G.R. No. 79255 January 20, 1992
UNION OF FILIPRO EMPLOYEES (UFE), petitioner, vs. BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and NESTLÉ PHILIPPINES, INC. (formerly FILIPRO, INC.), respondents.

FACTS

This case involves a labor dispute concerning the entitlement to holiday pay and the proper divisor for computing benefits. Nestlé Philippines, Inc. (formerly Filipro, Inc.) filed a petition for declaratory relief with the NLRC regarding its obligations for holiday pay following the Chartered Bank decision. The parties submitted the case to voluntary arbitrator Benigno Vivar, Jr. His initial decision directed payment of holiday pay to monthly paid employees under Article 94 of the Labor Code. Nestlé sought clarification, specifically requesting the exclusion of sales personnel (salesmen, representatives, truck drivers, etc.) as field personnel under Article 82 and a change in the divisor from 251 to 261 days, arguing the old divisor led to overpayments for other benefits. The Union of Filipro Employees (UFE) opposed, contending sales personnel were not field personnel and the 251-day divisor was a vested benefit.
Arbitrator Vivar’s subsequent order ruled that the holiday pay award retroacted to November 1, 1974 (the Labor Code’s effectivity), but excluded sales personnel as field personnel and ordered the divisor changed to 261 days, requiring reimbursement for alleged overpayments. Both parties filed motions for reconsideration. The NLRC remanded the case, but Vivar declined jurisdiction due to his prior resignation. The case was elevated to the Supreme Court.

ISSUE

The issues are: (1) Whether Nestlé’s sales personnel are entitled to holiday pay; and (2) Whether the grant of holiday pay necessitates changing the divisor from 251 to 261 days and results in overpayments for other benefits.

RULING

The Supreme Court ruled that sales personnel are not entitled to holiday pay. Under Article 82 of the Labor Code, field personnel are excluded from holiday pay benefits. Field personnel are defined as non-agricultural employees who regularly perform duties away from the principal place of business and whose actual hours of work in the field cannot be determined with reasonable certainty. The Court agreed with the arbitrator’s finding that while sales personnel reported to the office at 8:00 a.m. and returned at 4:00 or 4:30 p.m., their actual hours spent in field work between these times could not be determined with reasonable certainty. The reporting requirement was a management prerogative for administrative control, not an effective means of supervising or ascertaining actual field hours. Therefore, they qualify as field personnel and are excluded from holiday pay.
On the divisor issue, the Court held that the divisor should remain 251 days. It applied the “operative fact” doctrine, recognizing that Nestlé, in good faith, relied on the then-valid implementing rules and policy instructions which did not require holiday pay for monthly paid employees prior to the Chartered Bank ruling. To impose retroactive liability to 1974 would be unduly harsh. The Court deemed it fair to make the holiday pay award effective from October 23, 1984, the date of the Insular Bank of Asia and America decision, which clarified the application of holiday pay. Consequently, there was no basis for changing the divisor to 261 days or ordering reimbursements for overpayments. The arbitrator’s order was modified to use the 251-day divisor and to compute holiday pay from October 23, 1984, while affirming the exclusion of sales personnel.