Sime Darby Pilipinas, Inc. V.

NLRC

FACTS:

Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires, tubes
and other rubber products. Sime Darby Salaried Employees Association (ALU-TUCP), private
respondent, is an association of monthly salaried employees of petitioner at its Marikina
factory. Prior to the present controversy, all company factory workers in Marikina including
members of private respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30-minute
paid “on call” lunch break.

Petitioner issued a memorandum to all factory-based employees advising all its monthly
salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality
Assurance Department working on shifts, a change in work schedule effective 14 September
1992 thus —

TO: ALL FACTORY-BASED EMPLOYEES

RE: NEW WORK SCHEDULE

Effective Monday, September 14, 1992, the new work schedule of the factory office will be as
follows:

7:45 A.M. — 4:45 P.M. (Monday to Friday)

7:45 A.M. — 11:45 A.M. (Saturday).

Coffee break time will be ten minutes only anytime between:

9:30 A.M. — 10:30 A.M. and

2:30 P.M. — 3:30 P.M.

Lunch break will be between:

12:00 NN — 1:00 P.M. (Monday to Friday).

Since private respondent felt affected adversely by the change in the work schedule and
discontinuance of the 30-minute paid “on call” lunch break, it filed on behalf of its members a
complaint with the Labor Arbiter for unfair labor practice, discrimination and evasion of liability
pursuant to the resolution of this Court in Sime Darby International Tire Co., Inc. v. NLRC. 2
However, the Labor Arbiter dismissed the complaint on the ground that the change in the
work schedule and the elimination of the 30-minute paid lunch break of the factory workers
constituted a valid exercise of management prerogative and that the new work schedule,
break time and one-hour lunch break did not have the effect of diminishing the benefits
granted to factory workers as the working time did not exceed eight (8) hours.

Private respondent appealed to respondent National Labor Relations Commission (NLRC)

which sustained the Labor Arbiter and dismissed the appeal. 4 However, upon motion for
reconsideration by private respondent, the NLRC, this time with two (2) new commissioners
replacing those who earlier retired, reversed its earlier decision as well as the decision of the
Labor Arbiter. 5 The NLRC considered the decision of this Court in the Sime Darby case of
1990 as the law of the case wherein petitioner was ordered to pay “the money value of these
covered employees deprived of lunch and/or working time breaks.” The public respondent
declared that the new work schedule deprived the employees of the benefits of a time-
honored company practice of providing its employees a 30-minute paid lunch break resulting
in an unjust diminution of company privileges prohibited by Art. 100 of the Labor Code, as
amended.
Hence, this petition alleging that public respondent committed grave abuse of discretion
amounting to lack or excess of jurisdiction.

The Office of the Solicitor General filed in a lieu of comment a manifestation and motion
recommending that the petitioner be granted, alleging that the memorandum which contained
the new work schedule was not discriminatory of the union members nor did it constitute
unfair labor practice on the part of petitioner.

ISSUE:

Whether or Not the act of management in revising the work schedule of its employees and
discarding their paid lunch break constitutes unfair labor practice.

RULING:

We agree, hence, we sustain petitioner. The right to fix the work schedules of the employees
rests principally on their employer. In the instant case petitioner, as the employer, cites as
reason for the adjustment the efficient conduct of its business operations and its improved
production. 6 It rationalizes that while the old work schedule included a 30-minute paid lunch
break, the employees could be called upon to do jobs during that period as they were “on
call.” Even if denominated as lunch break, this period could very well be considered as
working time because the factory employees were required to work if necessary and were
paid accordingly for working. Since the employees are no longer required to work during this
one-hour lunch break, there is no more need for them to be compensated for this period. We
agree with the Labor Arbiter that the new work schedule fully complies with the daily work
period of eight (8) hours without violating the Labor Code.

It was grave abuse of discretion for public respondent to equate the earlier Sime Darby case
9 with the facts obtaining in this case. That ruling in the former case is not applicable here.
The issue in that case involved the matter of granting lunch breaks to certain employees while
depriving the other employees of such breaks. This Court affirmed in that case the NLRC’s
finding that such act of management was discriminatory and constituted unfair labor practice.

Further, management retains the prerogative, whenever exigencies of the service so require,
to change the working hours of its employees. So long as such prerogative is exercised in
good faith for the advancement of the employer’s interest and not for the purpose of defeating
or circumventing the rights of the employees under special laws or under valid agreements,
this Court will uphold such exercise. 12

WHEREFORE, the Petition is GRANTED. The Resolution of the National Labor Relations
Commission is SET ASIDE and the decision of the Labor Arbiter dated dismissing the
complaint against petitioner for unfair labor practice is AFFIRMED.
Bisig Manggagawa sa Tryco v. NLRC

FACTS:
Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its principal
office is located in Caloocan City. Petitioners Joselito Lario, Vivencio Barte, Saturnino Egera
and Simplicio Aya-ay are its regular employees, occupying the positions of helper, shipment
helper and factory workers, respectively, assigned to the Production Department. They are
members of Bisig Manggagawa sa Tryco (BMT), the exclusive bargaining representative of
the rank-and-file employees.

Tryco and the petitioners signed separate MOA providing for a compressed workweek
schedule to be implemented in the company with 8:00 a.m. to 6:12 p.m., from Monday to
Friday, as the regular working hours.

After the Department of Agriculture directed Trycos to transfer its production activities to San
Rafael, Bulacan, it ordered petitioner Aya-ay, Egera, Lario and Barte to report to the
company’s plant site in Bulacan. They refused to obey and BMT opposed the transfer of its
members to San Rafael, Bulacan.

The Labor Arbiter, the NLRC,and the CA uniformly agreed that the petitioners were not
constructively dismissed and that the transfer orders did not amount to an unfair labor
practice.

ISSUES:

1. Whether or not the transfer of Trycos personnel from Caloocan City to its plant site in
Bulacan constitutes constructive dismissal.
2. Whether or not the petitioner-employees were entitled to payment of wages, overtime pay
and service incentive leave.
3. Whether or not the MOA is not enforceable as it is contrary to law.

RULING:
1. The transfer of Trycos personnel, assigned to the Production Department was within the
scope of its management prerogative. This prerogative extends to the managements right to
regulate, according to its own discretion and judgment, all aspects of employment, including
the freedom to transfer and reassign employees according to the requirements of its
business. When the transfer is not unreasonable, or inconvenient, or prejudicial to the
employee, and it does not involve a demotion in rank or diminution of salaries, benefits, and
other privileges, the employee may not complain that it amounts to a constructive dismissal. A
mere incidental inconvenience is not sufficient to warrant a claim of constructive dismissal.

2. The nonpayment of wages was justified because the petitioners did not render work from
May 26 to 31, 1997; overtime pay is not due because of the compressed workweek
agreement between the union and management; and service incentive leave pay cannot be
claimed by the complainants because they are already enjoying vacation leave with pay for at
least five days.

3. The MOA on compressed workweek scheme is enforceable and binding against the
petitioners. Where it is shown that the person making the waiver did so voluntarily, with full
understanding of what he was doing, and the consideration for the quitclaim is credible and
reasonable, the transaction must be recognized as a valid and binding undertaking. MOA
clearly states that the employee waives the payment of overtime pay in exchange of a five-
day workweek.
Linton Commercial Co., Inc. V. Hellera
Engineering Equipment Inc. V. Minister of Labor
Caltex Regular Employees at Manila Office v. Caltex [Philippines], Inc.

FACTS:

Sometime in August 1986, the Petitioner called Respondent Caltex’s attention to alleged
violations by Caltex of Annex “B” of the 1985 CBA, e.g. non-payment of night-shift differential,
non-payment of overtime pay and non-payment at “first day-off rates” for work performed on a
Saturday.

Respondent’s Industrial Relations manager immediately evaluated petitioner’s claims and

accordingly informed petitioner Union that differential payments would be timely implemented,
which, however, was never implemented.

Petitioner’s Contention: Petitioner, then, instituted a complaint for unfair labor practice against
Respondent alleging violation of the provisions of the 1985 CBA. Petitioner Union charged
Respondnet with shortchanging its employees when it compensated work performed on the
first 2 1/2 hours of Saturday, an employees’ day of rest, at regular rates, when it should be
paying at “day of rest” or “day off” rates.

Respondent’s Contention: Respondent denied the accusations of the Petitioner Union. It

averred that Saturday was never designated as a day of rest, much less a “day-off”. It
maintained that the 1985 CBA provided only 1 day of rest for employees at the Manila Office,
as well as employees similarly situated at the Legazpi and Marinduque Bulk Depots. This day
of rest, according to Caltex, was Sunday.

It was stated in the CBA that the daily working schedules shall be established by
management in accordance with the requirements of efficient operations on the basis of eight
(8) hours per day for any five (5) days. Provided, however employees required to work in
excess of forty (40) hours in any week shall be compensated in accordance with Annex B of
this Agreement.

Labor Arbiter ruled in favor of petitioner Union, while finding at the same time that private
respondent Caltex was not guilty of any unfair labor practice.

ISSUE:

Whether or not and undertime work may be offset by an overtime work, respectively on
separate days.

RULING:

Article 88, Labor Code, as amended, provides:

Art. 88. Undertime not offset by overtime. — Undertime work on any particular day shall not
be offset by overtime work on any other day. Permission given to the employee to go on leave
on some other day of the week shall not exempt the employer from paying the additional
compensation required in this Chapter.

In order that work may be considered as overtime work, the hours worked must be in excess
of and in addition to the eight (8) hours worked during the prescribed daily work period, or the
forty (40) hours worked during the regular work week Monday thru Friday.

As provided in the 1985 CBA; under that CBA, Saturday is not a rest day or a “day off”. It is
only when an employee has been required on a Saturday to render work in excess of the forty
(40) hours which constitute the regular work week that such employee may be considered as
performing overtime work on that Saturday. We consider that the statutory prohibition against
offsetting undertime one day with overtime another day has no application in the case at bar.
Philippine National Bank v. Philippine National Bank Employees Association

FACTS:

– PNB and PNB Employees Association (PEMA) had a dispute regarding the proper
computation of overtime pay. PEMA wanted the cost of living allowance (granted in 1958) and
longevity pay (granted in 1961) to be included in the computation. PNB disagreed and the 2
parties later went before the CIR to resolve the dispute.

– CIR decided in favor of PEMA and held that PNB should compute the overtime pay of its
employees on the basis of the sum total of the employee’s basic salary or wage plus cost of
living allowance and longevity pay. The CIR relied on the ruling in NAWASA v NAWASA
Consolidated Unions, which held that “for purposes of computing overtime compensation,
regular wage includes all payments which the parties have agreed shall be received during
the work week, including differentiated payments for working at undesirable times, such as at
night and the board and lodging customarily furnished the employee.” This prompted PNB to
appeal, hence this case.

ISSUE:

WON the cost of living allowance and longevity pay should be

included in the computation of overtime pay as held by the CIR

HELD:

NO

Ratio Overtime pay is for extra effort beyond that

contemplated in the employment contract; additional pay given for any other purpose cannot
be included in the basis for the computation of overtime pay.

– Absent a specific provision in the CBA, the bases for the

computation of overtime pay are 2 computations, namely:

1. WON the additional pay is for extra work done or service

rendered

2. WON the same is intended to be permanent and regular, not contingent nor temporary as a
given only to remedy a situation which can change any time.

Reasoning

– Longevity pay cannot be included in the computation of

overtime pay for the very simple reason that the contrary is expressly stipulated in the CBA,
which constitutes the law between the parties.

– As regards cost of living allowance, there is nothing in Commonwealth Act 444 [or “the 8-
hour Labor Law,” now Art. 87 Labor Code] that could justify PEMA’s posture that it should be
added to the regular wage in computing overtime pay. C.A. 444 prescribes that overtime work
shall be paid “at the same rate as their regular wages or salary, plus at least 25% additional.”
The law did not define what is a regular wage or salary. What the law emphasized is that in
addition to “regular wage,” there must be paid an additional 25% of that “regular wage” to
constitute overtime rate of pay. Parties were thus allowed to agree on what shall be mutually
considered regular pay from or upon which a 25% premium shall be based and added to
makeup overtime compensation.
– No rule of universal application to other cases may be justifiably extracted from the
NAWASA case. CIR relies on the part of the NAWASA decision where the SC cited American
decisions whose legislation on overtime is at variance with the law in this jurisdiction. The US
legislation considers work in excess of forty hours a week as overtime; whereas, what is
generally considered overtime in the Philippines is work in excess of the regular 8 hours a
day. It is understandably material to refer to precedents in the US for purposes of computing
weekly wages under a 40-hour week rule, since the particular issue involved in NAWASA is
the conversion of prior weekly regular earnings into daily rates without allowing diminution or
addition.

– To apply the NAWASA computation would require a different formula for each and every
employee. It would require reference to and continued use of individual earnings in the past,
thus multiplying the administrative difficulties of the Company. It would be cumbersome and
tedious a process to compute overtime pay and this may again cause delays in payments,
which in turn could lead to serious disputes. To apply this mode of computation would retard
and stifle the growth of unions themselves as Companies would be irresistibly drawn into
denying, new and additional fringe benefits, if not those already existing, for fear of bloating
their overhead expenses through overtime which, by reason of being unfixed, becomes
instead a veritable source of irritant in labor relations.

**Overtime Pay Rationale Why is a laborer or employee who works beyond the regular hours
of work entitled to extra compensation called, in this enlightened time, overtime pay?

Verily, there can be no other reason than that he is made to work longer than what is
commensurate with his agreed compensation for the statutorily fixed or voluntarily agreed
hours of labor he is supposed to do. When he thus spends additional time to his work, the
effect upon him is multi- faceted; he puts in more effort, physical and/or mental; he is delayed
in going home to his family to enjoy the comforts thereof; he might have no time for relaxation,
amusement or sports; he might miss important pre-arranged engagements; etc. It is thus the
additional work, labor or service employed and the adverse effects just mentioned of his
longer stay in his place of work that justify and are the real reasons for the extra
compensation that is called overtime pay.

**Overtime Pay Definition The additional pay for service or work rendered or performed in
excess of 8 hours a day by employees or laborers in employment covered by the 8 hour
Labor Law [C.A. 444, now Art. 87 Labor Code] and not exempt from its requirements. It is
computed by multiplying the overtime hourly rate by the number of hours worked in excess of
eight.

Disposition decision appealed from is REVERSED.

Bisig ng Manggagawa ng Philippine Refining Co., Inc. V. Phil. Refining Co. Inc.

Facts of the case:

In 1966, petitioner union Bisig ng Manggagawa ng Philippine Refining Company, Inc. filed
with the Court of First Instance of Manila a petition for declaratory relief seeking, among
others, the judgement that their Christmas bonus be included as part of their basic pay for the
computation of overtime pay. Petitioner based its contention primarily on the ruling of the
Supreme Court in NAWASA vs. NAWASA Consolidated Unions, et all G.R. No. L-18938,
August 31, 1964, 11 SCRA 766 where it was declared that the 'regular rate' is also deemed to
include other incentives and bonuses which employers may receive as part of their regular
pay.

Respondent Philippine Refining Company, Inc. on the other hand contended that in their
collective bargaining agreement (CBA), the parties never intended to include the employees'
Christmas bonus in the computation of the overtime pay, and that it did agree to raise the
overtime rate to 50% instead of 25% of the regular base pay precisely on the consideration
that it be based only on the regular base pay and should not include Christmas bonus.

Issue:

The issue resolved by the Supreme Court was whether or not, in the interpretation of the
provision of the CBA of the parties on overtime pay, the term "regular base pay" should
include Christmas bonus, and that in case it should not, whether such interpretation would
contravene the principle established in the Nawasa vs Nawasa case.

Ruling:

The Supreme Court ruled that the term "regular base pay" is clear, unequivocal and requires
no interpretation. It held that the term means regular basic pay which necessarily EXCLUDES
money received in different concepts such as Christmas bonus and other fringe benefits. The
Court observed that in framing up their CBA escpecially on the provision regarding overtime
pay, it was only the regular base pay that was considered, and the same fact was undeniably
known to the petitioner - the very reason, according to the court, why it attempted to have a
different provision pertaining to overtime pay which would include Christmas bonus and other
benefits. This factual information by itself constrains the petitioner to question the intention of
that particular phrase in their CBA pertaining to overtime pay but could only claim that it
violated the Nawasa doctrine and insist that it be reformed to conform to said doctrine.

The Supreme Court held that the Nawasa ruling did not limit that the computation of overtime
pay to be based solely on the employees' regular wage or salary, which according to law
includes bonuses and other benefits. What is important is that the product resulting from the
computation must always be equal or higher than the statutory requirement of 25% more than
the regular wage. In the case at bar, the formula adopted by the CBA is 50% more than the
regular basi pay, which when computer is much higher than what can be arrived at using the
statutory formula. Thus, the Court declared that the provisions of the CBA as to the
computation of overtime pay has amply complied with what is required by law, and therefore
is valid and not in contravention to the Nawasa doctrine.
PAL Employees Savings and Loan Association Inc. V. NLRC

Petitioner also insists that private respondent’s delay in asserting his right/claim demonstrates
his agreement to the inclusion of overtime pay in his monthly salary rate. This argument is
specious. First of all, delay cannot be attributed to the private Respondent. He was hired on
March 1, 1986. His twelve-hour work periods continued until November 30, 1989. On October
10, 1990 (just before he was suspended) he filed his money claims with the labor arbiter.
Thus, the public respondent in upholding the decision of the arbiter computed the money
claims for the three year period from the date the claims were filed, with the computation
starting as of October 10, 1987 onwards.

In connection with the foregoing, we should add that even if there had been a meeting of the
minds in the instant case, the employment contract could not have effectively shielded
petitioner from the just and valid claims of private Respondent. Generally speaking, contracts
are respected as the law between the contracting parties, and they may establish such
stipulations, clauses, terms and conditions as they may see fit; and for as long as such
agreements are not contrary to law, morals, good customs, public policy or public order, they
shall have the force of law between them. 18 However,." . ., while it is the inherent and
inalienable right of every man to have the utmost liberty of contracting, and agreements
voluntarily and fairly made will be held valid and enforced in the courts, the general right to
contract is subject to the limitation that the agreement must not be in violation of the
Constitution, the statute or some rule of law (12 Am. Jur. pp. 641-642)." 19 And under the
Civil Code, contracts of labor are explicitly subject to the police power of the State because
they are not ordinary contracts but are impressed with public interest. 20 Inasmuch as in this
particular instance the contract is question would have been deemed in violation of pertinent
labor laws, the provisions of said laws would prevail over the terms of the contract, and
private respondent would still be entitled to overtime pay.

Moreover, we cannot agree with petitioner’s assertion that by judging the intention of the
parties from their contemporaneous acts it would appear that the "failure of respondent
Esquejo to claim such alleged overtime pay since 1986 clearly demonstrate(s) that the
agreement on his gross salary as contained in his appointment paper is conclusive on the
matter of the inclusion of overtime pay." (Rollo, pp. 13-15; also, Rollo, pp. 378-380). This is
simply not the case here. "The interpretation of the provision in question having been put in
issue, the Court is constrained to determine which interpretation is more in accord with the
intent of the parties. 21 To ascertain the intent of the parties, the Court is bound to look at
their contemporaneous and subsequent acts. 22 Private respondent’s silence and failure to
claim his overtime pay since 1986 cannot be considered as proving the understanding on his
part that the rate provided in his employment contract covers overtime pay. Precisely, that is
the very question raised by private respondent with the arbiter, because contrary to the claim
of petitioner, private respondent believed that he was not paid his overtime pay and that such
pay is not covered by the rate agreed upon and stated in his Appointment Memorandum. The
subsequent act of private respondent in filing money claims negates the theory that there was
clear agreement as to the inclusion of his overtime pay in the contracted salary rate. When an
employee fails to assert his right immediately upon violation thereof, such failure cannot ipso
facto be deemed as a waiver of the oppression. We must recognize that the worker and his
employer are not equally situated. When a worker keeps silent inspite of flagrant violations of
his rights, it may be because he is seriously fearful of losing his job. And the dire
consequences thereof on his family and his dependents prevent him from complaining. In
short, his thoughts of sheer survival weigh heavily against launching an attack upon his more
powerful employer.

The petitioner contends that the agreed salary rate in the employment contract should be
deemed to cover overtime pay, otherwise serious distortions in wages would result "since a
mere company guard will be receiving a salary much more that the salaries of other
employees who are much higher in rank and position than him in the company." (Rollo, p. 16)
We find this argument flimsy and undeserving of consideration. How can paying an employee
the overtime pay due him cause serious distortions in salary rates or scales? And how can
"other employees" be aggrieved when they did not render any overtime service?
Mercader v. Manila Polo Club

sum of P50,000, by way of moral damages; the sum of P2,000, by way of attorney’s fees; and
P200 by way of litigation expenses.

Ruling:
We have carefully scrutinized the record of the case, the pleadings of the parties and the
evidence supporting them and find no reason for disturbing the decision appealed from. The
settlement recited in Exhibit 1, signed by the Plaintiff together with his counsel Constancio
Leuterio, does constitute an absolute waiver of any and all claims including overtime work,
vacation and sick leave privileges which the Plaintiff had against the Manila Polo Club;
consequently, by virtue of said settlement, Plaintiff lost any action against
the Defendant Manila Polo Club in connection with his employment and separation from said
Club.
Plaintiff has lengthily discussed in his brief about the nature of his employment and
laboriously argued on the permanency of his position as an employee of
the Defendant Manila Polo Club; but, in our opinion, all these questions are completely
immaterial for, whatever be the nature of his employment, whether permanent or temporary,
the facts of the case show that he has no longer any action against the Defendants because
he entered with the latter in an amicable settlement whereby he renounced and waived any
and all claims against them.
As to Defendant Alex D. Stewart, the evidence shows that he only acted as agent of
the Defendant Manila Polo Club in securing the services of the Plaintiff and therefore he
cannot be made responsible for the separation of the Plaintiff from his employment.
In his third assignment of error, Plaintiff assails the award of P600 attorney’s fees in favor of
the Defendants contending that in filing the present action he tried to protect his rights. We
notice that in the decision no reason was given by the lower court for awarding the fees in
question; neither is there in the record any indication that the present action was malicious
and intended only to cause prejudice to the Defendants; hence, we believe that there is no
sufficient ground for ordering the Plaintiff to pay the fees in question.
Wherefore, the decision appealed from in so far as it dismisses the complaint is hereby
affirmed, and reversed as it orders the payment of P600 in favor of the Defendant for litigation
expenses and attorney’s fees. No pronouncement with regard to cost.
Mantrade / FMMC Division Employees and Workers Union v. Bacungan
Jose Rizal College v. NLRC

Facts:
Petitioner is a non-stock, non-profit educational institution duly organized and existing under
the laws of the Philippines.
Private respondent National Alliance of Teachers and Office Workers (NATOW) in behalf of
the faculty and personnel of Jose Rizal College filed a complaint against the college for said
alleged non-payment of holiday pay from 1975 to 1977.
Labor Arbiter:
The faculty and personnel of the respondent Jose Rizal College 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;
The personnel of the respondent Jose Rizal College 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;
Collegiate faculty of the respondent Jose Rizal College 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.
NLRC: Teaching personnel paid by the hour are entitled to holiday pay

Issue:
Whether or not the school faculty who according to their contracts are paid per lecture hour
are entitled to unworked holiday pay.

Held:
No. The provisions in the Labor Code as to holiday pay do not apply in this case.
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; … “
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. …
The aforementioned implementing rule is not justified by the provisions of the law which after
all is silent with respect to faculty members paid by the hour. Regular holidays 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 regular semesters of the school year or during
semestral, Christmas, or Holy Week vacations;
(b) but ordering petitioner to pay said faculty members their regular hourly rate on days
declared as special holidays or for some reason classes are called off or shortened for the
hours they are supposed to have taught, whether extensions of class days be ordered or not;
in case of extensions said faculty members shall likewise be paid their hourly rates should
they teach during said extensions.
San Miguel Corp. V. CA

Facts:
Upon a routine inspection done by the Department of Labor and Employment in the premises
of San Miguel Corporation in Iligan City, it was discovered that there was underpayment by
SMC of regular Muslim Holiday pay to its employees. SMC received the inspection result
which later on contested such thus DOLE conducted summary hearings. Both DOLE
Regional Office and National Office ruled against SMC ordering the latter to consider Muslim
Holidays as regular holidays and to pay its Muslim and non-Muslim employees holiday pay.
Thus, this appeal.

Issue:
Whether or not the Muslim holiday pay is applicable to employees regardless of faith or
religion

Held:
Yes.
Although Article 3 of Presidential Decree 1083 (Code of Muslim Personal Laws) provides that
the provisions of the code shall be applicable only to Muslims, on which the petitioner based
its defense, the same article provides further that nothing in the code shall be construed to the
prejudice of non-Muslims. The Supreme Court stated that there should be no distinction
between Muslims and non-Muslims as regards the payment of benefits for Muslim Holidays.
The Court, quoting the Court of Appeals, “assuming that the SMC is correct, then Muslims
throughout the Philippines are also not entitled to holiday pays on Christian holidays declared
by law. We must remind (SMC) that wages and other emoluments granted by law are
determined not on the basis of the worker’s faith or religion”, finds against the petitioner, and
dismissed the petition.