Union of Filipro Employees v. Benigno Vivar, Jr, et al.

Facts:
On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor
Relations Commission (NLRC) a petition for claims of its monthly paid employees for holiday pay.
Abitrator Vivar: Filipro to pay its monthly paid employees holiday pay pursuant to Art 94 of Labor Code,
subject to exclusions and limitations in Art 82.

Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2)
the exclusion of salesmen, sales representatives, truck drivers, merchandisers and medical
representatives (hereinafter referred to as sales personnel) from the award of the holiday pay, and (3)
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, that their sales personnel are not field personnel and are therefore entitled to holiday pay, and that
the use of 251 as divisor is an established employee benefit which cannot be diminished.
Arbitrator Vivar: On January 14, 1986, the respondent arbitrator issued an order declaring that the
effectivity of the holiday pay award shall retroact to November 1, 1974, the date of effectivity of the Labor
Code. He adjudged, however, that the companys sales personnel are field personnel and, as such, are
not entitled to holiday pay. He likewise ruled that with the grant of 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.

Issues:
1) Whether or not Nestles sales personnel are entitled to holiday pay; and

2) Whether or not, concomitant with the award of holiday pay, the divisor should be changed from 251 to
261 days and whether or not the previous use of 251 as divisor resulted in overpayment for overtime,
night differential, vacation and sick leave pay.

Held:
1. Sales personnel are not entitled to holiday pay.
Under Article 82, field personnel are not entitled to holiday pay. Said article 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.

The law requires that the actual hours of work in the field be reasonably ascertained. The company has
no way of determining whether or not these sales personnel, even if they report to the office before 8:00
a.m. prior to field work and come back at 4:30 p.m, really spend the hours in between in actual field work.

Moreover, the requirement that actual hours of work in the field cannot be determined with reasonable
certainty must be read in conjunction with Rule IV, Book III of the Implementing Rules which provides:

Rule IV Holidays with Pay

Sec. 1. Coverage This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose time and performance is unsupervised by the employer . . .
(Emphasis supplied)
Hence, in deciding whether or not an employees actual working hours in the field can be determined with
reasonable certainty, query must be made as to whether or not such employees time and performance is
constantly supervised by the employer.

2. The divisor in computing the award of holiday pay should still be 251 days.
While in that case the issue was whether or not salesmen were entitled to overtime pay, the same
rationale for their exclusion as field personnel from holiday pay benefits also applies.

The petitioner union also assails the respondent arbitrators ruling that, concomitant with the award of
holiday pay, the divisor should be changed from 251 to 261 days to include the additional 10 holidays and
the employees should reimburse the amounts overpaid by Filipro due to the use of 251 days divisor.

The 251 working days divisor is the result of subtracting all Saturdays, Sundays and the ten (10) legal
holidays from the total number of calendar days in a year. If the employees are already paid for all non-
working days, the divisor should be 365 and not 251.

In the petitioners case, its computation of daily ratio since September 1, 1980, is as follows:

monthly rate x 12 months / 251 days

The use of 251 days divisor by respondent Filipro indicates that holiday pay is not yet included in the
employees salary, otherwise the divisor should have been 261.

It must be stressed that the daily rate, assuming there are no intervening salary increases, is a constant
figure for the purpose of computing overtime and night differential pay and commutation of sick and
vacation leave credits. Necessarily, the daily rate should also be the same basis for computing the 10
unpaid holidays.

The respondent arbitrators 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 employees annual salary, should correspondingly be increased to incorporate the
holiday pay.
To illustrate, if prior to the grant of holiday pay, the employees annual salary is P25,100, then dividing
such figure by 251 days, his daily rate is P100.00 After the payment of 10 days holiday pay, his annual
salary already includes holiday pay and totals P26,100 (P25,100 + 1,000). Dividing this by 261 days,
the daily rate is still P100.00. There is thus no merit in respondent Nestles 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.
SC Decision:

The Court thereby resolves that the grant of holiday pay be effective, not from the date of promulgation of
the Chartered Bank case nor from the date of effectivity of the Labor Code, but from October 23, 1984,
the date of promulgation of the IBAA case (Insular Bank of Asia and America Employees Union (IBAAEU)
v. Inciong, where the court declared that Sec 2, Rule IV, Book III of IRR which excluded monthly paid employees
from holiday pay benefits, are null and void).
WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The divisor to be used in
computing holiday pay shall be 251 days. The holiday pay as above directed shall be computed from
October 23, 1984. In all other respects, the order of the respondent arbitrator is hereby AFFIRMED.