boils down to whether or not Bautista is a field

employee.
According to Article 82 of the Labor Code, field personnel shall refer to
non-agricultural employees who regularly perform their duties away
from the principal place of business or branch office of the employer
and whose actual hours of work in the field cannot be determined with
reasonable certainty.

As a general rule, field personnel are those whose performance of their

job/service is not supervised by the employer or his representative, the
workplace being away from the principal office and whose hours and
days of work cannot be determined with reasonable certainty; hence,
they are paid specific amount for rendering specific service or
performing specific work. If required to be at specific places at specific
times, employees including drivers cannot be said to be field personnel
despite the fact that they are performing work away from the principal
office of the employee.

Certainly, Bautista is not a field employee. He has a specific route to

traverse as a bus driver and that is a specific place that he needs to be
at work. There are inspectors hired by Auto Bus to constantly check
him. There are inspectors in bus stops who inspects the passengers,
the punched tickets, and the driver. Therefore he is definitely
supervised though he is away from the Auto Bus main office.

In the present Petition, Auto Bus contends that respondent Bautista

should not be entitled to payment of service incentive leave because
he is merely paid on a purely commission basis. Additionally, Auto Bus
also argues that Bautista is not entitled to the grant of SIL because he
is considered a field personnel due to the nature of his work.
<Additional discussion as to the prescriptive period for money claims>
ISSUE: Whether or not respondent is entitled to payment of service
incentive leave.
HELD: YES. Section 1(d), Book III, Rule V of the Omnibus Rules
provides:
Book III, Rule V: SERVICE INCENTIVE LEAVE
SECTION 1. Coverage. This rule shall apply to
all employees except:
xxx
(d) Field personnel and other employees whose
performance is unsupervised by the employer
including those who are engaged on task or
contract basis, purely commission basis, or those
who are paid in a fixed amount for performing
work irrespective of the time consumed in the
performance thereof; x x x
The Supreme Court ruled that the phrase those who are engaged
on task or contract basis, purely commission basis should still be
related with field personnel, applying the principle of ejusdem
generis. Hence, employees engaged in a commission basis, just like
respondent, are not automatically exempt from the grant of SIL unless
they are proven to be field personnel.

On the other hand, the 3 year prescriptive period ran but Bautista was
able to file his suit in time before the prescriptive period expired. It was
only upon his filing of a complaint for illegal dismissal, one month from
the time of his dismissal, which Bautista demanded from his former
employer commutation of his accumulated leave credits. His cause of
action to claim the payment of his accumulated service incentive leave
thus accrued from the time when his employer dismissed him and
failed to pay his accumulated leave credits.

Therefore, the prescriptive period with respect to his claim for service
incentive leave pay only commenced from the time the employer failed
to compensate his accumulated service incentive leave pay at the time
of his dismissal. Since Bautista had filed his money claim after only
one month from the time of his dismissal, necessarily, his money claim
was filed within the prescriptive period provided for by Article 291 of
the Labor Code.

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