SC ruling: Increase in overtime pay of customs personnel constitutional
September 27, 2011 at 10:53
THE Supreme Court has directed the Bureau of Customs (BOC) to immediately implement its administrative order requiring airline companies to increase the overtime pay and other allowances of customs personnel assigned at the Ninoy Aquino International Airport (Naia) by more than 100 percent.
Affected by the SC’s ruling are the members of the Board of Airlines (BAR)—such as Asiana Airlines, Cathay Pacific, Cebu Pacific, China Airlines, China Southern Airlines, Continental Micronesia Airlines, Emirates, Etihad Airways, Eva Air Airways, Federal Express Corp., Gulf Air, Japan Airlines, Air France-KLM Royal Dutch Airlines, Korean Air, Kuwait Airways Corp., Lufthansa German Airlines, Malaysia Airlines, Northwest Airlines, Philippine Airlines, Qantas Airlines, Qatar Airlines, Royal Brunei Airlines, Singapore Airlines, Swiss International Airlines, Saudi Arabian Airlines and Thai International Airways.
In its 28-page ruling penned by Associate Justice Antonio Carpio, the Court’s Second Division declared as constitutional Customs Administrative Order (CAO) 1-2005 which amended CAO 7-92.
Under CAO 7-92, the BOC officers and employees at Naia were to receive P30 to P38 hourly overtime pay, P50 traveling allowance per way and P50 allowance per meal.
Under CAO 1-2005, the hourly overtime pay of BOC officers and employees would range from P66 to P83, P110 flat rate for traveling allowance and P110 allowance per meal.
Concurring with the ruling were Associate Justices Arturo Brion, Mariano del Castillo, Jose Portugal Perez and Maria Lourdes Sereno.
Circular 7-92 mandated the airlines to pay for the overtime pay, traveling, board and lodging expenses and/or meal allowance of customs personnel at the Naia. The airlines were made to pay these charges directly to BOC personnel.
However, CAO 1-2005, approved by the Department of Finance on February 9, 2005, amended CAO 7-92 by increasing the rates of all the charges by more than 100 percent.
The SC reversed the decision issued by the Court of Appeals on October 26, 2010, which declared CAO 1-2005 as unconstitutional.
Both CAO 7-92 and 1-2005 were promulgated pursuant to Section 3506 of the Tariff and Customs Code of the Philippines (TCCP) which the appellate court also declared as “unenforceable” against the BAR members.
Section 3506 states that “customs officials may be assigned by a collector to do overtime work at rates fixed by the commissioner of Customs when the service rendered is to be paid for by importers, shippers, or other persons served.”
The term “other persons served,” according to the CA, is incomplete in terms and conditions, which the BOC took advantage of by including airline companies, aircraft owners and operators in the coverage of CAO 7-92 and CAO 1-2005.
The CA said Section 3506 of the TCCP and CAO 7-92 as amended by CAO 1-2005 constitute an undue delegation of legislative power.
It noted that under Section 8, Article IX (B) of the Constitution, an appointive public officer or employee “is prohibited from receiving additional, double or indirect compensation, unless specifically authorized by law.”
But, the SC disagreed with the CA in excluding airline companies, aircraft owners and operators from the coverage of Section 3506 of the TCCP.
The Court noted that the term “other persons served” refers to all other persons served by the customs employees.
“Airline companies, aircraft owners and operators are among other persons served by the BOC employees. As pointed out by the OSG, the processing of embarking and disembarking from aircrafts of passengers, as well as their baggage and cargoes, forms part of the BOC functions. BOC employees who serve beyond the regular office hours are entitled to overtime pay for the services they render,” the Court ruled.
Furthermore, the Court held that contrary to the ruling of the CA, customs employees rendering overtime services are not receiving double compensation for the overtime pay, travel and meal allowances provided for under CAO 7-92 and CAO 1-2005.
The Court explained that Section 3506 provides that the rates shall not be less than that prescribed by law to be paid to employees of private enterprise.
“The overtime pay, travel and meal allowances are payment for additional work rendered after regular office hours and do not constitute double compensation prohibited under Section 8, Article IX [B] of the 1987 Constitution as they are in fact authorized by law or Section 3506 of the TCCP,” the Court said.
The BAR, according to the SC, also cannot claim that it was denied due process in the imposition of the increase of the overtime rate because it, and the Airline Operators Council, participated in several meetings conducted prior to the issuance of the CAO 1-2005.
The BAR has been opposing the implementation of CAO 1-2205 claiming that it would aggravate the already high operating cost paid by the airlines which are still reeling from the impact of consecutive negative events, such as the severe acute respiratory syndrome, Iraqi war, avian flue and the unprecedented increase in fuel prices.
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By: Joel R. San Juan
Source: Business Mirror, Sept. 25, 2011
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