Case Digest: Odango v. NLRC, G.R. No. 147420, June 10, 2004

Labor Law | Art. 99 Daily-Paid or Monthly-Paid

Facts: 

Petitioners are monthly-paid employees of Antique Electric Cooperative (ANTECO), working from Monday to Friday and half of Saturday.

In 1989, Department of Labor and Employment (DOLE) found ANTECO liable for underpayment, directing them to pay wage differentials, which ANTECO failed to pay.

In 1995, 33 monthly-paid employees filed complaints with NLRC, seeking wage differentials, damages, and attorneys fees. 

Labor Arbiter: Ruled in favor of petitioners.

• ANTECO's use of 304 as divisor is an admission that it is paying its employees for only 304 days a year instead of the 365 days. ANTECO owed its employees the wages for 61 days, the difference between 365 and 304, for every year.

NLRC: Reversed LA Decision.

• The daily wage rates of ANTECO's employees were above the minimum daily wage of P124.The lowest paid employee of ANTECO was then receiving a monthly wage of P3,788. The NLRC applied the formula [(Daily Wage Rate = (Wage x 12) /365)] to the monthly wage of P3,788 to arrive at a daily wage rate of P124.54, an amount clearly above the minimum wage.
• The use of 304 as a divisor in converting leave credits is more favorable to the employees since a lower divisor yields a higher rate of pay.

Issue: 

WoN the petitioners are entitled to their money claim. NO

Held:

Petitioners base their claim on Section 2, Rule IV of Book III of the Omnibus Rules Implementing the Labor Code. Petitioners argue that under this provision monthly-paid employees are considered paid for all days of the month including un-worked days. Petitioners assert that they should be paid for all the 365 days in a year. They argue that since in the computation of leave credits, ANTECO uses a divisor of 304, ANTECO is not paying them 61 days every year.

Petitioners claim is without basis.

We have long ago declared void Section 2, Rule IV of Book III of the Omnibus Rules Implementing the Labor Code. In Insular Bank of Asia v. Inciong, we ruled as follows:

Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions No. 9 issued by the Secretary (then Minister) of Labor are null and void since in the guise of clarifying the Labor Codes provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion.

The Labor Code is clear that monthly-paid employees are not excluded from the benefits of holiday pay. However, the implementing rules on holiday pay promulgated by the then Secretary of Labor excludes monthly-paid employees from the said benefits by inserting, under Rule IV, Book III of the implementing rules, Section 2 which provides that monthly-paid employees are presumed to be paid for all days in the month whether worked or not.

Thus, Section 2 cannot serve as basis of any right or claim. Absent any other legal basis, petitioners claim for wage differentials must fail.

Even assuming that Section 2, Rule IV of Book III is valid, petitioners claim will still fail. The basic rule in this jurisdiction is no work, no pay. The right to be paid for un-worked days is generally limited to the ten legal holidays in a year. Petitioners claim is based on a mistaken notion that Section 2, Rule IV of Book III gave rise to a right to be paid for un-worked days beyond the ten legal holidays. In effect, petitioners demand that ANTECO should pay them on Sundays, the un-worked half of Saturdays and other days that they do not work at all. Petitioners line of reasoning is not only a violation of the no work, no pay principle, it also gives rise to an invidious classification, a violation of the equal protection clause. Sustaining petitioners argument will make monthly-paid employees a privileged class who are paid even if they do not work.

The use of a divisor less than 365 days cannot make ANTECO automatically liable for underpayment. The facts show that petitioners are required to work only from Monday to Friday and half of Saturday. Thus, the minimum allowable divisor is 287, which is the result of 365 days, less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days means that ANTECOs workers are deprived of their holiday pay for some or all of the ten legal holidays.The 304 days divisor used by ANTECO is clearly above the minimum of 287 days.

Finally, petitioners cite Chartered Bank Employees Association v. Ople as an analogous situation. Petitioners have misread this case.

In Chartered Bank, the workers sought payment for un-worked legal holidays as a right guaranteed by a valid law. In this case, petitioners seek payment of wages for un-worked non-legal holidays citing as basis a void implementing rule. The circumstances are also markedly different. In Chartered Bank, there was a collective bargaining agreement that prescribed the divisor. No CBA exists in this case. In Chartered Bank, the employer was liable for underpayment because the divisor it used was 251 days, a figure that clearly fails to account for the ten legal holidays the law requires to be paid. Here, the divisor ANTECO uses is 304 days. This figure does not deprive petitioners of their right to be paid on legal holidays.

A final note ANTECOs defense is likewise based on Section 2, Rule IV of Book III of the Omnibus Rules Implementing the Labor Code although ANTECOs interpretation of this provision is opposite that of petitioners. It is deplorable that both parties premised their arguments on an implementing rule that the Court had declared void twenty years ago in Insular Bank. This case is cited prominently in basic commentaries. And yet, counsel for both parties failed to consider this. This does not speak well of the quality of representation they rendered to their clients. This controversy should have ended long ago had either counsel first checked the validity of the implementing rule on which they based their contentions.