Customs Overtime Pay Dispute Ruling
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LouCustoms Overtime Pay Dispute Ruling
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LouSergio Carbonilla, et al. v Board of Airlines, et al.
G.R. 193247,
Sept. 14, 2011
FACTS:
Before the Court are two petitions for review assailing the Decision promulgated on 9
July 2009 by the Court of Appeals in CA-G.R. SP No. 103250.
In G.R. No. 193247, petitioners Sergio I. Carbonilla, Emilio Y. Legaspi IV, and Adonais
Y. Rejuso (Carbonilla, et al.) assail the Resolution promulgated on 5 August 2010 by the
Court of Appeals in CA-G.R. SP No. 103250.
In G.R. No. 194276, petitioners Office of the President, represented by Paquito N.
Ochoa in his capacity as Executive Secretary, Department of Finance, represented by
Cesar V. Purisima in his capacity as Secretary of Finance, and the Bureau of Customs
(BOC), represented by Angelito A. Alvarez in his capacity as Commissioner of Customs
(Office of the President, et al.), assail the Resolution promulgated on 26 October 2010
by the Court of Appeals in CA-G.R. SP No. 103250.
The Bureau of Customs issued and administrative order amending Customs
Administrative Order no. 1-2005 pursuant to Section 3506 in relation to Section 609 of
the Tariff and Customs Code of the Philippines.
Petitioners Office of the President, et al. alleged that prior to the amendment of CAO 7-
92, the BOC created a committee to review the overtime pay of Customs personnel in
NAIA and to propose its adjustment from the exchange rate of P25 to US$1 to the then
exchange rate of P55 to US$1.
Petitioners, Office of the President, alleged that for a period of more than two years from
the creation of the committee, several meetings were conducted with the agencies
concerned, including respondent Board of Airlines Representatives (BAR), to discuss the
proposed rate adjustment that would be embodied in an Amendatory Customs
Administrative Order.
Respondent, BAR, alleged that it learned of the proposed increase in the overtime rates
only sometime in 2004 and only through unofficial reports. BAR wrote letters to BOC-
NAIA and to the Secretary of Finance informing them of its objection to the proposed
increase in the overtime rates. BOC informed BAR that the Secretary of Finance already
approved CAO 1-2005 on 9 February 2005. As such, the increase in the overtime rates
became effective on 16 March 2005.
The BOC then sent a letter to BARs member airlines demanding payment of overtime
services to BOC personnel in compliance with CAO 1-2005. The BARs member airlines
refused and manifested their intention to file a petition with the Commissioner of
Customs and/or the Secretary of Finance to suspend the implementation of CAO 1-
2005.
ISSUE: Whether CAO 7-92 and Section 3506 of the Tariff and Customs Code on the
assignment of customs employees to overtime work valid.
RULING: YES. Section 3506 provides: “Customs employees 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 by the importers, shippers or other persons served. The rates to be fixed shall not be
less than that prescribed by law to be paid to employees of private enterprise.” The Supreme
Court disagreed with the CA in excluding airline companies, aircraft owners, and operators from
the coverage of Section 3506 of the TCCP. The term “other persons served” refers to all other
persons served by the BOC employees. Airline companies, aircraft owners, and operators are
among other persons served by the BOC employees. 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 SC also noted that the BOC created a
committee to re-evaluate the proposed increase in the rate of overtime pay and for two years,
several meetings were conducted with the agencies concerned to discuss the proposal. BAR
and the Airline Operators Council participated in these meetings and discussions. Hence, BAR
cannot claim that it was denied due process in the imposition of the increase of the overtime
rate.
