Oceanic Pharmacal Employees Union v. Inciong
REITERATIONFacts
The Antecedents: Oceanic Pharmacal Employees Union (FFW) and Oceanic Pharmacal, Inc. (OPI) had a collective bargaining agreement (CBA) effective from March 1, 1976, to February 28, 1979. On April 27, 1976, OPI confirmed in writing a supplementary agreement to continue extending emergency allowance to employees earning less than P1,000.00 monthly and holiday pay to monthly-salaried employees. On October 25, 1976, OPI posted a memorandum discontinuing the payment of holiday pay to regular employees, citing a proviso in the April 27, 1976 memo, Section 2, Rule IV, Book III of the Implementing Rules, Policy Instruction No. 9, and a decision in the Chartered Bank Case. Procedural History: The Union objected to the discontinuance of holiday pay. After an amicable settlement failed, the Union filed a complaint for unfair labor practice and violation of the CBA. The Labor Arbiter ordered OPI to resume payment of holiday pay. The National Labor Relations Commission (NLRC) dismissed OPI's appeal. The Minister of Labor, however, set aside the NLRC resolution and dismissed the case. The Petition: The Oceanic Pharmacal Employees Union (FFW) filed a petition for review of the decision of the Minister of Labor.
Issue(s)
Whether the Company may discontinue the holiday pay it agreed to give pursuant to its letter dated April 27, 1976, by invoking the last paragraph thereof. Whether the discontinuance of the holiday pay benefit is justified by Section 2, Rule IV, Book III of the Rules and Regulation Implementing the Labor Code and Policy Instructions No. 9 of the Minister of Labor.
Ruling
The decision of the Minister of Labor is reversed. The resolutions of the Labor Arbiter and the NLRC are reinstated, ordering the Company to resume payment of holiday pay.
Ratio Decidendi
On the issue of whether the Company may discontinue holiday pay by invoking the last paragraph of the supplementary agreement: The Court held that the Company cannot discontinue the holiday pay. The supplementary agreement, dated April 27, 1976, confirmed the continuation of holiday pay for monthly-salaried employees. The last paragraph stated that the benefits would continue "unless otherwise directed by other new requirements, rules, laws, decrees, etc. on the subject." However, the rules and policy instructions cited by the Company (Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions No. 9) were already existing and effective prior to the execution of the supplementary agreement. Therefore, when the Company agreed to continue giving holiday pay, it did so with full knowledge that these employees were not covered by the law requiring such payment. The condition in the supplementary agreement must have referred to laws, decrees, or rules enacted after the agreement, not those already in effect. On the justification for withdrawal based on Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions No. 9: The Court found no justification for the withdrawal of holiday pay benefits, even if the issuances were considered to have been promulgated after the agreement. This is because Section 11, Rule IV, Book III of the Implementing Rules and Regulations explicitly provides that "Nothing in this Rule shall justify an employer in withdrawing or reducing any benefits, supplements or payments for unworked holidays as provided in existing individual or collective agreement or employer practice or policy." The Court cited the case of States Marine Corporation v. Cebu Seaman's Association (G.R. No. L-12444, February 28, 1963; 7 SCRA 294) which, based on a similar provision in the Minimum Wage Law (R.A. No. 602), ruled that the Act did not justify an employer in reducing wages or supplements paid in excess of the minimum wage or provided in existing agreements. Consequently, the Company's violation of the Supplementary Agreement constituted unfair labor practice, as it is an unfair labor practice for an employer to violate a collective bargaining agreement.
Main Doctrine
An employer cannot unilaterally withdraw or reduce benefits, such as holiday pay, provided for in an existing collective bargaining agreement or supplementary agreement, even if subsequent implementing rules or policy instructions appear to allow such withdrawal, due to the explicit provision that nothing in the rules shall justify an employer in withdrawing or reducing benefits provided in existing agreements or practices.