- The Supreme Court ruled that the Bureau of Customs can’t charge overtime pay of its personnel to private entities, including airlines
- This would be a violation of Republic Act No. 10863 or the Customs Modernization and Tariff Act, it said
- But the High Court ruled as valid a policy of three eight-hour shifts with night differential pay
The Bureau of Customs can’t charge overtime pay of its personnel to private entities, including airlines, as this would be a violation of Republic Act No. 10863 or the Customs Modernization and Tariff Act, according to the Supreme Court (SC).
The ruling is part of a 14-page en banc decision written by Justice Ricardo Rosario and promulgated on July 12 but only released on November 24, in which the High Court partially granted the petition for 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.
According to SC, the CMTA, which took effect on June 16, 2016 and repealed portions of the Tariff and Customs Code of the Philippines (TCCP), states that overtime work and other customs services should be paid by the bureau, according to service fees fixed by the Commissioner and approved by the Secretary of Finance.
This is in contract to Section 3506 of the TCCP, which states that overtime work should be paid for by importers, shippers or other persons served.
Since the CMTA took effect a few years after BOCEA’s petition was filed in 2013, the SC had ruled as invalid earlier Department of Finance (DOF) and BOC orders (issued from 2011 to 2012) that stopped the charging of overtime work of BOC personnel against private entities for violating the TCCP.
But the High Court ruled as valid the policy of three eight-hour shifts with night differential pay.
Customs Administrative Order (CAO) No. 7-2011 issued on July 15, 2011 provided a shifting schedule of three 8-hour shifts for continuous 24-hour service, applying the policy on night-shift differential pay.
According to the SC, the issuance of CAO 7-2011 was in response to an instruction from President Benigno Aquino, Jr, who had received a Department of Finance (DOF) report which “came to recognize that the payment by airline companies and other private entities of overtime pay rendered by government personnel was ‘a deterrent to the tourism industry,’ and was an ‘irregular activity’”. The DOF report followed a meeting with stakeholders and relevant government agencies.
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 DOF memo dated August 3, 2012.
The same DOF memo expressly prohibited any BOC personnel from charging overtime pay against private entities, charging them instead against the national government using government rates. It 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 (CMC) No. 195-2012.
On March 7, 2013, BOCEA challenged the four administrative issuances before the SC.
BOCEA questioned whether DOF and BOC committed grave abuse of discretion in issuing the administrative orders and memoranda laying down a policy of 24/7 shifting and of charging overtime work for Customs employees only against the government and not against private entities or airline companies.
BOCEA asserted the discontinuance of the practice of charging private entities for overtime work “has worsened the situation of the already economically dislocated customs personnel”, noting that the administrative issuances are unconstitutional, illegal and issued with grave abuse of discretion.
In partially granting BOCEA’s petition, the SC held that the exemption laid down in the administrative issuances in favor of private entities violates Section 3506 of the TCCP.
But the High Court ruled that the practice of charging private entities for overtime pay became prohibited upon effectivity of the CMTA on June 16, 2016, which codified the exemption in the assailed administrative issuances.
Thus, 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, the SC said.
“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.
It 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, the SC found the policy a valid exercise of the Executive Department’s ordinance-making power and thus should be upheld.
“In the exercise of executive control, the [then] 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.
Under CMO 10-2021, BOC’s working hours is from 8am-5pm, from Monday to Friday. For offices rendering 24 hour services, the regular eight-hours per work day will be in any of the four shift choices.
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