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PHILIPPINE HOTELIERS v. NATIONAL UNION OF WORKERS IN HOTEL

FACTS:

The case involves a petition for review on certiorari assailing the decision of the Court of Appeals granting the Emergency Cost of Living Allowance (ECOLA) to employees of Dusit Hotel Nikko (Dusit Hotel) and imposing a penalty of double indemnity on the hotel. The antecedent facts of the case are as follows: Wage Order (WO) No. NCR-09, which granted the ECOLA, took effect on November 5, 2001. The National Union of Workers in Hotel, Restaurant and Allied Industries-Dusit Hotel Nikko Chapter (Union) reported the non-compliance of Dusit Hotel with WO No. 9 to the Department of Labor and Employment-National Capital Region (DOLE-NCR). The DOLE-NCR conducted inspections of Dusit Hotel and found that 144 employees were affected by the non-compliance. The NLRC also rendered a decision granting wage increases to the hotel employees. The DOLE-NCR ordered Dusit Hotel to pay the employees their unpaid ECOLA and imposed the penalty of double indemnity. Dusit Hotel filed a motion for reconsideration, but it was denied by the appellate court.

Dusit Hotel and the Union were in a bargaining deadlock over salary increases under the Collective Bargaining Agreement (CBA). The National Labor Relations Commission (NLRC) resolved the deadlock and awarded retroactive salary increases to hotel employees. The increase, along with the employees' share in service charges, would already exceed the coverage of Wage Order No. 9 (WO No. 9). As a result, the Department of Labor and Employment - National Capital Region (DOLE-NCR) set aside its earlier order and dismissed the Union's complaint for non-compliance. The Union appealed, arguing that the NLRC decision should not be considered compliance with WO No. 9. The DOLE Secretary initially granted the appeal, but later reversed the decision, stating that the wage increase granted by the NLRC, combined with the employees' share in service charges, already fulfilled the requirements of WO No. 9. The Union's motion for reconsideration was denied by the DOLE Secretary. The Union then appealed to the Court of Appeals.

ISSUES:

  1. Whether the hotel employees were still entitled to Emergency Cost of Living Allowance (ECOLA) granted by Wage Order No. 9 despite the salary increases ordered by the National Labor Relations Commission (NLRC).

  2. Whether the salary increases granted by the employer can be credited as compliance with the prescribed ECOLA increase under Wage Order No. 9.

  3. Whether the increased salaries of the hotel employees should be used as bases for determining their entitlement to Emergency Cost of Living Allowance (ECOLA) under Wage Order No. 9.

  4. Whether the receipt by the hotel employees of their shares in the service charges collected by the hotel constitutes substantial compliance with the payment of ECOLA under Wage Order No. 9.

  5. Whether Dusit Hotel can be held liable for double indemnity for failure to pay ECOLA.

RULING:

  1. The Court of Appeals reversed and set aside the orders of the Department of Labor and Employment (DOLE) Secretary and reinstated the order of the DOLE Acting Secretary, holding that the hotel employees were still entitled to ECOLA despite the salary increases granted by the employer. The Court of Appeals found that there was no provision in the collective bargaining agreement (CBA) allowing the salary increases to be credited as compliance with ECOLA. The Court of Appeals also ruled that the hotel failed to substantiate its claim that the employees' receipt of shares in the service charges was substantial compliance with the ECOLA payment. The Court of Appeals held that the hotel should be held liable for double indemnity for its failure to comply with Wage Order No. 9.

  2. The increased salaries of the hotel employees should be used as bases for determining their entitlement to ECOLA under Wage Order No. 9. The retroactive increases in salaries were the rightful salaries of the hotel employees, and it is only fair and just that their increased salaries be considered in determining their entitlement to ECOLA.

  3. The receipt by the hotel employees of their shares in the service charges collected by the hotel does not constitute substantial compliance with the payment of ECOLA under Wage Order No. 9. The hotel employees have a separate right to their shares in the service charges, which is distinct from their right to ECOLA.

  4. Dusit Hotel cannot be held liable for double indemnity for failure to pay ECOLA. The Notice of Inspection Result issued by the Department of Labor and Employment did not contain an advice regarding the employer's liability for double indemnity in case of non-compliance. Therefore, Dusit Hotel was not sufficiently informed about the penalty, depriving them of the opportunity to avoid it.

PRINCIPLES:

  • Salary increases granted by an employer within three months prior to the effectivity of a wage order shall be credited as compliance with the prescribed increase if provided in the law or the collective bargaining agreement (CBA).

  • In the absence of a provision in the CBA allowing creditability, any increase granted by the employer shall not be credited as compliance with the wage order.

  • Emergency Cost of Living Allowance (ECOLA) is distinct and separate from benefits derived from negotiation or agreement with the employer.

  • Unpaid salary increases should be considered in determining entitlement to other benefits.

  • Receipt of shares in service charges does not constitute payment of ECOLA.

  • Employers must be sufficiently informed of the penalty for non-compliance in order to avoid it.

  • Retroactive salary increases should be considered in determining entitlement to benefits such as ECOLA.

  • Hotel employees with daily salary rates between P250.00 and P290.00 are entitled to the first tranch of ECOLA.

  • Receipt of shares from service charges collected by the employer does not constitute payment of ECOLA.