TERMINAL FACILITIES AND SERVICES CORPORATION, PETITIONER, VS. THE NATIONAL LABOR RELATIONS COMMISSION AND ASSOCIATED LABOR UNIONS (ALU), RESPONDENTS.

Terminal Facilities and Services Corporation versus National Labor Relations Commission

The Case

This is a petition for certiorari brought by Terminal Facilities and Services Corporation, known as TEFASCO, a domestic corporation engaged in wharf services and facilities in Davao City, against the National Labor Relations Commission and the Associated Labor Unions, the exclusive bargaining agent of its rank and file and monthly paid employees. TEFASCO asks the Supreme Court to annul two resolutions of the labor commission which affirmed, with modification, a labor arbiter's award of monthly living allowance differentials to the union's members under Wage Order Number 6. The case matters because it draws the line between two superficially similar situations: the Chartered Bank ruling on holiday pay and overtime, where a divisor drawn from a collective bargaining agreement controlled, and the present claim for cost of living allowance, where no such agreement exists and the presumption that monthly paid employees are paid even on unworked rest days must prevail.

Procedural History

The union filed a complaint for underpayment of emergency cost of living allowance with the labor arbitration branch of the National Labor Relations Commission in Davao City. Labor Arbiter Jose O. Libron ruled in favor of the union, holding that the employees belonged to Group III of the Ministry of Labor and Employment table of computations and were entitled to a monthly living allowance of 517 pesos and 8 centavos, or a monthly differential of 62 pesos and 8 centavos, from the effectivity of Wage Order Number 6 on the first of November 1984. The commission affirmed the arbiter's decision with modification, agreeing that employees receiving a basic salary of 1,095 pesos belonged to Group III, but limiting the award to those who were actually receiving that salary as of the first of November 1984. TEFASCO's motion for reconsideration was denied for lack of merit. TEFASCO then filed this petition with the Supreme Court, assigning as errors that the commission decided the case contrary to the Chartered Bank ruling and that its findings were not supported by substantial evidence.

Facts

TEFASCO operates wharf services and facilities for profit in Davao City. Its monthly paid employees who are members of the union were each receiving 455 pesos a month as emergency cost of living allowance. The union claimed that the prescribed amount under Wage Order Number 6, as reflected in the table of computations released by the Ministry of Labor and Employment, was 517 pesos and 8 centavos per month, and that the employees were therefore underpaid. The union filed its complaint on the fifth of September 1985, after TEFASCO refused to adjust the allowances.

TEFASCO answered that its employees belonged to Group II of the table, which covers establishments that treat rest days as unworked and unpaid, and not to Group III, which covers establishments that treat rest days and holidays as paid although unworked. It explained that it used a divisor of 26 days per month, excluding the four rest days, in computing the daily equivalent of a monthly paid employee's salary for purposes of deducting absences. It relied on Section 5 of the Implementing Rules of Wage Order Number 6, arguing that the allowance for an unworked day is owed only when the employee is paid his basic wage on that unworked day.

The labor arbiter found that the union's members each received a monthly basic wage of not less than 1,095 pesos, the amount prescribed under Group III, so that their rest days and holidays, although unworked, were considered paid and formed the basis of their monthly allowance. The commission affirmed this grouping but modified the award to reach only those members actually receiving 1,095 pesos as of the first of November 1984.

Issues

• Whether or not the National Labor Relations Commission committed grave abuse of discretion, or jurisdictional error, in ruling contrary to the doctrine laid down in Chartered Bank Employees Association versus Ople.
• Whether or not the findings and conclusions of the National Labor Relations Commission are supported by substantial evidence.

Applicable Provisions

Section 5 of the Implementing Rules of Wage Order Number 6, invoked by TEFASCO, provides:

Allowance for Unworked Days. All covered employees shall be entitled to their daily living allowance during the days that they are paid their basic wage even if unworked.

The Court reads this rule against TEFASCO, because the employees' monthly basic wage already treats unworked rest days as paid, so the allowance attaches to those days.

Paragraph 1 of Section 3 of Article XIII of the Constitution, which the Court invokes as the governing mandate, provides:

The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.

This command of social justice anchors the Court's resolution of the doubt in favor of the workers.

Article 4 of the Labor Code, quoted by the Court through the Chartered Bank decision, provides:

Article 4. Construction in favor of labor. All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor.

This rule of liberal construction supports upholding the commission's award rather than the employer's restrictive reading.

Ruling

On the first issue, the Court held that the Chartered Bank ruling does not apply. That case involved holiday pay, premium pay, and overtime pay, and its divisor of 251 days was provided for in the collective bargaining agreement between the bank and the association. The present case involves cost of living allowance, and there is no provision on divisor in the parties' collective bargaining agreement, not even for computing daily wage for deductions from monthly salary in cases of absence. The Court stressed that TEFASCO's company practice of using a divisor of 26 days to determine deductions for absences does not mean the same procedure should govern the monthly cost of living allowance. It declared:

In the absence of any provision in any collective bargaining agreement of the parties, the presumption that a monthly paid employee is considered paid even on rest days must prevail.

On the second issue, the Court found no grave abuse of discretion. TEFASCO did not dispute the existence and validity of the table of computations, and under that table an employee receiving a basic monthly rate of not less than 1,095 pesos with 365 working days in a year falls under Group III and is entitled to 517 pesos and 8 centavos monthly effective the first of November 1984, with rest days and holidays considered paid. The Court resolved any doubt in favor of labor, in keeping with the constitutional mandate of social justice and the rule that all doubts in the implementation and interpretation of the Labor Code and its implementing rules shall be resolved in favor of labor.

Doctrine

A company practice of using a divisor of 26 days to compute deductions from a monthly paid employee's salary for absences does not carry over to the computation of the monthly cost of living allowance under a wage order. In the absence of any provision in the collective bargaining agreement, the presumption that a monthly paid employee is considered paid even on unworked rest days must prevail, and the employee falls under Group III of the Ministry table of computations. The Chartered Bank doctrine on divisors applies only where the divisor is fixed by the collective bargaining agreement and the claim concerns holiday pay, premium pay, or overtime pay, not cost of living allowance. Any doubt in the implementation and interpretation of the Labor Code and its implementing rules is resolved in favor of labor, consistent with Article 4 of the Labor Code and the constitutional mandate of full protection to labor.

Disposition

The petition was dismissed for failure to show grave abuse of discretion, the questioned resolutions of the National Labor Relations Commission were affirmed, and costs were taxed against TEFASCO.

Remember This

Memorize the line that in the absence of any provision in the collective bargaining agreement, the presumption that a monthly paid employee is considered paid even on rest days must prevail. Examiners use this case to test the distinction between the Chartered Bank divisor doctrine and cost of living allowance claims, and to test the rule of liberal construction in favor of labor.