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Petitioner is a labor union composed of faculty members of the respondent University of Pangasinan, an educational institution duly organized

and existing by virtue of the laws of the Philippines.

Th petitioner filed a complaint against the private respondent with the Arbitration Branch of the NLRC- Dagupan City seeking: (a) the payment

of Emergency Cost of Living Allowances (ECOLA) for November 7 to December 5, 1981, a semestral break; (b) salary increases from the 60%

of the incremental proceeds of increased tuition fees; and (c) payment of salaries for suspended extra loads.

The petitioner’s members are full-time professors, instructors, and teachers of respondent University. The teachers in the college level teach

for a normal duration of 10 months a school year, divided into 2 semesters of 5 months each, excluding the 2 months summer vacation. These

teachers are paid their salaries on a regular monthly basis.

During the semestral break (Nov. 7- Dec. 5, 1981), they were not paid their ECOLA. The private respondent claims that the teachers are not

entitled thereto because the semestral break is not an integral part of the school year and there being no actual services rendered by the

teachers during said period, the principle of “No work, no pay” applies.

During the same school year (1981-1982), the private respondent was authorized by the Ministry of Education and Culture to collect, from its

students a 15% increase of tuition fees. Petitioner’s members demanded a salary increase effective the first semester of said schoolyear to be

taken from the 60% percent incremental proceeds of the said increased tuition fees as mandated by the PD 451. Private respondent refused.







1. Yes. According to various Presidential Decrees on ECOLAs “Allowances of Fulltime Employees . . .” that “Employees shall be paid in full

the required monthly allowance regardless of the number of their regular working days if they incur no absences during the month. If they

incur absences without pay, the amounts corresponding to the absences may be deducted from the monthly allowance . . .”; and on

“Leave of Absence Without Pay”, that “All covered employees shall be entitled to the allowance provided herein when they are on leave of

absence with pay.”

The petitioner’s members are full-time employees receiving their monthly salaries irrespective of the number of working days or teaching hours

in a month. However, they find themselves in a situation where they are forced to go on leave during semestral breaks. These semestral

breaks are in the nature of work interruptions beyond the employees’ control. As such, these breaks cannot be considered as absences within

the meaning of the law for which deductions may be made from monthly allowances. The “No work, no pay” principle does not apply in the

instant case. The petitioner’s members received their regular salaries during this period. It is clear from the provision of law that it contemplates

a “no work” situation where the employees voluntarily absent themselves. Petitioners, in the case at bar, do not voluntarily absent themselves

during semestral breaks. Rather, they are constrained to take mandatory leave from work. For this they cannot be faulted nor can they be

begrudged that which is due them under the law.

The intention of the law is to grant ECOLA upon the payment of basic wages. Hence, we have the principle of “No pay, no ECOLA” the

converse of which finds application in the case at bar. Petitioners cannot be considered to be on leave without pay so as not to be entitled to

ECOLA, for, as earlier stated, the petitioners were paid their wages in full for the months of November and December of 1981, notwithstanding

the intervening semestral break.

Although said to be on forced leave, professors and teachers are, nevertheless, burdened with the task of working during a period of time

supposedly available for rest and private matters. There are papers to correct, students to evaluate, deadlines to meet, and periods within

which to submit grading reports. Although they may be considered by the respondent to be on leave, the semestal break could not be used

effectively for the teacher’s own purposes for the nature of a teacher’s job imposes upon him further duties which must be done during the said

period of time. Arduous preparation is necessary for the delicate task of educating our children. Teaching involves not only an application of

skill and an imparting of knowledge, but a responsibility which entails self dedication and sacrifice. It would be unfair for the private respondent

to consider these teachers as employees on leave without pay to suit its purposes and, yet, in the meantime, continue availing of their services

as they prepare for the next semester or complete all of the last semester’s requirements.

Thus, the semestral break may also be considered as “hours worked.” For this, the teachers are paid regular salaries and, for this, they should

be entitled to ECOLA. The purpose of the law is to augment the income of employees to enable them to cope with the harsh living conditions

brought about by inflation; and to protect employees and their wages against the ravages brought by these conditions

2. With regard to the second issue, under Section 3 of Presidential Decree 451, “no increase in tuition or other school fees or charges shall

be approved 60% of the proceeds is allocated for increase in salaries or wages of the members of the faculty and all other employees of

the school concerned, and the balance for institutional development, student assistance and extension services, and return to

investments: Provided, That in no case shall the return to investments exceed twelve (12%) per centum of the incremental proceeds; . . .”

Such allowances must be taken in resources of the school not derived from tuition fees.

If the school happen to have no other resources to grant allowances and benefits, either mandated by law or secured by collective bargaining,

such allowances and benefits should be charged against the return to investments referred.

The law is clear. The 60% incremental proceeds from the tuition increase are to be devoted entirely to wage or salary increases which means

increases in basic salary. The law cannot be construed to include allowances which are benefits over and above the basic salaries of the

employees. To charge such benefits to the 60% incremental proceeds would be to reduce the increase in basic salary provided by law.

Law provides that 60% of tuition fee increase should go to wage increases and 40% to institutional developments, student assistance,

extension services, and return on investments. Framers of the law intended this portion (return on investments) of the increases in tuition fees

to be a general fund to cover up for the university’s miscellaneous expenses.

Petition for certiorari is GRANTED.



1. Private respondent Angel Esquejo started working with petitioner PAL Employees Savings and Loan Association (PESALA) as a
company guard and was receiving a monthly basic salary of P 1,900 plus an emergency allowance in the amount of P 510.

2. He was required to work 12 hours a day. That during his entire period of employment with petitioner, herein private respondent was
required to perform overtime work without any additional compensation from the latter.

3. Sometime later, private respondent was administratively charged with serious misconduct or disobedience of the lawful orders of
petitioner or its officers. As a result, private respondent filed a detailed and itemized computation of his money claims.

4. Thereafter, the labor Arbiter rendered a decision granting private respondent overtime pay.

5. Aggrieved by the decision, petitioner appealed to the NLRC only to be rejected later.

6. In the meantime, petitioner filed the instant special civil action for certiorari citing as reason that quite recently, the employee payroll
sheets which contained the salaries and overtime pay received by private respondent were located in the bodega of the petitioner and based
on the payroll sheets, it appears that substantial overtime pay have been paid to private respondent.


Whether or not an employee is entitled to overtime pay for work rendered in excess of the regular eight hour day given the fact that he entered
into a contract of labor specifying a work-day of twelve hours at a fixed monthly rate above the legislated minimum wage.


YES. The Supreme Court held that based on petitioner’s own computation, it appears that the basic salary plus emergency allowance given to
private respondent did not actually include the overtime pay claimed by private respondent.
Moreover, there was no meeting of the minds between petitioner and private respondent as to what is covered by the salary stipulated. The
said contract was definite only as to the number of hours to be rendered.

Furthermore, the subsequent act of private respondent in filing the money claims negates the theory that there was a clear agreement as to
the inclusion of his overtime pay in the contracted salary rate.




1. Wage Order No. 6 increased the cost-of-living allowance of non-agricultural workers in the private sector. Petitioner corporation
(GMCR) complied with the said Wage Order by paying its monthly-paid employees the mandated P3.00 per day COLA. However, in computing
said COLA, GMCR multiplied the P3.00 daily COLA by 22 days, which is the number of working days in the company.

2. Respondent Union disagreed with the computation of the monthly COLA claiming that the daily COLA rate of P3.00 should be
multiplied by 30 days to arrive at the monthly COLA rate. The union alleged furthermore that prior to the effectivity of Wage Order No. 6,
GMCR had been computing and paying the monthly COLA on the basis of thirty (30) days per month and that this constituted an employer
practice, which should not be unilaterally withdrawn.

3. The Labor Arbiter ruled that the monthly COLA should be computed on the basis of twenty two (22) days, since the evidence showed
that there are only 22 paid days in a month for monthly-paid employees in the company. To compel the respondent company to use 30 days in
a month to compute the allowance and retain 22 days for vacation and sick leave, overtime pay and other benefits is inconsistent and palpably
unjust. If 30 days is used as divisor, then it must be used for the computation of all benefits, not just the allowance. But this is not fair to
complainants, not to mention that it will contravene the provision of the parties' CBA.

4. However, the NLRC reversed the Labor Arbiter and held that petitioner was guilty of illegal deductions, upon the following
considerations: (1) that the P3.00 daily COLA should be paid and computed on the basis of thirty (30) days instead of twenty two (22) days
since workers paid on a monthly basis are entitled to COLA on Saturdays, Sundays and legal holidays "even if unworked;" (2) that the full
allowance enjoyed by monthly-paid employees before the CBA executed in 1982 constituted voluntary employer practice, which cannot be
unilaterally withdrawn.


1. How should the COLA be computed?

2. Can the COLA be unilaterally withdrawn by the employer?


1. The primordial consideration for entitlement to COLA is that basic wage is being paid. In other words, the payment of COLA is
mandated only for the days that the employees are paid their basic wage, even if said days are unworked. So that, on the days that employees
are not paid their basic wage, the payment of COLA is not mandated. Peculiar to this case, however, is the circumstance that pursuant to the
Collective Bargaining Agreement (CBA) between Petitioner and Respondent Union, the monthly basic pay is computed on the basis of five (5)
days a week, or twenty two (22) days a month.

In determining the hourly rate of monthly paid employees for purposes of computing overtime pay, the monthly wage is divided by the number
of actual work days in a month and then, by eight (8) working hours. If a monthly-paid employee renders overtime work, he is paid his basic
salary rate plus one-half thereof. Thus, where the company observes a 5-day work week, it will have to be held that the COLA should be
computed on the basis of twenty two (22) days, which is the period during which the employees of petitioner receive their basic wage. The
CBA is the law between the parties and, if not acceptable, can be the subject of future re-negotiation.

2. Payment in full by petitioner of the COLA before the execution of the CBA in 1982 and in compliance with Wage Orders Nos. 1 (26
March 1981) to 5 (11 June 1984), should not be construed as constitutive of voluntary employer practice, which cannot now be unilaterally
withdrawn by petitioner. To be considered as such, it should have been practiced over a long period of time, and must be shown to have been
consistent and deliberate. Adequate proof is wanting in this respect. The test of long practice has been enunciated in Oceanic Pharmaceutical
Employees Union vs. Inciong such that “respondent company agreed to continue giving holiday pay knowing fully well that said employees are
not covered by the law requiring payment of holiday pay."

Absent clear administrative guidelines, petitioner cannot be faulted for erroneous application of the law. Payment may be said to have been
made by reason of a mistake in the construction or application of a "doubtful or difficult question of law." Since it is a past error that is being
corrected, no vested right may be said to have arisen nor any diminution of benefit under Article 100 of the Labor Code may be said to have
resulted by virtue of the correction.

NESTLÉ PHILIPPINES, INC. (formerly FILIPRO, INC.), respondents.

Nestle Philippines (Nestle) filed with the National Labor Relations Commission (NLRC) a petition for declaratory relief seeking a ruling on its
rights and obligations respecting claims of its monthly paid employees for holiday pay.b Both Nestle and the Union of Filipino Employees (UFE)
agreed to submit the case for voluntary arbitration and appointed respondent Benigno Vivar, Jr. (Vivar) as voluntary arbitrator.

Consequently, Arbitrator Vivar rendered a decision directing Nestle to pay its monthly paid employees holiday pay pursuant to Article 94 of the
Code, subject only to the exclusions and limitations specified in Article 82 and such other legal restrictions as are provided for in the Code.

Nestle filed a motion for clarification seeking the limitation of the award to three years, the exclusion of salesmen, sales representatives, truck
drivers, merchandisers and medical representatives from the award of the holiday pay, and deduction from the holiday pay award of
overpayment for overtime, night differential, vacation and sick leave benefits due to the use of 251 divisor.

Petitioner UFE answered that the award should be made effective from the date of effectivity of the Labor Code and that sales personnel
should be entitled to holiday pay since they are not field personnel, and that the use of 251 as divisor is an established employee benefit which
cannot be diminished.

Vivar issued an order declaring that the effectivity of the holiday pay award shall retroact from the date of effectivity of the Labor Code.
However, company's sales personnel are considered field personnel and, as such, are not entitled to holiday pay. Likewise, with the grant of
the 10 days' holiday pay, the divisor should be changed from 251 to 261 and ordered the reimbursement of overpayment for overtime, night
differential, vacation and sick leave pay due to the use of 251 days as divisor.

Both Nestle and UFE filed their respective motions for partial reconsideration. Vivar treated the two motions as appeals and forwarded the
case to the NLRC which in return issued a resolution remanding the case to the respondent arbitrator on the ground that it has no jurisdiction
to review decisions in voluntary arbitration cases pursuant to Article 263 of the Labor Code. In a letter from Vivar, however, he refused to take
cognizance of the case reasoning that he had no more jurisdiction to continue as arbitrator because he had resigned from service.


Whether or not sales personnel, who were considered as field personnel, entitled to holiday pay.


No, sales personnel are not entitled to holiday pay as they fall under the definition of field personnel under Article 82 of the Labor Code which
defines field personnel as "non-agritultural employees who regularly perform their duties away from the principal place of business or branch
office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. However, Vivar’s order to
change the divisor from 251 to 261 days would result in a lower daily rate which is violative of the prohibition on non-diminution of benefits
found in Article 100 of the Labor Code. To maintain the same daily rate if the divisor is adjusted to 261 days, then the dividend, which
represents the employee's annual salary, should correspondingly be increased to incorporate the holiday pay. There is thus no merit in
respondent Nestle's claim of overpayment of overtime and night differential pay and sick and vacation leave benefits, the computation of which
are all based on the daily rate, since the daily rate is still the same before and after the grant of holiday pay.

Nevertheless, Nestle is ordered to pay the rest of its employees their corresponding holiday pay. The divisor to be used in computing holiday
pay shall be 251 days and shall be computed accordingly from October 23, 1984.



Rodolfo Serrano (petitioner) was hired on Sept. 28, 1992 as bus conductor by Severino Santos Transit (respondent), a bus company owned a
operated by Severino Santos (co-respondent)

14 years of service after, petitioner applied for optional retirement from the company whose representative advised him that he must first sign
the already prepared Quitclaim before his retirement pay could be released.

Petitioner’s request to first go over the computation of his retirement pay was denied. He then signed the Quitclaim on which he wrote “U.P.”
(under protest) after his signature, indicating his protest to the amount of P75,277.45 which he received, computed by the company at 15 days
per year of service.

Petitioner’s allegation: Petitioner soon after filed a complaint before the LA, alleging that the company erred in its computation since under R.A.
7641 (Retirement Pay Law), his retirement pay should have been computed at 22.5 days per year of service to include the cash equivalent of
the 5-day SIL and 1/12 of the 13th month pay which the company did not.

Respondents’ allegation: The Quitclaim signed by petitioner barred his claim and, in any event, its computation was correct since petitioner
was not entitled to the 5-day SIL and pro-rated 13th month pay for, as a bus conductor, he was paid on a commission basis.

LA: ruled in favor of petitioner awarding him P116,135.45 as retirement pay differential, among others.

NLRC: reversed the LA decision but ordered respondents to pay retirement differential in the amount of P2,365.35.

CA: affirmed NLRC.

ISSUE: WON an employee paid on a commission basis is entitled to the 5-day SIL and pro-rated 13th month pay.

HELD: Yes. The petition is granted.

R.A. 7641 amended Art. 287 of the Labor Code by providing for retirement pay to qualified private sector employees in the abs ence of any
retirement plain in the establishment. The pertinent provision of said law reads:

“In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon
reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who
has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half
(1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.

Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of
the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves. …”

Further, the Implementing Rules of said law provide that such rule shall apply to all employees in the private sector, regardless of their position,
designation or status and irrespective of the method by which their wages are paid, except to those specifically exempted under Section 2 of
the said Implementing Rules.

Under Sec. 2 thereof, the rule shall not apply to the following employees:

1. Employees of the national government

2. Domestic helpers and persons in the personal service of another

3. Employees of retail, service and agricultural establishment or operations regularly employing not more than ten (10) employees.

Under Sec. 5 of the same Implementing Rules, it provides that for the purpose of determining the minimum retirement pay due an employee,
the term “one-half month salary” shall include all of the following:

1. Fifteen (15) days salary of the employee based on his latest salary rate.

2. Cash equivalent of not more than five (5) days of service incentive leave;

3. One-twelfth of the 13th month pay

4. All other benefits

In the present case, petitioner worked for 14 years for the bus company which did not adopt any retirement scheme. Even if petitioner as bus
conductor was paid on commission basis then, he falls within the coverage of R.A. 7641 and its implementing rules. Thus, petitioner’s
retirement pay should include the cash equivalent of the 5-day SIL and 1/12 of the 13th month pay.

For purposes, however, of applying the law on SIL, as well as on retirement, the SC notes that there is a difference between drivers paid under
the “boundary system” and conductors who are paid on commission basis.

A taxi driver paid according to the “boundary system” is not entitled to the 13th month and the SIL pay, hence, his retirement pay should be
computed on the sole basis of his salary. In practice, taxi drivers do not receive fixed wages. They retain only those sums in excess of the
“boundary” or fee they pay to the owners or operators of the vehicles.

Conductors, on the other hand, are paid a certain percentage of the bus’ earnings for the day. Hence, being paid on purely commission basis.

Under P.D. 851 (SIL Law), the exclusion from its coverage of workers who are paid on a purely commission basis is only with respect to field
personnel. Hence, employees engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the
grant of SIL, unless, they fall under the classification of field personnel.

As a general rule, field personnel are those whose performance of their job/service is not supervised by the employer or his representative, the
workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty; hence,
they are paid specific amount for rendering specific service or performing specific work. If required to be at specific places at specific times,
employees including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of
the employee.