Title
Globe Mackay Cable vs. National Labor Relations Commission
Case
G.R. No. 74156
Decision Date
Jun 29, 1988
Dispute over COLA computation: union claimed 30-day basis, company used 22 days per CBA. SC ruled in favor of 22-day computation, rejecting prior practice claim, reinstating Labor Arbiter's decision.
dispute
computation
ruling
A

Case Summary (G.R. No. 74156)

Key Dates and Procedural Posture

Wage Order No. 6 took effect 30 October 1984. The Labor Arbiter rendered decision on 9 May 1985 in favor of the employer. The NLRC issued its decision on 10 March 1986 reversing the Labor Arbiter. The Supreme Court issued a Temporary Restraining Order on 19 May 1986 and thereafter, after full briefing, rendered the dispositive decision reinstating the Labor Arbiter’s ruling and setting aside the NLRC decision.

Applicable Law and Regulatory Framework

The relevant legal authorities cited and applied are: the Rules Implementing Wage Orders Nos. 2, 3, 5 and 6 (Section 5: “Allowance for Unworked Days”); Wage Orders Nos. 1–6; the Rules Implementing Wage Order No. 4 which provides a conversion formula for daily to monthly rates (including the 262/12 calculation); Civil Code Arts. 2154 and 2155 (recovery of undue payments and payments made by mistake of law); and Article 100 of the Labor Code (prohibition against elimination or diminution of benefits). The decision was rendered under the constitutional and statutory environment applicable at the time of decision.

Material Facts

Wage Order No. 6 mandated a daily COLA of P3.00 for covered non‑agricultural workers. Petitioners computed the monthly COLA by multiplying P3.00 by 22 (their company’s recognized number of paid working days for monthly‑paid employees, reflecting a five‑day workweek). The Union contended the correct multiplier is 30 days (arguing that monthly‑paid employees should receive COLA on Saturdays, Sundays and legal holidays “even if unworked”), and alleged that the employer’s prior computation on a 30‑day basis constituted an established employer practice that could not be unilaterally withdrawn. After grievance procedures failed, the Union filed a complaint for illegal deduction, underpayment and unpaid allowances, also impleading corporate officers as personally liable.

Labor Arbiter and NLRC Findings

The Labor Arbiter sustained petitioners’ method, holding that the company’s monthly basic pay and payroll practice demonstrated that monthly compensation covered 22 paid days and that COLA should be computed on that basis; the Arbiter also concluded that the corporate officers were improperly impleaded because they acted in corporate capacity. The NLRC reversed, concluding that (1) monthly COLA must be computed on a 30‑day basis because monthly workers are entitled to COLA on Saturdays, Sundays and legal holidays even if unworked; (2) the employer’s prior practice of paying the full allowance on a 30‑day basis before the 1982 CBA amounted to a voluntary employer practice that could not be withdrawn unilaterally; and (3) the corporate officers were properly impleaded and may be personally liable.

Legal Issues Presented

  1. Whether the COLA mandated by Wage Order No. 6 should be computed on a 22‑day or 30‑day monthly basis for monthly‑paid employees of petitioners.
  2. Whether prior payment of full COLA before the 1982 CBA established a non‑withdrawable employer practice.
  3. Whether corporate officers were properly impleaded and liable personally for the monetary claims.

Supreme Court’s Legal Reasoning — Entitlement Principle (“No Pay, No ECOLA”)

The Court emphasized the rule in Section 5 of the Rules Implementing the Wage Orders: the COLA is payable “during the days that they are paid their basic wage, even if unworked.” The controlling criterion is payment of basic wage: COLA is mandated only for days on which the employee is paid basic wage. For monthly‑paid employees, had the monthly salary covered all days in a calendar month, COLA would be computed on that basis; but where the parties’ Collective Bargaining Agreement (CBA) expressly computes monthly basic pay on the basis of a five‑day workweek (forty hours, five working days, 22 days per month), the monthly basic wage is only for those 22 paid days. Because the CBA defines the pay period and is binding between the parties, the COLA must be computed on the basis of the days for which basic wage is actually paid — 22 days in this instance.

Supreme Court’s Reasoning — Employer Practice and Administrative Guidelines

The Court rejected the NLRC’s finding that prior payment on a 30‑day basis before the 1982 CBA constituted an entrenched employer practice immune from unilateral withdrawal. To qualify as a binding employer practice, payment must be shown to have been consistent, deliberate, and of long standing; adequate proof of such a sustained practice was lacking. The Court also noted that prior to issuance of implementing rules (notably the Rule under Wage Order No. 4) there were no clear administrative guidelines for converting daily allowances into monthly equivalents; the later formula (involving 262/12 producing an equivalent of about 21.8 days per month for certain five‑day workweek situ

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