RFM CORPORATION-FLOUR DIVISION AND SFI FEEDS DIVISION, PETITIONER, VS. KASAPIAN NG MANGGA-GAWANG PINAGKAISA-RFM (KAMPI-NAFLU-KMU) AND SANDIGAN AT UGNAYAN NG MANGGAGAWANG PINAGKA…

RFM Corporation versus Kasapian ng Manggagawang Pinagkaisa-RFM

The Case

This is a labor case about a collective bargaining agreement and a special holiday that fell on a Sunday. RFM Corporation, through its Flour Division and SFI Feeds Division, refused to pay its daily-paid employees for December 31, 2000, which the national government had declared a special holiday but which fell on a rest day. The two labor unions, Kasapian ng Manggagawang Pinagkaisa-RFM for the Flour Division and Sandigan at Ugnayan ng Manggagawang Pinagkaisa-SFI for the Feeds Division, demanded payment under the holiday provision of their collective bargaining agreements. The case matters because it settles a recurring question: when the terms of a collective bargaining agreement are clear, does the literal meaning prevail even against the employer's claim of a different intent, and does holiday pay accrue even when the special holiday falls on a rest day?

Procedural History

The parties submitted their deadlock to voluntary arbitration. Voluntary Arbitrator Bernardino Volante, in a decision dated October 11, 2001, held that the collective bargaining agreement provision was clear, ruled in favor of the unions, and ordered RFM to pay the salaries of the members for December 31, 2000, plus attorney's fees equivalent to ten percent of the monetary award. RFM's motion for reconsideration was denied, so it appealed to the Court of Appeals. The Court of Appeals affirmed the voluntary arbitrator in a decision dated October 30, 2003. It held that if RFM intended to pay daily-paid employees for a special holiday only when it fell on a weekday, the agreement should have said so clearly and expressly. It also found inapplicable the Kimberly Clark Philippines versus Lorredo case cited by RFM, because there were no words in the agreements that would produce an absurd interpretation against the parties' true intention. The appellate court sustained the award of attorney's fees because the unions were compelled to engage a lawyer to pursue their claims. RFM's motion for reconsideration was denied, so it filed the present petition with the Supreme Court.

Facts

RFM Corporation is a domestic corporation engaged in flour-milling and animal feeds manufacturing. Sometime in 2000, its Flour Division and SFI Feeds Division entered into collective bargaining agreements with their respective labor unions. The agreements contained similar provisions and were effective for five years, from July 1, 2000 up to June 30, 2005.

Section 3 of Article XVI of each agreement provided that the company would pay all daily-paid employees for certain days if declared as special holidays by the national government, namely Black Saturday, November 1, and December 31, at the regular rate, with any work beyond eight hours paid the standard ordinary premium.

During the first year of the agreements, December 31, 2000 fell on a Sunday and was declared by the national government as a special holiday. The unions claimed payment of their members' salaries under the provision. RFM refused, saying December 31, 2000 was not compensable because it was a rest day. The controversy resulted in a deadlock, and the parties submitted it for voluntary arbitration.

Issues

• Whether or not the daily-paid employees are entitled to their regular salaries for December 31, 2000, a special holiday declared by the national government that fell on a Sunday or rest day, under the clear terms of the collective bargaining agreement.
• Whether or not the award of attorney's fees in favor of the unions is warranted.

Applicable Provisions

Section 3 of Article XVI of the collective bargaining agreements provides:

Section 3. Special Holidays with Pay. The COMPANY agrees to make payment to all daily paid employees, in respect of any of the days enumerated hereunto if declared as special holidays by the national government: a) Black Saturday b) November 1 c) December 31. The compensation rate shall be the regular rate. Any work beyond eight (8) hours shall be paid the standard ordinary premium.

This is the provision the Court construes, and its clear and literal terms require payment regardless of whether the special holiday falls on a rest day.

Ruling

On the first issue, the Court ruled against RFM. It held that if the terms of a collective bargaining agreement are clear and leave no doubt on the intention of the contracting parties, as in the provision in question, the literal meaning prevails. That is settled. As such, the daily-paid employees must be paid their regular salaries on the holidays declared by the national government, regardless of whether they fall on rest days.

The Court explained that holiday pay is a legislated benefit enacted as part of the constitutional imperative that the State shall afford protection to labor. Its purpose is not merely to prevent diminution of the monthly income of the workers on account of work interruptions. The Court quoted its own formulation:

In other words, although the worker is forced to take a rest, he earns what he should earn, that is, his holiday pay.

The Court stressed that the collective bargaining agreement is the law between the parties, hence they are obliged to comply with its provisions. If RFM and the unions had intended the provision to cover payment only during holidays falling on work days or weekdays, it should have been so incorporated. On RFM's argument that the parties failed to foresee a special holiday falling on a rest day, the Court was not persuaded, because the Labor Code specifically enjoins that in case of doubt in the interpretation of any law or provision affecting labor, it should be interpreted in favor of labor.

On the second issue, the Court sustained the award of attorney's fees. The unions having been compelled to litigate as a result of RFM's failure to satisfy their valid claim, the Court deemed it just and equitable to sustain the award.

Doctrine

First, when the terms of a collective bargaining agreement are clear and leave no doubt on the intention of the contracting parties, the literal meaning of those terms prevails. The agreement is the law between the parties, and they are obliged to comply with its provisions. Second, holiday pay is a legislated benefit enacted under the constitutional protection to labor; its purpose is not merely to prevent diminution of the monthly income of workers on account of work interruptions, but to ensure that although the worker is forced to take a rest, he earns what he should earn, that is, his holiday pay. Third, a special holiday declared by the national government is compensable under a clear collective bargaining agreement provision even if it falls on a rest day or Sunday, and any doubt in the interpretation of a labor provision is resolved in favor of labor.

Disposition

The Supreme Court denied the petition, thereby affirming the rulings of the Court of Appeals and the voluntary arbitrator ordering RFM to pay the salaries of the unions' members for December 31, 2000, plus attorney's fees equivalent to ten percent of the monetary award.

Remember This

Memorize this line: when the terms of a collective bargaining agreement are clear, the literal meaning prevails, and the agreement is the law between the parties. Examiners like to use this case to test the rule on interpretation of clear collective bargaining agreement provisions, the nature and purpose of holiday pay, and the labor-law principle that doubts are resolved in favor of labor.