RESOLUTION OF THE SPECIFIC ISSUES OF THE 6 CASES

(RELEVANT TO OUR TOPIC)

A. CEBU INSTITUTE OF TECHNOLOGY CASE

(1) PUBLIC RESPONDENT ERRED IN NOT DECLARING THAT PETITIONER IS
EXEMPTED AND/OR NOT OBLIGED TO PAY SERVICE INCENTIVE LEAVE. -
NO

Going now to the matter of service incentive leave benefits, petitioner claims
that private respondents are engaged by the school on a contract basis as
shown by the individual teachers contract which defines the nature, scope
and period of their employment; hence, they are not entitled to the said
benefit according to Rule V of the Implementing Rules and Regulations of
the Labor Code to wit:

Sec. 1. Coverage. This rule [on Service Incentive Leave] shall apply to all employees, except:

xxx xxx xxx

(d) Field personnel and other employees whose performance is unsupervised by the employer including those
who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for
performing work irrespective of the time consumed in the performance thereof; (MOLE Rules and Regulations, Rule
V, Book III)

The phrase "those who are engaged on task or contract basis" should
however, be related with "field personnel " applying the rule on ejusdem
generis that general and unlimited terms are restrained and limited by the
particular terms that they follow, [Vera v. Cuevas, G.R. No. L-33693, May 31,
1979, 90 SCRA 379].
Clearly, petitioner's teaching personnel cannot be deemed field personnel
which refers "to non-agricultural 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. [Par. 3, Article 82, Labor Code of the Philippines].
Petitioner's claim that private respondents are not entitled to the service incentive
leave benefit cannot therefore be sustained.



B. FAR EASTERN UNIVERSITY CASE

Two other issues are raised in the petition:

(1) WHETHER OR NOT 'TRANSPORTATION ALLOWANCE' SHOULD BE
CONSIDERED AS 'EQUIVALENT TO 13TH-MONTH PAY UNDER PRES. DEC.
NO. 851. -- YES

(2) WHETHER OR NOT LEGAL HOLIDAY PAY BENEFIT COULD BE VALIDLY
WITHDRAWN AFTER BEING PRACTICED CONTINUOUSLY FOR EIGHT (8)
MONTHS. --

First Issue:
The issue on the thirteenth (13th) month pay involves an interpretation of the
provisions of Pres. Dec. No. 851 which requires all employers "to pay all their
employees receiving a basic salary of not more than Pl,000 a month, regardless of
the nature of the employment, a 13th- month pay" (Sec. 1). However,
"employer[s] already paying their employees a 13th-month pay or its
equivalent are not covered" (Sec. 2).

The Rules and Regulations Implementing Pres. Dec. No. 851 provide the
following:

SEC. 3. Employees. The Decree shall apply to all employers except to: ...

c) Employers already paying their employees 13th-month or more in a calendar year or its equivalent at the time
of this issuance; ...

xxx xxx xxx

The term "its equivalent" as used in paragraph (c) hereof shall include Christmas
bonus, mid-year bonus, profit-sharing payments and other cash bonuses
amounting to not less than 1/12th of the basic salary but shall not include cash and
stock dividends, cost of living allowances and all other allowances regularly
enjoyed by the employer, as well as non-monetary benefits. Where an employer
pays less than 1/1 2th of the employees basic salary, the employer shall pay the
difference.
In the case at bar, the 13th month pay is paid in the following manner:
FOR REGULAR EMPLOYEES:

o Transportation Allowance (TA)

50% of basic for the first year of service plus additional 5% every year thereafter
but not to exceed 100% of basic salary

o Christmas Bonus (CB)

50% of basic salary for the first year of service plus additional 5% every year
thereafter but not to exceed 100% of basic salary.

o For employees who have served the University for more than 10 years, the
University pays them emoluments equivalent to the 14 months salaries.

o 13th Month Pay Formula:

Monthly Rate x No. of months served for the year
Less TA/CB = 13th Mo. pay

12 months

FOR CASUAL EMPLOYEES:

13th Month Pay Formula:

Add salaries from 16 December of previous year to 15th December of present year [and]
divide by 12 months = 13th Mo. Pay

The University's answer to the Union's claim of underpayment of the 13th month
pay is that the "transportation allowance" paid to its employees partakes the
nature of a mid-year bonus which under section 2 of Pres. Dec. No. 851 and
section 3(c) of the Implementing Rules and Regulations is equivalent to the 13th
month pay

It is clear that insofar as employees with ten (10) years of service or more are
concerned, they receive the equivalent of one (1) month pay for Christmas bonus
and another one (1) month pay as transportation allowance or a total of fourteen
(14) months salary in a year. Obviously, this group of employees are fully paid of
their 13th month pay and are not therefore subject to the instant claim.
As it is only those with less than ten (10) years of service are included or
encompassed by the Labor Arbiter's resolution on this particular issue.
Whether or not the so designated "transportation allowance" being paid to the
employees should be considered among those deemed equivalent to 13th month
pay.
Complainants claim that the transportation allowance they enjoy has always been
called and termed allowance and never as bonus since the time the same was
given to them. They assert that it simply was intended as an allowance and not a
bonus.
It would appear however that complainants do not dispute respondent's stand that
transportation allowance is being paid only every March of each year as
distinguished from other allowances that are being paid on a monthly basis or on a
bimonthly basis; that the amount of transportation allowance to be paid is
dependent on the length of service of the employee concerned (i.e. 50% basic in
the first year and additional 5% for each succeeding years, etc.); that the said
method of computing the amount of the transportation allowance to be paid the
complainants is identical to that used in determining Christmas bonus that the
reason behind said transportation allowance is to financially assist employees in
meeting their tax obligations as the same become due on or about the month of
March of each year.
The Court is inclined to believe and so hold that by the manner by which said
transportation allowance is being paid (only once a year) as well as the
method in determining the amount to be paid (similar to Christmas bonus)
and considering further the reason behind said payment (easing the burden
of taxpayer-employee), the said transportation allowance given out by
respondent while designating as such, partakes the nature of a mid-year
bonus.
It bears to note in passing that in providing for transportation allowance,
respondent was not compelled by law nor by the CBA (Annex "A" of
respondent's Appeal) as nowhere in the CBA nor in the Labor Code can be found
any provision on transportation allowance.
It was therefore a benefit that stemmed out purely from the voluntary act
and generosity of the respondent FEU. Moreover, said transportation
allowance is only being paid once a year.
On the other hand, regular allowances not considered as 13th month pay
equivalent under P.D. 851, to our mind, refer to those paid on regular
intervals and catering for specific employees' needs and requirements that
recur on a regular basis.
Verily, if the intendment behind the disputed transportation allowance is to
answer for the daily recurring transportation expenses of the employees, the same
should have been paid to employees on regular periodic intervals. All
indications, as we see it, point out to conclusion that the disputed transportation
allowance, while dominated as such apparently for lack of better term, is in fact a
form of bonus doled out by the respondent during the month of March every year.
Hence, we hold that it is one of those that can very well be considered as
equivalent to the 13th month pay


Second Issue:
Presidential Decree No. 570-A was issued on November 1, 1974 amending
certain articles of Presidential Decree No. 442 (Labor Code of the Philippines
promulgated on May 1, 1974 which took effect six months thereafter). Section 28
thereof provides that:

Section 28. A new provision is hereby substituted in lieu of the original provision of Article 258 of the same Code to
read as follows:

Art. 258. Right to holiday pay-

(a) Every worker shall be paid his regular holidays, except in retail and service establishments regularly
employing less than ten (10) workers;

(b) The term "holiday" as used in this Chapter, shall include: New Year's day, Maundy Thursday, Good Friday,
the ninth of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty fifth
and thirtieth of December and the day designated by law for holding a general election.

(c) When employer may require work on holidays. The employer may require an employee to work on any
holiday but such employee shall be paid a compensation equivalent twice his regular rate.

Presidential Decree No. 850 issued on December 16, 1975 also amending certain
articles of Pres. Dec. No. 442 adopted the aforequoted provision. Two months
later, on February 16, 1976, the Rules and Regulations Implementing the Labor
Code, as amended, was released the pertinent portion of which states that:

Section 2. Status of employees paid by the month. Employees who are uniformly paid by the month, irrespective of
the number of working days therein, with a salary of not less than the statutory or established minimum wage shall be
presumed to be paid for all days in the month whether worked or not.

For this purpose, the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365
days divided by twelve.

(e) Section 3. Holiday Pay. Every employer shall pay his employees their regular daily wage for any
unworked regular holiday.

As used in the Rule, the term 'holiday' shall exclusively refer to: New Year's
Day, Maundy Thursday, Good Friday, the ninth of April, the first of May,
the twelfth of June, the fourth of July, the thirtieth of November, the twenty-
fifth and thirtieth of December and the day designated by law for a general
election or national referendum or plebiscite (MOLE Rules and Reg. Book III,
Rule IV, sec. 2 (1976).
After one week, on February 23, 1976, the Minister of Labor issued Policy
Instruction No. 9, to clarify further the right to holiday pay, thus:

The Rules Implementing PD 850 have clarified the policy in the implementation
of the ten (10) paid legal holidays. Before PD 850. the number of working days a
year in a firm was considered important in determining entitlement to the benefit.
Thus, where an employee was working for at least 313 days, he was definitely
already paid. If he was working for less than 313, there was no certainty whether
the ten (10) paid legal holidays were already paid to him or not.
The ten (10) paid legal holidays law, to start with, is intended to benefit
principally daily employees. In the case of monthly, only those whose
monthly salary did not yet include payment for the ten (10) paid legal
holidays are entitled to the benefit.
Under the rules implementing PD 850, this policy has been fully clarified to
eliminate controversies on the entitlement of monthly paid employees. The new
determining rule is this: If the monthly paid employee is receiving not less
than P 240, the maximum monthly minimum wage, and his monthly pay is
uniform from January to December, he is presumed to be already paid the
ten (10) paid legal holidays. However, if deductions are made from his
monthly salary on account of holidays in months where they occur, then he is
entitled to the ten (10) legal holidays.
In the meantime, respondent University paid its employees holiday pay for the
following days:

DATE HOLIDAYS PAID

June 9, 1975 for the previous nine legal holidays

August, 1975 for the previous June 12 and July 4

Jan. 14, 1976 or the previous Nov. 30, Dec. 25

and 30 and Jan. 1

After January 14, 1976, however, the University ceased paying the holiday pay
allegedly by reason of Policy Instruction No. 9. Specifically, the University
claimed that the monthly salary of its employees was, as of 1976, more than
P240.00 without deductions from their monthly salary on account of holidays in
months where they occurred and that therefore, by virtue of Policy Instruction No.
9, they were no longer entitled to the ten paid legal holidays.
Petitioners, upon the other hand, contend that Policy Instruction No. 9 could
not have possibly been the reason that prompted the University to withdraw
such benefits from its faculty and employees because said implementing rule
was issued only on April 23, 1976 or four months later.
The Court agrees with the petitioner's contention that Section 2, Rule IV, Book
Ill of the implementing rules and Policy Instruction No. 9 issued by the then
Secretary of Labor are null and void since in the guise of clarifying the Labor
Code's provision on holiday pay, they in fact amended them by enlarging the
scope of their exclusion.
It is elementary in the rules of statutory construction that when the language of the
law is clear and unequivocal the law must be taken to mean exactly what it says.
In the case at bar, the provisions of the Labor Code on the entitlement to the
benefits of holiday pay are clear and explicit it provides for both the
coverage of and exclusion from the benefits. In Policy Instruction No. 9, the
then Secretary of Labor went as far as to categorically state that the benefit is
principally intended for daily paid employees, when the law clearly states that
every worker shall be paid their regular holiday pay.
This is a flagrant violation of the mandatory directive of Article 4 of the Labor
Code, which states that "All doubts in the implementation and interpretation of
the provisions of this Code, including its implementing rules and regulations,
shall be resolved in favor of labor. " Moreover, it shall always be presumed that
the legislature intended to enact a valid and permanent statute which would have
the most beneficial effect that its language permits.