G.R. No. 114698 - Wellington Investment and Manufacturing Corp. vs. Trajano

Wellington Investment and Manufacturing Corporation (petitioner) operates an establishment known as Wellington Flour Mills and utilizes a fixed monthly compensation scheme for its employees through what is referred to as the "314 factor."
Respondents include Cresceniciano B. Trajano, Undersecretary of Labor and Employment, Elmer Abadilla, and thirty-four others, whose actions led to administrative orders imposing additional wage obligations.
The central controversy involves whether a monthly-paid employee, whose compensation is fixed using the "314 factor," is entitled to extra pay when a regular holiday falls on a Sunday.

On August 6, 1991, a Labor Enforcement Officer conducted a routine inspection of the petitioner’s establishment.
The inspection report, duly explained to and acknowledged by Wellington’s personnel manager, observed that regular holidays falling on Sundays had not been separately compensated for monthly-paid employees.
Based on the report’s finding—specifically the non-payment of what was deemed extra working days on such occasions—administrative scrutiny was initiated.

Wellington sought reconsideration of the Labor Inspector’s findings by submitting a letter on August 10, 1991, arguing that the fixed monthly salary inherently included holiday pay for all regular holidays.
The petitioner further elaborated its position in a position paper, asserting that the "314 factor" used for computing monthly salaries covers all working days as well as the 10 unworked regular holidays throughout the year.
Wellington maintained that no additional payment should be required since its compensation scheme fully accounted for all legally prescribed holidays.

The Regional Director, in an Order dated July 28, 1992, held that when a regular holiday falls on a Sunday, an extra working day is created and mandated the payment of extra compensation for such days—except for the last Sunday of August, whose holiday payment was deemed included in the 314 factor.
Wellington filed a motion for reconsideration on August 10, 1992, objecting to the imposition of additional pay for what it considered already compensated days.
The respondent Undersecretary, in an Order dated September 22, 1992, reinforced the Regional Director’s decision and later mandated payment for six extra working days covering the years 1988, 1989, and 1990.
Despite further motions for reconsideration by Wellington, the orders were sustained, leading the petitioner to file a special civil action of certiorari seeking to nullify the orders, with a temporary restraining order issued on July 4, 1994.

Under the Labor Code, every worker is entitled to receive his regular daily wage during regular holidays—even if no work is done—except in specified cases such as certain retail and service establishments.
Employees paid by the month must receive a minimum wage calculated as the statutory minimum wage multiplied by 365 days divided by 12, intended to cover all days in a month regardless of whether they are worked.
The "314 factor" adopted by Wellington deducts 51 Sundays from 365 days, purporting to cover the remaining 314 days, which include all regular as well as special holidays and other non-working days.

The Labor Enforcement Officer noted that in some years, two or three regular holidays coincided with Sundays, effectively depriving employees of a non-working day, and thus obliging the employer to compensate for an extra working day.
The Regional Director and subsequently the Undersecretary adopted this reasoning, contending that if a regular holiday falls on a Sunday, it creates an additional day of work.
Specifically, the Undersecretary argued that Wellington should have applied a "317 factor" in years where extra working days resulted (as in 1988, 1989, and 1990) rather than the "314 factor" it had consistently used.

Wellington argued that its method of salary computation was legally sound and comprehensive, covering every day of the year except the predetermined 51 Sundays.
It contended that the respondents’ insistence on additional compensation was unsupported by law, as there was no statutory basis for recalculating the number of compensable days beyond the 365-day framework.
The petitioner maintained that any adjustment to the monthly salary on the basis of holidays coinciding with Sundays would impose an impractical and unfounded administrative burden on employers.

Whether a monthly-paid employee, whose salary is fixed using the "314 factor," is entitled to additional pay when a regular holiday falls on a Sunday.
Whether the practice of deducting Sundays from the total number of days in a year (thereby using a "314 factor") adequately accounts for all legally mandated payments, including holiday pay.

Whether the orders issued by the Regional Director and the Undersecretary, which imposed additional pay for extra working days resulting from holidays falling on Sundays, are justified under existing labor legislation.
Whether the power granted to labor authorities under Section 2, Rule X of Book III of the Labor Code can be extended to re-compute monthly wages in a manner contrary to the statutory wage computation formula.

Whether the statutory provision that the monthly salary be computed as the statutory minimum wage multiplied by 365 divided by 12 inherently covers all days—including when regular holidays fall on Sundays.
Whether the respondents’ approach of effectively increasing the number of compensable days (e.g., asserting a "317 factor") is supported by, or in conflict with, the legislative intent underlying wage computation for monthly-paid employees.