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TERMINAL FACILITIES v. NATIONAL LABOR RELATIONS COMMISSION

FACTS:

Petitioner Terminal Facilities and Services Corporation (TEFASCO) is a domestic corporation engaged in the business of wharf services and facilities operating for profit in Davao City. Respondent Associated Labor Unions (ALU) is the exclusive bargaining agent of the on-and-off rank and file workers as well as the monthly paid employees of TEFASCO. ALU filed a complaint against TEFASCO for underpayment of emergency cost of living allowance, alleging that TEFASCO pays its monthly-paid employees only P455.00 per month, which is less than the prescribed amount of P517.08 per month under Wage Order No. 6. TEFASCO argued that the covered employees belong to Group II under the table of computations, which includes establishments that consider rest days as unworked and unpaid. On April 29, 1986, the Labor Arbiter ruled in favor of ALU and ordered TEFASCO to pay the differential in living allowance. The NLRC affirmed the decision with modification, categorizing the union members as belonging to Group III under the table of computations. TEFASCO filed a petition seeking to annul the NLRC resolutions, disputing the NLRC's jurisdictional error and claiming lack of substantial evidence.

ISSUES:

  1. Whether the divisor of 26 working days used by the employer to compute the cost of living allowance (COLA) is valid.

  2. Whether the ruling in Chartered Bank Employees Association v. Ople (138 SCRA 273) is applicable to the present case.

  3. Whether the company practice of using a divisor of 26 days in determining the deductions from the monthly salary of an employee when he incurs absences during the period should also be followed in determining the monthly cost of living allowance due the employee.

  4. Whether the petitioner is entitled to relief.

RULING:

  1. The Court held that the divisor of 26 working days used by the employer to compute the COLA is valid. The Court emphasized that the monthly salary of the employees already includes payment for unworked rest days and their work days in one year is 314 or approximately 26 days in one month. Therefore, the divisor of 26 is justified in determining the daily equivalent salary of the employees.

  2. The Court ruled that the ruling in Chartered Bank Employees Association v. Ople is not applicable to the present case. The ruling in the Chartered Bank case involved claims for holiday pay, premium, and overtime pay differentials, while the present case pertains to the computation of COLA. The Court emphasized that the divisor of 251 days or less than 365 days used in the Chartered Bank case is not applicable to determine the monthly COLA provided for in Wage Order No. 6.

  3. The company practice of using a divisor of 26 days in determining the deductions from the monthly salary does not mean that the same procedure should also be followed in determining the monthly cost of living allowance due to the employee.

  4. The petitioner is not entitled to relief and the resolutions of the National Labor Relations Commission (NLRC) are upheld.

PRINCIPLES:

  • The construction of labor laws and regulations must be resolved in favor of labor.

  • Doubts in the implementation and interpretation of labor laws should be resolved in favor of labor.

  • Any remaining doubts arising from conflicting divisors used in the computation of overtime pay and employees' absences should be resolved based on how work actually rendered on holidays is paid.

  • Computation of holiday pay and overtime pay should be treated similarly, as both involve work on rest days.

  • The intention of the law is to provide benefits to all workers, regardless of their pay or employment status.

  • Changes in the computation of benefits should be made through a clear redrafting of the collective bargaining agreement or an amendment of the law, not through administrative rules or policy instructions.

  • The State shall afford full protection to labor and promote equality of employment opportunities for all, as mandated by the constitution.

  • Labor contracts deserve special treatment and liberal interpretation in favor of the worker.

  • The law allows two opposite interpretation, one strictly in favor of the employers and the other liberally in favor of the worker. In this case, the latter interpretation should be chosen.

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