Republic of the Philippines SO ORDERED.

SUPREME COURT
Manila Presiding Commissioner of the NLRC, Diego P. Atienza, concurred in the result, while
Commissioner Cleto T. Villaltuya dissented and voted to affirm in toto the Labor Arbiter's
SECOND DIVISION Decision.

G.R. No. 74156 June 29, 1988 On 19 May 1986, we issued the Temporary Restraining Order enjoining respondents from
enforcing the assailed Decision. On 2 September 1987, we gave due course to the petition and
GLOBE MACKAY CABLE AND RADIO CORPORATION, FREDERICK WHITE and required the submittal of memoranda, by the parties, which has been complied with.
JESUS SANTIAGO, petitioners, 
vs. The facts follow:
NATIONAL LABOR RELATIONS COMMISSION, FFW-GLOBE MACKAY
EMPLOYEES UNION and EDA CONCEPCION, respondents. Wage Order No. 6, which took effect on 30 October 1984, increased the cost-of-living allowance
of non-agricultural workers in the private sector. Petitioner corporation complied with the said
Castillo, Laman, Tan & Pantaleon for petitioners. Wage Order by paying its monthly-paid employees the mandated P3.00 per day COLA. However,
in computing said COLA, Petitioner Corporation multiplied the P 3.00 daily COLA by 22 days,
Edwin D. Dellaban for private respondents. which is the number of working days in the company.

Respondent Union disagreed with the computation of the monthly COLA claiming that the daily
COLA rate of P3.00 should be multiplied by 30 days to arrive at the monthly COLA rate. The
union alleged furthermore that prior to the effectivity of Wage Order No. 6, Petitioner Corporation
MELENCIO-HERRERA, J.:
had been computing and paying the monthly COLA on the basis of thirty (30) days per month and
that this constituted an employer practice, which should not be unilaterally withdrawn.
A special civil action for certiorari with a prayer for a Temporary Restraining Order to enjoin
respondents from enforcing the Decision of 10 March 1986 of the National Labor Relations
After several grievance proceedings proved futile, the Union filed a complaint against Petitioner
Commission (NLRC), in NCR Case No. 1-168-85 entitled "FFW-Globe Mackay Employees
Corporation, its President, F. White, and Vice-President, J. Santiago, for illegal deduction,
Union, et al., vs. Globe Mackay Cable & Radio Corporation, et al.," the dispositive portion of
underpayment, unpaid allowances, and violation of Wage Order No. 6. Petitioners White and
which reads:
Santiago were sought to be held personally liable for the money claims thus demanded.

WHEREFORE, premises considered, the appealed Decision is as it is hereby

Labor Arbiter Adelaido F. Martinez sustained the position of Petitioner Corporation by holding
SET ASIDE and another one issued:
that since the individual petitioners acted in their corporate capacity they should not have been
impleaded; and that the monthly COLA should be computed on the basis of twenty two (22) days,
1. Declaring respondents-appellees (petitioners herein) guilty of illegal since the evidence showed that there are only 22 paid days in a month for monthly-paid employees
deductions of cost-of-living allowance; in the company. His reasoning, inter alia, was as follows:

2. Ordering respondents-appellees to pay complainants-appellants their back To compel the respondent company to use 30 days in a month to compute the
allowances reckoned from the time of illegal deduction; and allowance and retain 22 days for vacation and sick leave, overtime pay and
other benefits is inconsistent and palpably unjust. If 30 days is used as divisor,
3. Ordering respondents-appellees from further illegally deducting the then it must be used for the computation of all benefits, not just the allowance.
allowances of complainants-appellants.
 But this is not fair to complainants, not to mention that it will contravene the Art. XV(a)—Eight net working hours shall constitute the regular work day for
provision of the parties' CBA. five days.

On appeal, the NLRC reversed the Labor Arbiter, as heretofore stated, and held that Petitioner Art. XV(b)—Forty net hours of work, 5 working days, shall constitute the
Corporation was guilty of illegal deductions, upon the following considerations: (1) that the P3.00 regular work week.
daily COLA under Wage Order No. 6 should be paid and computed on the basis of thirty (30) days
instead of twenty-two (22) days since workers paid on a monthly basis are entitled to COLA on Art. XVI, Sec. 1(b)—All overtime worked in excess of eight net hours daily or
Saturdays, Sundays and legal holidays "even if unworked;" (2) that the full allowance enjoyed by in excess of 5 days weekly shall be computed on hourly basis at the rate of time
Petitioner Corporation's monthly-paid employees before the CBA executed between the parties in and one half.
1982 constituted voluntary employer practice, which cannot be unilaterally withdrawn; and (3) that
petitioners White and Santiago were properly impleaded as respondents in the case below.
The Labor Arbiter also found that in determining the hourly rate of monthly paid employees for
purposes of computing overtime pay, the monthly wage is divided by the number of actual work
Hence, this Petition, anchored on the charge of grave abuse of discretion by the NLRC. days in a month and then, by eight (8) working hours. If a monthly-paid employee renders
overtime work, he is paid his basic salary rate plus one-half thereof. For example, after examining
We are constrained to reverse the reversal. the specimen payroll of employee Jesus L. Santos, the Labor Arbiter found:

Section 5 of the Rules Implementing Wage Orders Nos. 2, 3, 5 and 6 uniformly read as follows: the employee Jesus L. Santos, who worked on Saturday and Sunday was paid
base pay plus 50% premium. This is over and above his monthly basic pay as
Section 5. Allowance for Unworked Days. supported by the fact that base pay was paid. If the 6th and 7th days of the week
are deemed paid even if unworked and included in the monthly salary, Santos
should not have been paid his base pay for Saturday and Sunday but should
All covered employees shall be entitled to their daily living allowance during
have received only the 50% overtime premium.
the days that they are paid their basic wage, even if unworked. (Emphasis
supplied)
Similarly, the specimen payrolls of employees, Dennis Dungon and Rene Sanvictores, showed that
in computing the vacation and sick leaves of the employees, Petitioner Corporation consistently
The primordial consideration, therefore, for entitlement to COLA is that basic wage is being paid.
used twenty-two (22) days.
In other words, the payment of COLA is mandated only for the days that the employees are paid
their basic wage, even if said days are unworked. So that, on the days that employees are not paid
their basic wage, the payment of COLA is not mandated. As held in University of Pangasinan Under the peculiar circumstances obtaining, therefore, where the company observes a 5-day work
Faculty Union vs. University of Pangasinan, L-63122, February 20, 1984, 127 SCRA 691): week, it will have to be held that the COLA should be computed on the basis of twenty two (22)
days, which is the period during which the monthly-paid employees of Petitioner Corporation
receive their basic wage. The CBA is the law between the parties and, if not acceptable, can be the
... it is evident that the intention of the law is to grant ECOLA upon the payment
subject of future re-negotiation.
of basic wages. Hence, we have the principle of 'No Pay, No ECOLA.
2) Payment in full by Petitioner Corporation of the COLA before the execution of the CBA in
Applied to monthly-paid employees if their monthly salary covers all the days in a month, they are
1982 and in compliance with Wage Orders Nos. 1 (26 March 1981) to 5 (11 June 1984), should not
deemed paid their basic wages for all those days and they should be entitled to their COLA on
be construed as constitutive of voluntary employer practice, which cannot now be unilaterally
those days "even if unworked," as the NLRC had opined. Peculiar to this case, however, is the
withdrawn by petitioner. To be considered as such, it should have been practiced over a long
circumstance that pursuant to the Collective Bargaining Agreement (CBA) between Petitioner
period of time, and must be shown to have been consistent and deliberate. Adequate proof is
Corporation and Respondent Union, the monthly basic pay is computed on the basis of five (5)
wanting in this respect. The test of long practice has been enunciated thus:
days a week, or twenty two (22) days a month. Thus, the pertinent provisions of that Agreement
read:
 ... Respondent Company agreed to continue giving holiday pay knowing fully With the conclusions thus reached, there is no further need to discuss the liability of the officers of
well that said employees are not covered by the law requiring payment of Petitioner Corporation.
holiday pay.' (Oceanic Pharmacal Employees Union [FFW] vs. Inciong, L-
50568, November 7, 1979, 94 SCRA 270). (Emphasis ours) WHEREFORE, certiorari is granted, the Decision of the National Labor Relations Commission,
dated 10 March 1986, is SET ASIDE, and the Decision of the Labor Arbiter, dated 9 May 1985, is
Moreover, before Wage Order No. 4, there was lack of administrative guidelines for the hereby REINSTATED. The Temporary Restraining Order heretofore issued is hereby made
implementation of the Wage Orders. It was only when the Rules Implementing Wage Order No. 4 permanent.
were issued on 21 May 1984 that a formula for the conversion of the daily allowance to its
monthly equivalent was laid down, thus: SO ORDERED.

Section 3. Application of Section 2-- Yap, C.J., Paras, and Sarmiento, JJ., concur.

xxx xxx xxx Padilla, J., took no part.

(a) Monthly rates for non-agricultural workers covered Under PDs 1614, 1634,

1678 and 1713:

xxx xxx xxx

(3) For workers who do not work and are not considered paid on Saturdays and
Sundays:

P60 + P90 + P60 + (P2.00 x 262) divided by 12 = P 253.70 (Emphasis ours)

As the Labor Arbiter had analyzed said formula:

Under the aforecited formula/guideline, issued for the first time, when applied
to a company like respondent which observes a 5-day work week (or where 2
days in a week, not necessarily Saturday and Sunday, are not considered paid),
the monthly equivalent of a daily allowance is arrived at by multiplying the
daily allowance by 262 divided by 12. This formula results in the equivalent of
21.8 days in a month.

Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous
application of the law. Payment may be said to have been made by reason of a mistake in the
construction or application of a "doubtful or difficult question of law." (Article 2155, 1 in relation
to Article 2154 2 of the Civil Code). Since it is a past error that is being corrected, no vested right
may be said to have arisen nor any diminution of benefit under Article 100 of the Labor Code 3 may
be said to have resulted by virtue of the correction.