G.R. No. L-74156 June 29, 1988
Globe Mackay Cable and Radio Corporation, Frederick White and Jesus Santiago, petitioners, vs. National Labor Relations Commission, FFW-Globe Mackay Employees Union and Eda Concepcion, respondents.

FACTS

Petitioner Globe Mackay complied with Wage Order No. 6 by paying its monthly-paid employees the mandated P3.00 daily cost-of-living allowance (COLA). In computing the monthly COLA, the company multiplied the daily rate by 22 days, which was the number of working days per month under its five-day work week schedule as established in its Collective Bargaining Agreement with respondent Union. The Union contested this computation, arguing that the daily COLA should be multiplied by 30 days, entitling employees to COLA even for unworked days like Saturdays, Sundays, and holidays. The Union further alleged that prior company practice was to compute the monthly COLA based on 30 days, constituting a benefit that could not be unilaterally withdrawn. The Labor Arbiter ruled in favor of the company, but the NLRC reversed, declaring the company guilty of illegal deductions and ordering payment of back allowances.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in ruling that the monthly COLA for petitioner’s monthly-paid employees must be computed based on 30 days per month instead of 22 working days.

RULING

The Supreme Court granted the petition and reversed the NLRC decision. The legal logic centered on the proper application of the implementing rules for the Wage Orders, particularly the principle of “No Pay, No ECOLA.” Section 5 of the Rules Implementing Wage Orders Nos. 2, 3, 5, and 6 provided that employees are entitled to their daily living allowance during days they are paid their basic wage, even if unworked. The Court emphasized that the entitlement to COLA is contingent upon the payment of basic wage for that day. Crucially, the CBA between the parties explicitly defined the regular work week as five days (or 22 days a month) and stipulated that the monthly basic salary covered only these working days. Therefore, since the employees’ basic wage was paid only for 22 days a month, COLA was mandated only for those same days. The company’s computation using the 22-day multiplier was correct.
The Court also rejected the claim that a past practice of using a 30-day multiplier created a vested right. It noted that prior to the issuance of clear administrative guidelines, the company’s earlier computation was a mistake in applying a doubtful question of law. Correcting this error to align with the CBA’s wage structure did not constitute an illegal diminution of benefits under Article 100 of the Labor Code, as the correction was a rectification of a past error, not a withdrawal of a properly established benefit. Consequently, the NLRC’s decision was set aside for having been rendered with grave abuse of discretion, and the Labor Arbiter’s decision was reinstated.