G.R. No. 118289 - Trans-Asia Phils. Employees Association vs. National Labor Relations Commission

On July 7, 1988, Trans-Asia Philippines Employees Association (TAPEA), the duly recognized collective bargaining agent representing the monthly-paid rank-and-file employees of Trans-Asia (Phils.), entered into a CBA with the employer.
The CBA was intended to be effective from April 1, 1988, to March 31, 1991, and among other provisions, it stipulated a mechanism for paying holiday pay. In cases where an employee worked on a legal holiday, the employee would receive 200% of the regular daily wage plus an additional 60% premium pay.

Despite the execution of the CBA, an unresolved issue concerned the payment of holiday pay in arrears covering the period from January 1985 to December 1987.
The parties attempted preventive mediation through meetings facilitated by the National Mediation and Conciliation Board. However, no amicable settlement was reached.

On August 18, 1988, TAPEA, led by its President Arnel Galvez, filed a complaint before the labor arbiter seeking payment of the overdue holiday pay.
On September 18, 1988, petitioners amended the complaint to include claims for holiday pay during the CBA period (1988–1991), allegations of unfair labor practice, damages, and attorney’s fees.
In their argument, petitioners advanced various evidence:

The Trans-Asia Employees’ Manual, which set a pre-condition for holiday pay—that an employee must have worked or been on authorized leave with pay on the day preceding the legal holiday.
Appointment papers of the employees, which did not indicate that holiday pay was incorporated in the monthly compensation.
The generous provision in the CBA for a holiday pay rate (200% plus 60% premium) was contended as evidence that earlier practice did not include separate holiday pay.

Holiday pay was already incorporated in the monthly salary computation, as evidenced by their consistent use of a “286 days divisor” which implicitly included the effect of the ten (10) legal holidays.
The computation method (286 days divisor) was based on established company practice and reached by deducting the unworked 52 Sundays and 26 half-day Saturdays from the 365 calendar days.
The inclusion of a holiday pay provision in the CBA was a reaffirmation of compliance with the Labor Code’s mandates, not an admission of default for previous periods.

The Labor Arbiter rendered a decision on February 13, 1989, dismissing the complaint by affirming that:

There was no clear written or verbal agreement that holiday pay was outside the monthly salary.
Consistency in the use of the 286 days divisor, without conflicting computations as seen in other cases (e.g., the Chartered Bank case), suggested that holiday pay was incorporated.

The National Labor Relations Commission (NLRC) affirmed the labor arbiter’s decision by issuing resolutions:

A resolution dated November 23, 1993, dismissing the petitioners’ appeal.
A resolution dated September 13, 1994, denying the petitioners’ motion for reconsideration.

Acted with grave abuse of discretion by relying solely on the “286 days divisor” evidence.
Violated the constitutional mandate to resolve any ambiguity in favor of labor by not declaring an ambiguity in Trans-Asia’s payment method.

The Court, citing substantial evidence and prior case precedents, ultimately upheld the decisions with a modification requiring Trans-Asia to adjust its divisor to 287 days solely for computations affecting deductions (and not to reduce overtime pay, holiday pay, or benefits).

Whether the method of computing monthly salary using the “286 days divisor” by Trans-Asia, which implicitly incorporates the payment of holiday pay, is supported by substantial evidence.

The central contention was whether the practice of using the “286 days divisor” actually paid for the legal holiday pay or whether holiday pay is a separate benefit.
Petitioners argued that indications in the Employees’ Manual and their appointment papers, as well as the generous holiday pay clause in the CBA, suggested non-inclusion of holiday pay in the monthly salary.

Whether the NLRC and the Labor Arbiter erred in holding that there was no ambiguity in the method of computation and that holiday pay had already been paid through the established payroll practice.

Petitioners asserted that the solitary reliance on Trans-Asia’s consistent computation practice (using the divisor) amounted to a grave abuse of discretion.
They further contended that any ambiguity in determining the true nature of holiday pay should be resolved in favor of the labor according to the constitutional mandate in social legislation.

Whether adjusting the divisor from 286 to 287 days, for computing deductions related to absences, is proper and does not diminish the employees’ statutory benefits.

The issue also involved balancing the non-diminution of benefits versus providing a fair computation mechanism that accurately accounts for legal and special holidays as prescribed by Executive Order No. 203 and related statutes.