LABOR Digests 092215

Univ of Pangasinan Faculty v. Univ of Pangasinan

Rada v. NLRC
Pigcaulan v. SCII
Lepanto Consolidated v. Lepanto Local Staf
Shell Oil
Mantrade Employees v. Bacungan
Jose Rizal College v. NLRC
Trans-Asia v. NLRC
Wellington Investment v. Trajano

UNIVERSITY OF PANGASINAN FACULTY UNION (UNION) v.

UNIVERSITY OF PANGASINAN (UNIVERSITY)
20 February 1984; Gutierrez, J. | Digest Prepared by Hans
Santos
FACTS
UNION is a labor union composed of faculty members of
UNIVERSITY. UNION filed acomplaint, though its President, Miss
Abad, against the UNIVERSITY for (a) payment of Emergency
Cost of Living Allowances (ECOLA) for 7 November to 5
December 1981, the semestral break (sembreak); (b) salary
increases from the 60% of incremental proceeds of increased
tuition fees; and (c) payment of salaries for extra loads.
UNION members are full-time professors, instructors and
teachers of UNIVERSITY. The teachers in the college level teach
for a normal duration of 10 mos in a school year, excluding 2
months of summer vacation. During the sembreak, they were
paid their monthly salaries but not the ECOLA. UNIVERSITY
claims they are not entitled on the grounds that the break is
not an integral part of the school year and there were no actual
services rendered during the break.
During AY 1981-82, UNIVERSITY was authorized by the Ministry
of Education and Culture to collect a 15% increase of tuition
fees. UNION members demanded a salary increase to be taken
from 60% of the incremental proceeds. UNIVERSITY refused,
though it did grant a 5.86% salary increase during the
pendency of the proceedings.
Some UNION members were also given extra loads to handle in
the said school year but were unable to teach on 21 September
1981 due to said day being proclaimed a working holiday by
the President. Those with teaching loads claimed they were not
paid salaries while UNIVERSITY claimed they were paid.
The case does not disclose how the lower tribunals ruled.
ISSUES-HELD-RATIO
WON UNION members are entitled to ECOLA during the
sembreak: YES

Presidential Decrees providing for ECOLA (Nos. 1614,

1634, 1678, and 1713) provide that employees shall
be paid monthly allowance if they incur no absences
such that absence without pay shall result in
deductions in the allowance while leave with pay will
not.

The sembreak, being in the nature of a work

interruption beyond the employees control, cannot be
considered as absences within the meaning of the law.

The no work, no pay principle does not apply here as

this contemplates a situation where the employees
voluntarily absent themselves. In this case, UNION
member faculty do not voluntarily absent themselves
but re constrained to take mandatory leave from work.

UNIVERSITY contends that fact receiving salary, as

UNION members in fact did during the sembreak,
should not be basis for recovery of ECOLA. The Court
disagreed, citing Section 5 of the IRRs for Wage Order
No. 1 which provides that all covered employees are
entitled to daily living allowance when paid their basic
wage. Hence, there is the principle of no pay, no
ECOLA the converse of which is applicable in the
present case.

The payment of full wages during sembreak is a tacit

recognition that teachers are nevertheless, burdened
with work consisting of papers to correct, students to

evaluate, deadlines to meet, and grades to submit.

Teachers must keep abreast of developments,

Furthermore,
applying
the
Omnibus
Rules
Implementing the Labor Code, the time during which
the employee is inactive by reason of work
interruption is considered time worked if the internal is
too brief to be utilized efectively and gainfully for the
employees own interest.
WON 60% of proceeds are to be devoted to salary increase:
YES

The Court here is called to interpret Section 3 of PD

451, to wit:
SEC. 3. Limitations. - The increase in tuition or other school
fees or other charges as well as the new fees or charges
authorized under the next preceding section shall be subject to
the following conditions:
a) That no increase in tuition or other school fees or charges
shall be approved unless sixty (60%) per centum of the
proceeds is allocated for increase in salaries or wages of the
members of the faculty and all other employees of the school
concerned, and the balance for institutional development,
student assistance and extension services, and return to
investments: Provided, That in no case shall the return to
investments exceed twelve (12%) per centum of the
incremental proceeds; x x x "

The Court had earlier ruled in University of the East v.

UE Faculty Association that the increase in salaries or
wages shall not include allowances and benefits which
may be taken from the return on investment. Return
on investment is fixed at a maximum of 12% but
without any minimum.

UNIVERSITY contends that this earlier decision

disregards the spirit of the law as the PDs whereas
clauses make references to salary and other
benefits, allegedly implying that the latter is included
in the former. The Court disregarded this saying that it
is an elementary principle of statutory construction
that the whereas clauses cannot prevail over the
statements in the law itself.
The law is clear that the 60% incremental proceeds shall be
devoted entirely to increases in basic salary. To charge other
benefits to these proceeds would reduce the increase in basic
salary intended to help the teachers.

The Court is not guilty of usurpation of legislative

functions as it merely interpreted the meaning of the
law within its provisions. The ruling in University of the
East was merely to answer the query of where to
charge the said benefits.
WON payment of salary for 21 September 1981 was proven by
substantial evidence: YES

As found by respondent NLRC, the faculty members

have been paid for the extra loads. This is a question
of fact within the competence of the NLRC to pass
upon.

Assuming that these have not been paid, faculty

members are not entitled thereto applying the no
work, no pay principle. These are not regular loads
for which faculty members are paid regular monthly
salaries regardless of working days or hours. These
are extra loads which should only be pad when work is
actually performed. Since there was no work on 21
September 1981, faculty members should not be
granted extra wages for that day.
Petition is GRANTED. UNIVERSITY ordered to pay ECOLA and
undistributed balance 60% incremental proceeds as salary
increases. NLRC decision SUSTAINED in denying payment of
salary for 21 September.
RADA v NLRC (HILARIO)
G.R. No. 96078; 9 Jan 1992; REGALADO, J.
Digest by Miguel

LABOR: Digests | 092215 | kb | 1

Doctrine: When during travel time, an employee (often a

driver) performs work that is indispensable and mandatory to
his regularly assigned tasks, those hours of work are
compensable.
Facts:

The petitioner was initially employed by Philnor

Consultants as a Driver for the construction
supervision
phase
of
the
Manila
North
Expressway Extension, Second Stage for a term
of about 24 months, effective Jul 1, 1977.
o
It also provided that the engagement of
services is coterminus with the project,
and there was no continuing need for
his services.
The MNEE was not immediately finished, leading
to multiple contract extensions until 1985, when
by around December, the petitioner said that it
had no more work to do in the project, hence
the stoppage of contract extensions.
o
This was confirmed by a notice on Nov 28
1985
which
the
Petitioner
duly
acknowledged.
The petitioner later applied for Personnel Clearance,
and received P3796.20 representing conversion to
cash of unused leave credits and financial assistance.
He also released the respondent from all obligations
and claims through a release, waiver, and quitclaim.
o
However, he still filed a complaint for the
Labor Arbiter for non-payment of
separation pay and overtime pay.
o
His basis for the claim of overtime pay
was his picking up and dropping of other
employees to and from work when he was
going from or returning to his house in
Marikina.
The respondents aver that the petitioner was a
project employee whose employment was
terminated when the project for which he was
hired was completed (the MNEE Stage 2 Project).
o
They declare that the petitioner did not
render overtime services and that there
was no demand/claim for overtime pay,
and that he signed the aforementioned
release/waiver/quitclaim.
o
They also stress that their business renders
engineering consultancy services, and it hires
employees based on the project schedule of
a contract.
The petitioner amended his complaint with a
claim for illegal dismissal, and he argued with
respect to overtime pay that he was made to
render 3 hours overtime work from Monday to
Saturday for three years (until 6:00 p.m.)
because he would drive other employees to and
from work.
o
He also argues that he was illegally
dismissed as he already became a regular
employee, and that he was not a project
employee because Philnor is not engaged in
the construction business itself and that his
position still existed and is essential to the
conduct of the business even after the
completion of the period of contract.
o
Further, the contract of employment for a
definite period was against public policy by
attempting to defeat the intent of Art. 280
LC.
The respondent countered by pointing out that
the petitioner was not acting as a company
driver just because he drove the employees to
and from the place of work at the MNEE Stage 2
Project. Philnor adopted the policy of allowing

Issues:
1.
2.

certain employees, not necessarily the project

driver, to bring home project vehicles for the
convenience of the employees.
o
The petitioner was among those employees;
in fact, whenever the petitioner would be
absent, another employee would use the car.
o
Hence, the time alleged as overtime
work (driving employees to work) was
actually travel time that cannot be
counted as overtime. [they also presented
documents to substantiate their arguments]
The Labor Arbiter ruled in favor of the petitioner, also
granting him overtime pay. However, the NLRC
reversed the decision and dismissed the complaint.
Whether or not the petitioner is a regular employee.
Whether or not the petitioner is entitled to overtime
pay for the work done in his travel time.

Held/Ratio:
1. NO. The Labor Code also recognizes project
employees hired for a specific project, which is exactly
what occurs in this case. This is in spite of the actual
length of service.
In Sandoval Shipyards v NLRC, the Court held that project
employees with regard to construction are those hired in
connection with a particular construction project. This is in line
with Art. 281 LC where project employees are defined as those
employees whose employment has been fixed for a specific
project or undertaking the completion or termination of which
has been determined at the time of engagement. In such
cases, termination of the project does not give rise to
separation pay.
Though the petitioner worked as a driver for eight years, he
was still employed for one specific project and did not belong
to a work pool. If he was to be a regular employee, he had to
be hired for more than one project, as in Fegurin v NLRC.
2.

YES. The task he did in his travel time was

indispensable and mandatory to his regular duties,
which makes it compensable hours.

The petitioner's act of driving employees to and from

work is not merely incidental to the job as a company
driver. The respondent's memorandum shows that the
arrangement was adopted for the benefit of the employer, to
lessen the likelihood of tardiness.
Further, the respondents do not deny that it is usually
the project driver who performs this task. When he is
absent, a substitute would replace him. If driving the
employees to and from the project site is not really part
of the job, why get a replacement? It appears that this
assigned task is indispensable and mandatory, hence
the travel time is also compensable work hours that can
be considered overtime work.
Pigcaluan v. Security and Credit Investigation, Inc.
January 16, 2012; Del Castillo, J.
Parties:
Petitioner: Abduljuahid Pigcaulan
Respondents: Security and Credit Investigation, Inc. (SCII) and
Rene Amby Reyes
FACTS:

Oliver
Canoy
and
AbduljuahidPigcaulan
were
employed by SCII as security guards for diferent
clients. Canoy and Pigcaulan filed complaints with the
LA for underpayment of salaries and nonpayment of
overtime, holiday, restday, service incentive leave and
LABOR: Digests | 092215 | kb | 2

13th month pays. In support of their claim, they

submitted their respective daily time records
reflecting the number of hours served and their wages
for the same.
SCII claims that the two were paid and received their
just salaries, which was above minimum wage and
included their holiday pay in the computation of their
monthly salaries, and were given an additional 30%
for work on Sundays and 200% of their salary for work
on holidays. In support of their claim, they presented
copies of payroll listings and lists of employees
who received their 13th month pays.
LA, which was affirmed by the NLRC held: that the
payroll listings presented were not signed by Canoy or
Pigcaulan or any SCII officer. SCII must pay
petitioners the salary differentials.
CA reversed LA & NLRC: dismissed all monetary
claims of Canoy and Pigcaulan due to lack of
evidence. SC affirm CA.

ISSUE:WON Pigcaulan should be awarded overtime pay? NO!

WON Pigcaulan should be awarded holiday pay, service
incentive pay and 13th month pay? YES!
Note: Canoy is not included because after the CA decision, he
failed to appeal, therefore the decision is binding and final
upon him. Only pigcaulan appealed in behalf of himself.
HELD:
1.

2.

Pigcaulan cannot be awarded overtime pay because

there is nothing in the records/evidence that
supports his contention that he rendered
service beyond 8 hours to entitle him to overtime
pay and during Sundays to entitle him to restday pay.
In the absence of any concrete proof that additional
service beyond the normal working hours and days
had indeed been rendered, we cannot affirm the grant
of overtime.

The Labor Arbiter relied heavily on the

itemized computations Pigcaulan submitted
which he considered as representative daily
time records to substantiate the award of
salary diferentials.

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. It is
written only in pieces of paper and solely
prepared by Canoy and Pigcaulan.

Thus, these representative daily time records

can hardly be considered as competent
evidence to be used as basis to prove that
the two were underpaid of their salaries.
Under the LC (Art. 94 and 95 respectively),
Pigcaulan is entitled to his regular rate on holidays
even if he does not work. Also, the law states that he
is entitled to service incentive leave benefit after he
has rendered service for more than a year. And under
PD 851, he should be paid his 13th month salary.

SCII presented payroll listings and transmittal

letters to the bank to show that Canoy and
Pigcaulan received their salaries as well as
benefits which it claimed are already
integrated in the employees monthly
salaries. However, the documents presented
do not prove SCIIs allegation. SCII failed to
show any other concrete proof by means of
records, pertinent files or similar documents
reflecting that the specific claims have been
paid. With respect to 13th month pay, SCII
presented proof that this benefit was paid but

only for the years 1998 and 1999. To repeat,

the burden of proving payment of these
monetary claims rests on SCII, being the
employer.
As the employer, SCII has the burden of
proving that these benefits have been
paid to its employees. Even when the
plaintif alleges non-payment, still the
general rule is that the burden rests on the
defendant to prove payment, rather than on
the plaintif to prove non-payment. SCII has
failed to convincing proof that it has settled
these claims.

Lepanto Consolidated Mining Company v Lepanto Local Staf

Union
GR No. 161713; Aug 20 2008; Carpio
Digest prepared by Mara Recto
FACTS

Lepanto Local Staf Union (Union) is the duly certified

bargaining agent of Lepanto Consolidated Mining
Company (Company) employees occupying staf
positions.

Company and the Union entered into a 4 th CBA for the

period of July 1, 1998 to June 30, 2000 which provides:
ARTICLE VIII - NIGHT SHIFT DIFFERENTIAL
Section 3. Night Diferential pay. - The Company shall continue
to pay nightshift diferential for work during the first and third
shifts to all covered employees within the bargaining unit as
follows:
For the First Shift (11:00 p.m. to 7:00 a.m.), the diferential pay
will be 20% of the basic rate. For the Third Shift (3:00 p.m. to
11:00 p.m.), the diferential pay will be 15% of the basic rate.
However, for overtime work, which extends beyond the regular
day shift (7:00 a.m. to 3:00 p.m.), there [will] be no night
diferential pay added before the overtime pay is calculated.
ARTICLE XII - RIGHTS, PRIVILEGES AND OTHER BENEFITS
Section 9. Longevity pay - The company shall grant longevity
pay of P30.00 per month efective July 1, 1998 and every year
thereafter

Union filed a complaint with the National Conciliation

and Mediation Board Cordillera Administrative Region
(NCMB-CAR) alleging that the Company failed to pay
the night shift diferential and longevity pay. They
failed to amicably settle the dispute.

They submitted the issues before the Voluntary

Arbitrator. VA ruled in favor of the Union granting
longevity pay of P30/month reckoned from July 1,
1998 and nigh shift diferential pay of 15% basic rate
for hours beyong 3pm for the 7:00 A.M. to 4:00 P.M.,
7:30 A.M. to 4:30 P.M. and 8:00 A.M. to 5:00 P.M. shifts
o
VA ruled that Company had the obligation to
pay efective July 1, 1998. Efective should
be understood as the reckoning period from
which the employees start earning their right
to longevity pay and that the longevity pay
should be paid only on July 1, 1999.
o
Surface workers of the 2nd shift who
performed work after 3pm should be given
additional night shift diferential. Paragraph 3
of Sec. 3 of the CBA excludes the night shift
diferential in computation of the OT pay.
o
Claims of the Union for the night shift
diferential arising from the 1st, 2nd and 3rd
CBA already prescribed

MR was denied. Company appealed to the CA

CA affirmed VA decision.
LABOR: Digests | 092215 | kb | 3

Paragraph 3, Section 3, Article VIII was clear

and unequivocal. It grants night shift
diferential pay to employees of the second
shift for work rendered beyond their regular
day shift. However, the night shift diferential
was excluded in the computation of the
overtime pay.
The company voluntarily included the
employees in the second shift in the payment
of the night shift diferential, which shows
intent to include them and not just mere
error. Thus, Company is already estopped

equipment in constant operation. Even in continuous industries

the tendency is definitely in the direction of FOUR shifts of 6
hours each, with provision for an automatic change of shift for
all workers at stated intervals. Some discussion has taken place
with regard to the lengths of the period any workers should be
allowed to remain on the night shift. A weekly change of shifts
is common, specially where three or four shifts are in
operation; in other cases the change is made fortnightly or
monthly; in still other instances, no alternation is provided for,
the workers remaining on day or nightwork permanently,
except where temporary changes are made for individual
convenience.

W/N the second shift employees are entitled to night shift

diferential in interpreting the 4th CBA YES

The terms and conditions of the CBA constitute the

law between the parties.

For OT work which extends beyond the regular day

shift (7am to 3pm), there is no night diferential pay
added before the OT pay is calculated.

There is no question that workers are entitled to night

shift diferential of 20% of the basic rate for work
performed during the first shift from 11:00 p.m. to
7:00 a.m. Workers are also entitled to night shift
diferential of 15% of the basic rate for work
performed during the third shift from 3:00 p.m. to
11:00 p.m.

There is sharp diference of opinion concerning the relative

merits of these systems. Advocates of the weekly change of
shifts contend that the strain of nightwork and the difficulty of
getting adequate sleep during the day make it unwise for
workers to remain on the"graveyard" shift for more than a
week at a time. Opponents urge that repeated changes make it
more difficult to settle down to either kind of shift and that
after the first week nightwork becomes less trying while the
ability to sleep by day increases. Workers themselves react in
various ways to the diferent systems. This much, however, is
certain: Few persons react favorably to nightwork, whether the
shift be continuous or alternating. Outside of continuous
industries, nightwork can scarcely be justified, and, even in
these, it presents serious disadvantages which must be
recognized in planing for industrial efficiency, stabilization of
the working force, the promotion of industrial good-will, and the
conservation of the health and vitality of the workers.

W/N workers are entitled to night shift diferential for work

performed beyond the regular day shift (7am to 3pm) YES

first paragraph of Section 3 provides that petitioner

shall continue to pay night shift diferential to workers
of the first and third shifts. It does not provide that
workers who performed work beyond the second shift
shall not be entitled to night shift diferential. The
inclusion of the third paragraph is not intended to
exclude the regular day shift workers from receiving
night shift diferential for work performed beyond 3:00
p.m. It only provides that the night shift diferential
pay shall be excluded in the computation of the
overtime pay.

Contemporaneous and subsequent acts and the

negotiating and contractual history were used to
determine intent. Even after the promulgation of the
Voluntary Arbitrator's decision and while the case was
pending appeal, petitioner still paid night shift
diferential for work performed beyond 3:00 p.m. It
affirms the intention of the parties to the CBA to grant
night shift diferential for work performed beyond 3:00
p.m.
SHELL OIL (Cited pages)
. . . Then, it must be remembered that it is distinctly
unphysiological to turn the night into day and deprive the body
of the beneficial efects of sunshine. The human organism
revolts against this procedure. Added to artificial lighting are
reversed and unnatural times of eating, resting, and sleeping.
Much of the inferiority of nightwork can doubtless be traced to
the failure of the workers to secure proper rest and sleep, by
day. Because of inability or the lack of opportunity to sleep,
nightworkers often spend their days in performing domestic
duties, joining the family in the midday meal, 'tinkering about
the place', watching the baseball game, attending the theater
or taking a ride in the car. It is not strange that nightworkers
tend to be less efficient than dayworkers and lose more
time. . . (The Management of Labor Relations, by Watkins &
Dodd, page 524.).
Nightwork. Nightwork has gained a measure of prominence
in the modern industrial system in connection with continuous
industries, that is, industries in which the nature of the
processes makes it necessary to keep machinery and

Nightwork cannot be regarded as desirable, either from the

point of view of the employer or of the wage earner. It is
uneconomical unless overhead costs are unusually heavy.
Frequently the scale of wages is higher as an inducement to
employees to accept employment on the night shift, and the
rate of production is generally lower. (Management of Labor
Relations, by Watkins & Dodd, pp. 522-524; emphasis ours.)
. . . The lack of sunlight tends to produce anemia and
tuberculosis and to predispose to other ills. Nightwork brings
increased liability to eyestrain and accident. Serious moral
dangers also are likely to result from the necessity of traveling
the streets alone at night, and from the interference with
normal home life. From an economic point of view, moreover,
the investigations showed that nightwork was unprofitable,
being inferior to day work both in quality and in quantity.
Wherever it had been abolished, in the long run the efficiency
both of the management and of the workers was raised.
Furthermore, it was found that nightwork laws are a valuable
aid in enforcing acts fixing the maximum period of
employment. (Principles of Labor Legislation, by Commons and
Andrews, 4th Revised Edition, p. 142.)
Special regulation of nightwork for adult men is a
comparatively recent development. Some European countries
have adopted laws placing special limitations on hours of
nightwork for men, and others prohibit such work except in
continuous processes. (Principles of Labor legislation, 4th
Revised Edition by Common & Andrews, p. 147.)
Nightwork has almost invariably been looked upon with
disfavor by students of the problem because of the excessive
strain involved, especially for women and young persons, the
large amount of lost time consequent upon exhaustion of the
workers, the additional strain and responsibility upon the
executive staf, the tendency of excessively fatigued workers to
"keep going" on artificial stimulants, the general curtailment of
time for rest, leisure, and cultural improvement, and the fact
that night workers, although precluded to an extent from the
activities of day life, do attempt to enter into these activities,
with resultant impairment of physical well-being. It is not
contended, of course, that nightwork could be abolished in the
continuous-process industries, but it is possible to put such
industries upon a three- or four-shifts basis, and to prohibit
LABOR: Digests | 092215 | kb | 4

nightwork for women and children. (Labor's Progress and

Problems, Vol. I, p. 464, by Professors Millis and Montgomery.)
Nightwork. Civilized peoples are beginning to recognize the
fact that except in cases of necessity or in periods of great
emergency, nightwork is socially undesirable. Under our
modern industrial system, however, nightwork has greatly
aided the production of commodities, and has ofered a
significant method of cutting down the ever-increasing
overhead costs of industry. This result has led employers to
believe that such work is necessary and profitable. Here again
one meets a conflict of economic and social interests. Under
these circumstances it is necessary to discover whether
nightwork has deleterious efects upon the health of laborers
and tends to reduce the ultimate supply of efficient labor. If it
can proved that nightwork afects adversely both the quality
and quantity of productive labor, its discontinuance will
undoubtedly be sanctioned by employers. From a social point
of view, even a relatively high degree of efficiency in night
operations must be forfeited if it is purchased with rapid
exhaustion of the health and energy of the workers. From an
economic point of view, nightwork may be necessary if the
employer is to meet the demand for his product, or if he is to
maintain his market in the face of increasing competition or
mounting variable production costs.
Industrial experience has shown that the possession of extraordinary physical strength and self-control facilitates the
reversal of the ordinary routine of day work and night rest, with
the little or no unfavorable efect on health and efficiency.
Unusual vitality and self-control, however, are not common
possessions. It has been found that the most serious obstacle
to a reversal of the routine is the lack of self-discipline. Many
night workers enter into the numerous activities of day life that
preclude sleep, and continue to attempt to do their work at
night. Evidence gathered by the British Health of Munition
Workers' Committee places permanent night workers, whether
judged on the basis of output or loss of time, in a very
unfavorable positions as compared with day workers.
Systems of nightwork difer. There is the continuous system, in
which employees labor by night and do not attend the
establishment at all by day, and the discontinuous system, in
which the workers change to the day turn at regular intervals,
usually every other week. There are, of course, minor
variations in these systems, depending upon the nature of the
industry and the wishes of management. Such bodies as the
British Health Munition Workers' Committee have given us
valuable conclusions concerning the efect of nightwork.
Continuous nightwork is definitely less productive than the
discontinuous system. The output of the continuous day shift
does not make up for this loss in production.
There is, moreover, a marked diference between the rates of
output of night and day shifts on the discontinuous plan. In
each case investigated the inferiority of night labor was
definitely established. This inferiority is evidently the result of
the night worker's failure to secure proper amounts of sleep
and rest during the day. The system of continuous shifts,
especially for women, is regarded by all investigators as
undesirable. Women on continuous nightwork are likely to
perform domestic duties, and this added strain undoubtedly
accounts for the poorer results of their industrial activities. The
tendency to devote to amusement and other things the time
that should be spent in rest and sleep is certainly as common
among men as among women workers and accounts largely for
the loss of efficiency and time on the part of both sexes in
nightwork.
The case against nightwork, then, may be said to rest upon
several grounds. In the first place, there are the remotely
injurious efects of permanent nightwork manifested in the
later years of the worker's life. Of more immediate importance
to the average worker is the disarrangement of his social life,
including the recreational activities of his leisure hours and the

ordinary associations of normal family relations. From an

economic point of view, nightwork is to be discouraged
because of its adverse efect upon efficiency and output. A
moral argument against nightwork in the case of women is that
the night shift forces the workers to go to and from the factory
in darkness. Recent experiences of industrial nations have
added much to the evidence against the continuation of
nightwork, except in extraordinary circumstances and
unavoidable emergencies. The immediate prohibition of
nightwork for all laborers is hardly practicable; its
discontinuance in the case of women employees is
unquestionably desirable. 'The night was made for rest and
sleep and not for work' is a common saying among wageearning people, and many of them dream of an industrial order
in which there will be no night shift. (Labor Problems, 3rd
Edition, pp. 325-328, by Watkins & Dodd.).
Mantrade/FMMC Division Employees and Workers Union
v. Arbitrator Froilan M. Bacungan and Mantrade
Development Corporation
G.R. No. L-48437; September 30, 1986; Feria, J.
Digest prepared by Carlo Roman
I.
-

Facts
Petitioner Union questions the decision of respondent
arbitrator Froilan M. Bacungan and the validity of
the pertinent section of the Omnibus Rules
Implementing the Labor Code (IRR) on which
respondent based his decision specifically, that
Mantrade Development Corporation is not under
legal obligation to pay holiday pay (as provided
for in Art. 941 of the Labor Code) to its monthly paid
employees who are uniformly paid by month,
irrespective of the number of working days therein,
with a salary of not less than the statutory or
established minimum wage and shall be presumed to
be paid for all days in the month whether worked or
not.

Said exemption finds basis in Sec. 2, Rule IV,

Book III of the IRR, to wit:

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.
(emphasis supplied)
Respondent arbitrator further opined that respondent
corporation does not have any legal obligation to
grant its monthly salaried employees holiday pay,
unless it is argued that the pertinent section of the
Rules and Regulations implementing Section 94 of the
Labor Code is not in conformity with the law, and thus,
without force and efect.
Respondent corporation contends, among others, that
petitioner is barred from pursuing the present action
on procedural and substantive grounds:

Art. 263 of the LC provides in part that

voluntary arbitration awards or decisions
shall be final, inappealable, and executory;

The pertinent provision of the CBA between

petitioner and respondent (not stated);

Article 2044 of the Civil Code which provides

that "any stipulation that the arbitrators'

1 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. xxx
LABOR: Digests | 092215 | kb | 5

II.
1.
2.
3.

award or decision shall be final, is valid

and
That the special civil action of certiorari does
not lie because respondent arbitrator is not
an "officer exercising judicial functions"
within the contemplation of Rule 65, Section
1, of the Rules of Court.

Issues
W/N decision of arbitrators are subject to judicial
review. YES.
HOLIDAY PAY ISSUE: W/N Mantrade employees are
entitled to holiday pay. YES.
W/N mandamus lies in the present action. YES.

III.
-

Held
The questioned decision of respondent arbitrator is
SET ASIDE; respondent corporation is ordered to
GRANT holiday pay to its monthly salaried employees.

IV.
1.

Ratio
The decision of arbitrators, while given the highest
respect, may be subject to judicial review.
In line with the case of Oceanic Bic Division v. Romero:
"A voluntary arbitrator by the nature of her functions
acts in a quasi- judicial capacity. There is no reason
why her decisions involving interpretation of law
should be beyond this Court's review. Administrative
officials are presumed to act in accordance with law
and yet we do not hesitate to pass upon their work
where a question of law is involved or where a
showing of abuse of discretion in their official acts is
properly raised in petitions for certiorari."

2.
-

3.
-

Mantrade employees are entitled to holiday pay.

Under Art. 94 of the Labor Code, monthly salaried
employees are not among those excluded from
receiving holiday pay. However, they appear to be
excluded under Sec. 2, Rule IV, Book III of the IRR, as
stated above.
The Court had already decided this issue in the case
of Insular Bank of Asia and American Employees
Union v. Inciong: Sec. 2, Rule IV, Book III of the IRR
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 inclusion.
This was reiterated in Chartered Bank Employees
Association v. Ople: "The questioned Sec. 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."
W/N mandamus lies in the present action. YES.
In view of the above-cited subsequent decisions of this
Court clearly defining the legal duty to grant holiday
pay to monthly salaried employees, mandamus is an
appropriate equitable remedy.

JOSE RIZAL COLLEGE v. NLRC; NATIONAL ALLIANCE OF

TEACHERS/OFFICE WORKERS
1 December 1987; Paras, J. | Digest Prepared by Hans Santos
FACTS
COLLEGE has three classes of employees:

Personnel on monthly basis, who receive

their monthly salary throughout the year
irrespective of actual number of working days
in a month without deduction for holidays;

Personnel on daily basis who are paid for

actual days worked and who receive
unworked holiday pay; and

College faculty who are paid on basis of

student contact hours and sign contracts with
the college undertaking to meet their classes
as per schedule.
ALLIANCE filed a complaint with the Ministry of Labor for
alleged non-payment of Holiday Pay in behalf of the Faculty
and Personnel of COLLEGE for the years 1975 to 1977.
The LA ruled:

that the personnel of the first class are

presumed to be already paid the 10 legal
holidays and are no longer entitled to
separate payment;

that those of the second class re entitled to

be paid the 10 unworked regular holidays
according to the IRRs of the Labor Code; and

that those of the third class are not entitled

to unworked regular holiday pay considering
these
have
been
excluded
in
the
programming of the student contact hours.
The NLRC modified the LA decision, holding that the personnel
of the third class are entitled to holiday pay.
ISSUES-HELD-RATIO
WON personnel of the third class are entitled to holiday pay:
YES

There is no problem as to the first two classes as the

LA had found that the personnel paid monthly were
paid uniformly throughout the year regardless of
working days, and that as per affidavit of the COLLEGE
treasurer the personnel paid daily are paid for work
performed on holidays.

COLLEGE: It is not covered considering that it is a nonprofit organization. These personnel are paid based on
student contact hours. In programming these hours,
regular holidays are excluded for being no class
days while declaration of special holiday on regular
week days result in extension of the school calendar
for which the personnel receives compensation. Thus,
the programmed number of working hours is not
diminished.
SOLGEN: Under Article 94 of the Labor Code, holiday pay
applies to all employees except those in retail and service
establishments.
NLRC: The purpose of holiday pay is to prevent diminution of
monthly income on account of work interruptions.

The Court cited Article 94 of the Labor Code:

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; ... "
It also cited Section 8, Rule IV, Book III of the IRRs, to wit:
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. ...
Under these rules, the Court found that the school is obliged to
give holiday pay even for unworked regular holidays to hourly
paid faculty members subject to the terms and conditions
provided for.
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The Court held this rule unjustified stating that the law
is silent as to faculty members paid by the hour and
consent to be paid only for work actually done.
Regular holidays are specified by law and known
to both school and faculty as no class days.
Hence, the latter do not expect payment for
such days.
On the other hand, the law and rules are silent as to
special public holidays. The declared purpose of the
holiday pay (mentioned by the NLRC earlier) is
defeated when a regular class day is suspended and
class hours are held on another working day to make
up for time lost in the school calendar. Though forced
to take a rest, the personnel does not earn what he
should earn that day. The extension of the school
calendar does not matter as the income that he could
have earned from other sources, on that day when
there should have been no classes, is lost.

WON COLLEGE has been deprived of due process because it

was allegedly not notified of the appeal of made to the NLRC:
NO

The Court noted the seven (7) cardinal primary

requirements for due process in administrative
proceedings:
(1) the right to a hearing which includes the right to
present one's case and submit evidence in support
thereof;
(2) the tribunal must consider the evidence presented;
(3) the decision must have something to support itself;
(4) the evidence must be substantial, and substantial
evidence means such evidence as a reasonable mind
might accept as adequate to support a conclusion;
(5) the decision must be based on the evidence presented
at the hearing, or at least contained in the record and
disclosed to the parties afected;
(6) the tribunal or body of any of its judges must act on
its or his own independent consideration of the law
and facts of the controversy, and not simply accept
the views of a subordinate;
(7) the board or body should in all controversial
questions, render its decisions in such manner that
the parties to the proceeding can know the various
issues involved, and the reason for the decision
rendered.

COLLEGE was amply head and represented inasmuch

as it filed its position papers before the LA and NLRC,
and even filed a motion for reconsideration of the
decision of the NLRC as well as an urgent motion for
hearing en banc.
Petition is partly GRANTED. COLLEGE is exempt from paying
holiday pay to personnel for regular holidays but must pay
holiday pay for special holidays.
TRANS-ASIA
PHILS.
EMPLOYEES
ASSOCIATION
NLRC/TRANSASIA
G.R. No. 118289; 13 Dec 1999; KAPUNAN, J.
Digest by Miguel

Doctrine: In computing the divisor for holiday pay when such is

included along with ordinary pay, one deducts the days not
worked and thus, not paid. Should a holiday fall under a rest
day, include it in the deduction.
I.
Facts:
On 7 Jul 1988, Trans-Asia Phil. Employees Association
entered into a CBA with their employer (Trans-Asia Phils).
The new CBA included a provision for pay when an employee is
permitted to work on a legal holiday: 200% of regular daily
wage + 60% premium pay. However, there were still issues
remaining with regard to the payment of holiday pay
prior to the 1988 CBA (1985-1987). The parties

attempted to resolve this amicably, but there was no

settlement reb ached, prompting TAPEA to file a
complaint before the LA for the payment of their holiday
pay. This was later amended to include the payment of holiday
for the duration of the new CBA, unfair labor practice,
damages, and attorney's fees.
Arguments:
- The reason their holiday pay was in arrears is based on
its non-inclusion in their monthly pay. Their employees
manual said that holiday pay would only be paid if the
employee worked or was on authorized leave the day
preceding the legal holiday; this meant that the holiday pay
would be included alongside the monthly pay, and that if TransAsia never intended to pay the two together, the condition was
unnecessary. This was evidenced by their appointment papers,
which did not include a stipulation of holiday pay as one
included in the monthly salary. Finally, they cited the CBA
agreement as evidence that Trans-Asia failed to pay their
holiday pay.
- They also assert that Trans-Asia is guilty of bad faith in
negotiating and executing the current CBA as it refused to
honor the provision in spite of recognizing their right to holiday
pay.
Respondents' Arguments:
- As to the precondition and appointment papers: These are
not indicative of its non-payment as it has always
honored the provisions on holiday pay by incorporating
it in the payment of monthly salaries.
The company proved this by showing their formula for
computing pay: it uses the divisor of 286 days in
computing for overtime pay and daily rate deductions
for absences, from the formula (52 weeks x 44 hrs per
week) / 8 hrs per day = 286. The said divisor takes into
account the ten regular holidays in a year since it only
subtracts the unworked and unpaid 52 Sundays and 26
Saturdays (they work half-day on Saturdays). If they did not
want to include the regular holidays, they would use 277.
The divisor was based on RA 6640, where the divisor of 262
days is used in computing for the monthly rate of workers who
do not work and are not considered paid on Saturdays and
Sundays. 286 just factored in the additional 26 working
Saturdays.
- As to the allegations regarding the CBA, the inclusion of the
provision was just to get the CBA to formally reflect the
requirements under the Omnibus Rules, as they had already
been paying holiday pay. Given this, there can be no bad faith.
The Labor Arbiter dismissed the complaint based on the
computation of the divisor, considering the computation
proper, and noting the consistency in the practice did not leave
any doubt that may be resolved in favor of the petitioners. The
NLRC affirmed the decision on appeal.
II.
III.

Issue:
a. Whether or not the use of 286 as the divisor
was proper.
Held/Ratio:
a. Strictly speaking, NO, because it was the
result of an incorrect computation based on
EO 203 in relation to RA 6727. However, it
may still be applicable as using the correct
divisor, 287, would lead to non-diminution of
benefits prohibited under Art. 100 LC.

- Trans-Asia's inclusion of holiday pay is clearly

established by the consistent use of the '286' divisor. Its
use was never disputed (note that the Court applied a
different formula): 365 - 52 Sundays - 26 Saturdays = 286
(actually 287). Since the holidays were not included in
subtracting the unworked and unpaid days, one cannot
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doubt that it was included in the divisor. In contrast, the

case the petitioners cited, Chartered Bank v Ople, had wildly
varying divisors for diferent situations-- 251 for overtime and
365 for deductions. This created huge doubts as to whether or
not holiday pay was already incorporated in the monthly salary.
- However, the Court found Trans-Asia's divisor needs to
be adjusted based on EO 203 in relation to RA 6727. The
Court found that the proper divisor should be 287 based
on the following formula (based on Sec. 6 of the IRR
Implementing RA 6727):
262 (ordinary working days + regular holidays + special days
based on the RA 6727 computation) + 26 (half-day Saturdays) 1 (one of the rest days fell on a Sunday - National Heroes Day)
= 287 (migs: Yes, it's the same divisor.)
- Unfortunately, the Court noticed that increasing the
divisor to 287 would mean diminishing the daily rate for
overtime pay, holiday pay, and conversions of
accumulated leave, leading to a violation of the rule on
non-diminution of benefits under Sec. 100 LC. However,
the use of the 287 divisor would be advantageous to the
employees if used for deductions due to absences.

additional working days created as a result of

some regular holidays falling on Sundays.
ISSUE: Whether or not 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?
RULING AND RATIO: NO.
Art 94 (a), LC
Every worker shall be paid his regular daily wage during
regular holidays, except in retail and service establishments
regularly employing less than 10 workers
Sec 2, Rule IV, Omnibus Rules Implementing the LC
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 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 multiplied by 365 days
divided by twelve.

- Result: Since there is a conflict of sorts, resolve in favor of

labor. Apply the higher divisor only if it would be advantageous
to the worker (e.g. deductions for absences).
Wellington Investment v Trajano
July 3, 1995; Narvasa
Petitioners:
Wellington
Investment
and
Manufacturing
Corporation
Respondents: Cresenciano Trajano, Undersecretary of Labor
and Employment, Elmer Abadilla, and 34 others
FACTS:

Wellington Flour Mills operated by Wellington

Investment was inspected by a Labor Officer, and he
reported on his finding that there was a nonpayment
of regular holidays falling on a Sunday for monthlypaid employees
Wellington argued that: the monthly salary of the
company's
monthly-salaried
employees
already
includes holiday pay for all regular holiday, so there is
no legal basis for the finding of alleged non-payment
of regular holidays falling on a Sunday.
o
alleged that it used the 314 factor which
undeniably covers and already includes
payment for all the working days in a month
as well as all the 10 unworked regular
holidays within a year.
Regional Director: ruled against Wellington, directing it
to pay its employees compensation corresponding to
four extra working days
Undersecretary Trajano: affirmed the Regional
Directors order but modified the additional
compensation to six extra working days resulting from
regular holidays falling on Sundays in 1988, 1989, and
1990.
The Undersecretary explained that:
o
By using said (314) factor, Wellington
assumes that all the regular holidays fell on
ordinary days and never on a Sunday. Thus,
the respondent failed to consider the
circumstance that whenever a regular
holiday coincides with a Sunday, an
additional working day is created and left
unpaid. In other words, while the said divisor
may be utilized as proof evidencing payment
of 302 working days, 2 special days and the
ten regular holidays in a calendar year, the
same does not cover or include payment of

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." In other words,
whether the month is of thirty (30) or thirty-one (31)
days' duration, or twenty-eight (28) or twenty-nine
(29) (as in February), the employee is entitled to
receive the entire monthly salary. So, too, in the event
of the declaration of any special holiday, or any
fortuitous cause precluding work on any particular day
or days (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. The monthly compensation is
evidently
intended
precisely
to
avoid
computations and adjustments resulting from
the contingencies just mentioned which are
routinely made in the case of workers paid on
daily basis.
In Wellington's case, there seems to be no question
that at the time of the inspection conducted by the
Labor Enforcement Officer on August 6, 1991, it was
and 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, in other words,
no issue that to this extent, Wellington complied
with the minimum norm laid down by law.
However, the Usec 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."
The theory loses sight of the fact that the monthly
salary in Wellington which is based on the so-called
"314 factor" accounts for all 365 days of a
year; i.e., Wellington's "314 factor" leaves no day
unaccounted for; it is paying for all the days of a year
with the exception only of 51 Sundays.
Trajanos theory would make each of the years in
question 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 or extrapolated lifetime of his
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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

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