LeyteIVElectricCooperativeInc.

,vsLEYECOIVEmployeesUnion
Facts:
OnApril6,1998,LeyteIVElectricCooperative,Inc.(petitioner)and
LeyecoIVEmployeesUnionALU(respondent)enteredintoaCollective
BargainingAgreement(CBA)coveringpetitionerrankandfileemployees,
foraperiodoffive(5)yearseffectiveJanuary1,1998.

OnJune7,2000,respondent,throughitsRegionalVicePresident,
VicenteP.Casilan,sentalettertopetitionerdemandingholidaypayfor
allemployees,asprovidedforintheCBA.
OnJune20,2000,petitioner,throughitslegalcounsel,sentaletterreplyto
Casilan,explainingthatafterperusingallavailablepayslips,itfound
thatithadpaidallemployeesalltheholidaypaysenumeratedinthe
CBA
Afterexhaustingtheproceduresofthegrievancemachinery*theparties
agreedtosubmittheissuesoftheinterpretationandimplementationof
Section2,ArticleVIIIoftheCBAonthepaymentofholidaypay,for
arbitrationoftheNationalConciliationandMediationBoard(NCMB),
RegionalOfficeNo.VIIIinTaclobanCity.Thepartieswererequiredto
submittheirrespectivepositionpapers,afterwhichthedisputewas
submittedfordecision.
Initspositionpaper,theemployeesadmittedtheywerepaidallofthedays
ofthemontheveniftherewasnowork,respondentallegedthatitisnot
preventedfrommakingseparatedemandsforthepaymentofregular
holidaysconcomitantwiththeprovisionsoftheCBA,withitssupporting
documentsconsistingofaletterdemandingpaymentofholidaypay,
petitioner'sreplytheretoandrespondent'srejoinder,acomputationinthe
amountofP1,054,393.07fortheunpaidlegalholidays,andseveralpay
slips.

Petitioner,ontheotherhand,initsPositionPaper,insistedpaymentof
theholidaypayincompliancewiththeCBAprovisions,statingthat
paymentwaspresumedsincetheformulausedindeterminingthedailyrate
ofpayofthecoveredemployeesisBasicMonthlySalarydividedby30
daysorBasicMonthlySalarymultipliedby12dividedby360days,thus
withsaidformula,theemployeesarealreadypaidtheirregularandspecial
days,thedayswhennoworkisdone,the51unworkedSundaysandthe51
unworkedSaturdays
OnMarch1,2001,VoluntaryArbitrator.renderedaDecisioninfavorof
respondent,holdingpetitionerliableforpaymentofunpaidholidaysfrom
1998to2000inthesumofP1,054,393.07.Hereasonedthatpetitioner
miserablyfailedtoshowthatitcompliedwiththeCBAmandate
thatholidaypaybereflectedduringanypayrollperiodofoccurrence
sincethepayrollslipsdidnotreflectanypaymentofthepaidholidays.He
foundunacceptablenotonlypetitioner'spresumptionofpaymentofholiday
paybasedonaformulausedindeterminingandcomputingthedailyrateof
eachcoveredemployee,butalsopetitioner'sfurthersubmissionthattherate
ofitsemployeesisnotlessthanthestatutoryminimumwagemultipliedby
365daysanddividedbytwelve.
Issue:
WONLeyteIVElectricCooperativeisliableforunderpaymentofholiday
pay.
Ruling:
LeyteIVElectricCooperativeisnotliableforunderpaymentofholiday
pay.

TheVoluntaryArbitratorgravelyabuseditsdiscretioningivingastrictor
literalinterpretationoftheCBAprovisionsthattheholidaypaybereflected
inthepayrollslips.Suchliteralinterpretationignorestheadmissionof
respondentinitsPositionPaperthattheemployeeswerepaidallthedaysof

themonthevenifnotworked.Inlightofsuchadmission,petitioner's
submissionofits360divisorinthecomputationofemployees'salaries
gainssignificance.
In Union of Filipro Employees v. Vivar, Jr. the Court held that [t]he
divisor assumes an important role in determining whether or not holiday
pay is already included in the monthly paid employees salary and in the
computation of his daily rate.
ThisrulingwasappliedinWellingtonInvestmentandManufacturing
Corporationv.Trajano,ProducersBankofthePhilippinesv.National
LaborRelationsCommission.Inthiscase,themonthlysalarywasfixed
byLawandexcludingonlySundays.Infixingthesalary,Wellingtonused
whatitcalledthe"314factor";thatis,itsimplydeducted51Sundaysfrom
the365daysnormallycomprisingayearandusedthedifference,314,as
basisfordeterminingthemonthlysalary.Themonthlysalarythusfixed
actuallycoveredpaymentfor314daysoftheyear,includingregularand
specialholidays,aswellasdayswhennoworkwasdonebyreasonof
fortuitouscause,suchastransportationstrike,riot,ortyphoonorother
naturalcalamity,orcausenotattributabletotheemployees.
ItwasalsoappliedinOdangov.NationalLaborRelationsCommission,
whereCourtruledthattheuseofadivisorthatwaslessthan365days
cannotmaketheemployerautomaticallyliableforunderpaymentofholiday
pay.Insaidcase,theemployeeswererequiredtoworkonlyfromMonday
toFridayandhalfofSaturday.Thus,theminimumallowabledivisoris287,
whichistheresultof365days,less52Sundaysandless26Saturdays(or
52halfSaturdays).Anydivisorbelow287daysmeantthattheemployees
weredeprivedoftheirholidaypayforsomeorallofthetenlegalholidays.
The304daydivisorusedbytheemployerwasclearlyabovetheminimum
of287days.
Inthiscase,theemployeesarerequiredtoworkonlyfromMondayto
Friday.Thus,theminimumallowabledivisoris263,whichisarrivedatby
deducting51unworkedSundaysand51unworkedSaturdaysfrom365
days.Consideringthatpetitionerusedthe360daydivisor,whichisclearly

abovetheminimum,indubitably,petitioner'semployeesarebeinggiven
theirholidaypay.Thus,theVoluntaryArbitratorshouldnothavesimply
brushedasidepetitioner'sdivisorformula.
Ingrantingrespondent'sclaimofnonpaymentofholidaypay,a"double
burden"wasimposeduponpetitionerbecauseitwasbeingmadetopay
twiceforitsemployees'holidaypaywhenpaymentthereofhadalready
beenincludedinthecomputationoftheirmonthlysalaries
While the Constitution is committed to the policy of social justice and the
protection of the working class, it should not be supposed that every labor
dispute would automatically be decided in favor of labor. Management also
has it own rights which, as such, are entitled to respect and enforcement in
the interest of simple fair play. Out of concern for those with less privileges
in life, this Court has inclined more often than not toward the worker and
upheld his cause in his conflicts with the employer. Such favoritism,
however, has not blinded us to the rule that justice is in every case for the
deserving, to be dispensed in the light of the established facts and the
applicable law and doctrine
*agrievanceisanydifferenceordisputebetweenanemployeeorthe
union,andtheemployerwithrespecttotheinterpretation,application,orof
compliancewithanytermsandconditionsofthecontract.
TheGrievanceMachinery
Article260oftheLaborCoderequirespartiestoestablisha
grievancemachineryfortheadjustmentandresolutionofgrievances
arisingfromtheinterpretationorimplementationofacollective
bargainingagreementortheinterpretationorenforcementof
companypersonnelpolicies.

Grievancessubmittedtothegrievancemachineryandnotsettled
withinsevencalendardaysshallautomaticallybereferredto
voluntaryarbitration.
Thegrievanceprocedurereferstotheinternalrulesof
proceduresintendedtoresolveallissuesarisingfromthe

implementationandinterpretationoftheCBA.
EstablishedbythepartiesintheirCBA,thisgrievanceprocedure
leadstovoluntaryarbitrationasthefinalstep.Itispartofthe
continuousprocessofcollectivebargaining,whichintendedto
promotefriendlydialoguebetweenlaborandmanagementasa
meansofmaintainingindustrialpeace.