RFM Corporation vs. Kasapian ng Manggagawang Pinagkaisa-RFM

Daily-paid employees are entitled to their regular salaries on special holidays declared by the national government even if the holiday falls on a rest day, where Sec. 3, Art. XVI of the CBA plainly requires payment for days so declared without limiting payment to weekdays or workdays.

RFM Corporation is a domestic corporation engaged in flour-milling and animal feeds manufacturing. Its Flour Division and SFI Feeds Division dealt with their respective certified unions, Kasapian ng Manggagawang Pinagkaisa-RFM and Sandigan at Ugnayan ng Manggagawang Pinagkaisa-SFI, under collective bargaining agreements effective for five years from July 1, 2000 to June 30, 2005. Each CBA contained a similar Sec. 3, Art. XVI on special holidays with pay for daily-paid employees.

Sometime in 2000, RFM Corporation's Flour Division and SFI Feeds Division entered into separate collective bargaining agreements with Kasapian ng Manggagawang Pinagkaisa-RFM and Sandigan at Ugnayan ng Manggagawang Pinagkaisa-SFI, respectively, effective July 1, 2000 to June 30, 2005. Both CBAs contained a similar Sec. 3, Art. XVI providing that the company agrees to make payment to all daily-paid employees, at the regular rate, in respect of any of the days enumerated therein — Black Saturday, November 1, and December 31 — if declared as special holidays by the national government, with work beyond eight hours paid the standard ordinary premium.

During the first year of effectivity, December 31, 2000, which fell on a Sunday, was declared by the national government as a special holiday. Respondents claimed payment of their members' salaries for that day by invoking the CBA provision. Petitioner refused, averring that December 31, 2000 was not compensable because it was a rest day.

Because no payment followed, the controversy resulted in a deadlock. The parties thereafter submitted the dispute to voluntary arbitration and filed their respective position papers. The Voluntary Arbitrator found the CBA language clear and ordered payment of the December 31, 2000 salaries plus 10% attorney's fees, which findings the Court of Appeals sustained on appeal.

• Intent and Purpose of Provision: Petitioner insisted that the CBA provision was intended only to protect employees from reduction of take-home pay, hence it was not meant to remunerate them on Sundays, which are rest days, nor to increase their salaries.
• Evident Intention over Words: Petitioner invoked Kimberly Clark Philippines vs. Lorredo, arguing that whenever there is a conflict between the words in the CBA and the evident intention of the parties, the latter prevails.
• Unforeseen Situation: Petitioner maintained that the parties failed to foresee a situation where the special holiday would fall on a rest day.
• Attorney's Fees: Petitioner argued that the award was not warranted because it did not arbitrarily refuse to pay respondents' demands.

• Entitlement under CBA: Respondents claimed payment of their members' salaries for December 31, 2000 by invoking Sec. 3, Art. XVI of the CBAs.

• Coverage of Special Holiday Pay: Whether daily-paid employees are entitled to regular pay under Sec. 3, Art. XVI of the CBAs for December 31, 2000, a special holiday declared by the national government that fell on a Sunday rest day.
• Attorney's Fees: Whether the award of attorney's fees equivalent to 10% of the monetary award is warranted.

• Coverage of Special Holiday Pay: Yes. Payment was required because the CBA terms were clear and contained no weekday-only limitation, and unambiguous CBA terms must be given their literal meaning.
• Attorney's Fees: Yes. The award was sustained as just and equitable because respondents were compelled to litigate to satisfy a valid claim.

• Coverage of Special Holiday Pay: The literal meaning of clear CBA terms prevails where no doubt exists as to the contracting parties' intention. Sec. 3, Art. XVI requires payment to all daily-paid employees for the enumerated days if declared as special holidays by the national government, at the regular rate, without distinguishing between workdays and rest days. Had coverage been intended only for holidays falling on workdays or weekdays, it should have been clearly and expressly stipulated. Petitioner's reliance on Kimberly Clark Philippines vs. Lorredo was inapplicable, there being no words or provisions producing an absurd interpretation contrary to true intention. Moreover, any doubt in the interpretation of a provision affecting labor must be resolved in favor of labor, and holiday pay is not merely to prevent diminution of monthly income on account of work interruptions. The CBA, as the law between the parties, thus obliged payment regardless of the Sunday rest day.
• Attorney's Fees: Attorney's fees were sustained because respondents were compelled to engage counsel and litigate as a result of petitioner's failure to satisfy a valid claim. The award equivalent to 10% of the monetary award was deemed just and equitable under the circumstances.

• Literal interpretation of clear CBA — Where the terms of a CBA are clear and leave no doubt upon the intention of the contracting parties, the literal meaning thereof prevails. Applied to hold that Sec. 3, Art. XVI plainly required regular pay for enumerated days declared as special holidays, with no implied exclusion for rest days.
• CBA as law between the parties — A collective bargaining agreement constitutes the law between the contracting parties, who are obliged to comply with its provisions. Applied to enforce payment as stipulated without adding a weekday-only qualification not incorporated therein.
• Interpretation in favor of labor — In case of doubt in the interpretation of any law or provision affecting labor, it should be interpreted in favor of labor. Applied to reject petitioner's claim that the parties' failure to foresee a holiday falling on a rest day should defeat payment.
• Nature and purpose of holiday pay — Holiday pay is a legislated benefit enacted as part of the constitutional imperative of protection to labor, whose purpose is not merely to prevent diminution of monthly income on account of work interruptions. Applied to reject the contention that the provision merely protected take-home pay on workdays and could not apply to Sundays.
• Attorney's fees when compelled to litigate — Attorney's fees may be sustained as just and equitable where the claimant was compelled to litigate to enforce a valid claim. Applied to uphold the 10% award after petitioner's refusal forced respondents to pursue arbitration and appeal.

• "If the terms of a CBA are clear and have no doubt upon the intention of the contracting parties, as in the herein questioned provision, the literal meaning thereof shall prevail." — States the controlling rule of CBA interpretation upon which entitlement to special holiday pay was resolved.
• "The CBA is the law between the parties, hence, they are obliged to comply with its provisions." — Defines the binding effect of the CBA and bars reading in a weekday-only limitation the parties did not stipulate.
• "Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State shall afford protection to labor." — Grounds the pro-labor construction of the holiday-pay provision and its application to a rest day.
• "not merely "to prevent diminution of the monthly income of the workers on account of work interruptions. In other words, although the worker is forced to take a rest, he earns what he should earn, that is, his holiday pay."" — Clarifies the purpose of holiday pay to reject petitioner's take-home-pay-only theory.

• United Kimberly-Clark Employees Union-Philippine Transport General Workers' Organization (UKCEU-PTGWO) vs. Kimberly-Clark Philippines, Inc., G.R. No. 162957, March 6, 2006 — Followed as authority that clear CBA terms are given their literal meaning.
• Asian Transmission Corp. vs. Court of Appeals, G.R. No. 144664, March 15, 2004, 425 SCRA 478, 484-485 — Followed for the definition and purpose of holiday pay as more than mere prevention of diminution of income.
• TSPIC Corporation vs. TSPIC Employees' Union, et al., G.R. No. 163419, February 13, 2008, 545 SCRA 215, 225 — Followed for the rule that the CBA is the law between the parties.
• FAMIT vs. Court of Appeals, G.R. No. 164060, June 15, 2007, 524 SCRA 709, 717 — Followed for the rule that doubt in interpretation of labor provisions is resolved in favor of labor.
• Kimberly Clark Philippines vs. Lorredo, G.R. No. 103090, September 21, 1993, 226 SCRA 639 — Cited by petitioner for evident intention prevailing over words; held inapplicable by the Court of Appeals and the Supreme Court for lack of any absurd interpretation.

• Sec. 3, Art. XVI, CBAs — Provides payment at the regular rate to all daily-paid employees for Black Saturday, November 1, and December 31 if declared as special holidays by the national government; applied to require payment for December 31, 2000 despite falling on a Sunday.
• Labor Code — construction in favor of labor — Enjoins that doubt in the interpretation of any law or provision affecting labor be interpreted in favor of labor; applied to resolve the alleged unforeseen rest-day situation against the employer.
• Constitution — State protection to labor — Mandates State protection to labor as basis for holiday pay as a legislated benefit; applied to support the pro-labor reading of the CBA holiday-pay provision.

Leonardo A. Quisumbing, Dante O. Tinga, Presbitero J. Velasco, Jr., Arturo D. Brion