SC: Overtime Pay of Airport Personnel is not Chargeable to Private Airlines and Private Entities
November 26, 2022
In accordance with the Customs Modernization and Tariff Act, the overtime pay for airport personnel should be charged to the national government and not to airline companies and other private entities.
This was the ruling of the Supreme Court En Banc in a 14-page Decision written by Justice Ricardo R. Rosario. The Court partially granted the Petition for Certiorari and Injunction with Application for the Issuance of a Temporary Restraining Order filed by the Bureau of Customs Employees Association (BOCEA). The Petition sought to invalidate several issuances by former Customs Commissioner Rozzano Rufino Biazon and former Finance Secretary Cesar V. Purisima, which laid down a policy of three 8-hour shifts with night differential pay and of stopping the charging of overtime work against private entities.
On July 15, 2011, in response to concerns that the practice of charging airport personnel’s overtime pay to private entities was an irregular activity and a deterrent to the tourism industry, Customs Administrative Order (CAO) No. 7-2011 was issued, which provided a shifting schedule of three 8-hour shifts for continuous 24-hour service, applying the policy on night-shift differential pay.
The application of CAO No. 7-2011 was later expanded beyond the Ninoy Aquino International Airport and other international airports to seaports, pursuant to a Department of Finance (DOF) Memorandum dated August 3, 2012.
The same DOF Memorandum expressly prohibited any Bureau of Customs (BOC) personnel from charging overtime pay against private entities, charging them instead against the national government using government rates. The Memorandum also prohibited any personnel from accepting any direct or indirect payment from private entities for overtime work, including meals or transportation.
These policies were reiterated in a BOC Memorandum dated August 10, 2012 and Customs Memorandum Circular No. 195-2012.
On March 7, 2013, BOCEA challenged the four administrative issuances before the Supreme Court, asserting that the discontinuance of the practice of charging private entities for overtime work “has worsened the situation of the already economically dislocated customs personnel.”
In partially granting BOCEA’s petition, the Court held that the exemption laid down in the assailed administrative issuances in favor of private entities violates Section 3506 of the Tariff and Customs Code of the Philippines (TCCP). Under the TCCP, airline companies, importers, shippers, and other persons served are liable to pay overtime for services rendered by Customs employees.
However, upon the effectivity of RA 10863 or the Customs Modernization and Tariff Act on June 16, 2016, which codified the exemption in the assailed administrative issuances, the practice of charging private entities for overtime pay is now prohibited.
Hence, from the time the administrative issuances were implemented in 2012 and prior to June 16, 2016, all overtime pay for Customs employees must be charged against private entities served, not against the government.
“Because of the assailed administrative issuances, the national government was prejudiced to the extent of the overtime work it paid during the said four-year period. On the other hand, since their overtime work during the four-year period was already paid, albeit by the national government, Customs employees were prejudiced only to the extent of the difference—if any—between overtime rates in private enterprises and overtime rates actually paid to them by the Bureau [of Customs] during that time,” held the Court.
The Court also clarified that “[a]ny resulting monetary prejudice to the government or to petitioners is essentially evidentiary in nature and must be raised in the proper administrative and/or judicial proceeding.”
As to CAO No. 7-2011, which provides a shifting schedule of three 8-hour shifts for continuous 24-hour service to limit overtime work, the Court found that the policy was a valid exercise of the Executive’s ordinance-making power and thus should be upheld.
“In the exercise of executive control, the President has the inherent power to adopt rules and regulations and delegate this power to subordinate executive officials,” held the Court.
“Hence, We find the instructions to limit overtime work through a shifting schedule to be valid, reasonable, and not violative of any legal provision,” the Court concluded.
FULL TEXT of G.R. No. 205836 dated July 12, 2022 at: https://sc.judiciary.gov.ph/31430/