G.R. No. 147420; June 10, 2004
CEZAR ODANGO, et al., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and ANTIQUE ELECTRIC COOPERATIVE, INC., respondents.

FACTS

Petitioners are monthly-paid employees of respondent Antique Electric Cooperative (ANTECO). Following a routine inspection, the Department of Labor and Employment (DOLE) found ANTECO liable for underpayment of wages and directed it to pay wage differentials. ANTECO failed to comply, prompting the employees to file complaints before the Labor Arbiter. The Labor Arbiter ruled in favor of the petitioners, ordering ANTECO to pay wage differentials. The Arbiter based his decision on Section 2, Rule IV, Book III of the Implementing Rules of the Labor Code, interpreting it to mean that monthly-paid employees are presumed paid for all 365 days in a year. He noted ANTECO’s use of 304 as a divisor for converting leave credits as an admission it paid for only 304 days annually.
The NLRC reversed the Labor Arbiter’s decision. It applied the formula from the same Implementing Rule to the lowest monthly wage at ANTECO and found the resulting daily rate exceeded the statutory minimum wage, concluding there was no underpayment. The NLRC also reasoned that using 304 as a divisor for leave conversions was actually favorable to employees. The Court of Appeals subsequently dismissed the petitioners’ appeal via a petition for certiorari for failure to comply with procedural rules, specifically for not alleging with particularity how the NLRC committed grave abuse of discretion.

ISSUE

The core issue is whether the petitioners are entitled to wage differentials based on the interpretation of the rules governing the computation of wages for monthly-paid employees.

RULING

The Supreme Court denied the petition and affirmed the dismissal. The Court clarified that the foundational legal provision both parties relied upon—Section 2, Rule IV, Book III of the Implementing Rules—had been declared void by the Court in the 1984 case of Insular Bank of Asia and America Employees’ Union (IBAAEU) v. Inciong. This void rule had presumed monthly-paid employees were paid for all days in the year, including unworked days. The Court admonished both parties’ counsel for building their entire case on an invalidated rule, noting this poor representation prolonged the litigation unnecessarily.
On the substantive claim, the Court upheld the NLRC’s finding of no underpayment. Absent the void implementing rule, the proper basis is the Labor Code itself and relevant issuances on minimum wage. The NLRC correctly computed the daily rate from the monthly salary and found it compliant with the minimum wage. The use of a 304-day divisor for leave conversions is a separate administrative matter that does not equate to an admission of paying for only 304 work days per year for wage purposes. The Court of Appeals’ dismissal on procedural grounds was also proper, as the petitioners’ failure to specify instances of grave abuse of discretion in their petition was a distinct and valid ground for dismissal separate from prior procedural lapses.