In 2009, Republic Act No. (RA) 9849 was enacted into law declaring the celebration of Eidul Adha as a regular holiday.

The holiday falls on the tenth day of Zhul Hijja, the twelfth month of the Islamic Calendar. It is the tenth day in the month of Hajj or Islamic Pilgrimage to Mecca wherein Muslims pay homage to Abraham’s supreme act of sacrifice and signifies mankind’s obedience to God.

What are the rules governing payment of holiday pay?

Under Article 94 of the Labor Code of the Philippines (Labor Code), every worker shall be paid his/her regular daily wage during regular holidays. Employees covered by the holiday pay shall be paid their regular daily wages during the regular holiday even if no work is rendered. Thus, an employee must receive 100% of his/her daily wage even if he/she does not work on a regular holiday. This rule is subject to the qualification that the employee must be present, or on leave of absence with pay on the working day immediately preceding the regular holiday to be entitled to the holiday pay. Thus, an employee who is on leave of absence without pay on the day immediately preceding a regular holiday may not be paid the required holiday pay if he/she has not worked on such regular holiday.

On the other hand, an employee who is required to work on a regular holiday shall be paid at least 200% of his/her regular daily wage with the qualification that if the holiday work falls on the scheduled rest day of the employee, he/she shall be entitled to all additional premium of at least 30% of his/her regular holiday rate of 200% based on his/her regular wage rate. The employee is also entitled to additional pay for work performed in excess of eight hours on a regular holiday.

What happens when the company has a collective bargaining agreement (CBA) with its employees covering the payment of holiday pay for Eid’l Adha even prior to the enactment of RA 9849 in 2009? Is this considered to have ripened into company policy?

As a rule, employees have a vested right over existing benefits voluntarily granted to them by their employer. Any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued, or eliminated by the employer. The principle of non-diminution of benefits under Article 100 of the Labor Code is actually founded on the constitutional mandate to protect the rights of workers, promote their welfare, and afford them full protection. In turn, Article 4 of the Labor Code states that “[a]ll doubts in the implementation and interpretation of this Code, including its implementing rules and regulations, shall be rendered in favor of labor.”

There is diminution of benefits “when the following requisites are present: (1) the grant or benefit is founded on a policy or has ripened into a practice over a long period of time; (2) the practice is consistent and deliberate; (3) the practice is not due to error in the construction or application of a doubtful or difficult question of law; and (4) the diminution or discontinuance is done unilaterally by the employer.”

The Court ruled that it already ripened into company policy. Hence, the employees are entitled to the better pay formula contained in the CBA.

The Court is not convinced that the company merely erred in granting the additional holiday pay for Eidul Adha considering that the company has a meticulous financial audit every year. Thus, a yearly audit of company’s finances particularly in the years 2010 and 2011 as reflected in its financial statements should have made the purported error evident to the company. And yet, the company did not immediately rectify the purported error as it took two years for the company to stop the grant of the additional holiday pay for Eidul Adha. Further, the company’s allegation that it only discovered the error in the payment of additional holiday pay for Eidul Adha is unsubstantiated by any evidence.

The Court finds as immaterial to the case the fact that Eidul Adha was not included in the 2012 CBA’s list of regular holidays for which the company’s employees would receive additional holiday pay. The source of the entitlement of company’s employees to the subject additional benefit is not the CBA but company practice.

Nippon Paint Philippines v. Nippon Paint Philippines Employees Association. G.R. No. 229396, June 30, 2021