View full case

CALTEX REGULAR EMPLOYEES v. CALTEX PHILIPPINES

FACTS:

The Caltex Regular Employees Association entered into a Collective Bargaining Agreement (CBA) with Caltex (Philippines), Inc. The CBA contained provisions on the computation of different types of pay for the employees. The Union alleged that Caltex violated the CBA by not paying the night-shift differential, overtime pay, and first day-off rates for work done on a Saturday. Caltex's Industrial Relations manager acknowledged the violations and agreed to implement the payments, but discrepancies arose during the implementation.

The Union then filed a complaint for unfair labor practice against Caltex, claiming that the company violated the provisions of the 1985 CBA by not compensating employees at the "day of rest" rates for work done on the first 2 ½ hours of Saturday, which were considered part of the employees' day of rest. Caltex argued that Saturday was not designated as a day of rest and that the CBA only provided for one day of rest, which was Sunday. The Labor Arbiter ruled in favor of the Union, but the National Labor Relations Commission (NLRC) overturned the decision on appeal. The issue to be resolved was the interpretation of Article III in relation to Annex "B" of the 1985 CBA. Previous CBAs between the parties had similar provisions regarding hours of work.

ISSUES:

  1. Whether the provision in Annex "B" of the Collective Bargaining Agreement (CBA) provides for two days of rest.

  2. Whether Annex "B" prevails over Article III of the 1985 CBA.

  3. Whether the parties agreed to provide two days of rest based on the mathematical formulae contained in Annex "B" of the collective bargaining agreement (CBA).

  4. Whether the employees' work on a Saturday should be considered as overtime work compensable at premium rates of pay.

  5. Whether the day of rest for employees of Marinduque Bulk Depots is Sunday or Saturday.

  6. Whether work performed on a Saturday should be paid at regular rates of pay, unless the employee has worked in excess of forty hours in a week.

RULING:

  1. No, the provision in Annex "B" does not provide for two days of rest. The previous CBAs executed between the parties have consistently provided for only one day of rest, and there is no indication that two days of rest were agreed upon. The interpretation of the parties' conduct supports the understanding that only one day of rest was intended.

  2. No, Annex "B" does not prevail over Article III of the 1985 CBA. Annex "B" is not a separate provision that modifies or alters the terms expressed in the body of the agreement. It is subordinate to and has no independent significance from the 1985 CBA. Annex "B" does not confer rights on the employees or impose obligations on the employer. It is merely a company-wide guide for computing compensation.

  3. The Court held that the purported intention inferred from Annex "B" by the Labor Arbiter was based on mere conjecture and speculation. The deletion of the proviso in the 1970 CBA, which provided for two days-off, in subsequent CBAs indicated that the parties agreed to remove such stipulation. Therefore, the proviso found in the 1970 CBA ceased to be a demandable obligation, and the petitioner union cannot unilaterally re-insert such a stipulation based on Annex "B".

  4. The Court ruled that hours worked on a Saturday do not necessarily constitute overtime work compensable at premium rates of pay under the 1985 CBA. Saturday is not considered a rest day or a "day off" under the CBA. Only when an employee has been required to work in excess of the forty-hour regular work week on a Saturday can it be considered as performing overtime work. The statutory prohibition against offsetting undertime one day with overtime another day does not apply in this case.

  5. The Court dismissed the petition for lack of merit, affirming the decision of the National Labor Relations Commission (NLRC). Therefore, the ruling on the issues can be inferred from the decision of the NLRC.

PRINCIPLES:

  • The contemporaneous and subsequent conduct of the parties may be taken into account in the interpretation and application of a contract.

  • An annex is a subordinate document and does not modify or alter the terms expressed in the body of the agreement.

  • An annex without independent significance separate from the main agreement cannot prevail over the main agreement.

  • Deletion of a provision in a collective bargaining agreement indicates the parties' agreement to remove that stipulation.

  • Overtime work refers to hours worked in excess of the applicable work period, and not just hours worked during inconvenient or disagreeable hours.

  • Hours worked on a Saturday do not necessarily constitute overtime work compensable at premium rates of pay, unless they exceed the forty-hour regular work week.

  • The statutory prohibition against offsetting undertime one day with overtime another day does not apply when hours worked on a Saturday do not exceed the regular work week.

  • Work performed on a Saturday is to be paid at regular rates of pay, unless the employee has worked in excess of forty hours in a week.

  • Employees are entitled to a day of rest, which in this case was Sunday for the employees of Marinduque Bulk Depots.