University of Santo Tomas Faculty Union v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: A labor dispute arose between the University of Santo Tomas (UST) and the UST Faculty Union concerning the faculty members' share in tuition fee increases under Presidential Decree No. 451. The parties entered into an agreement on March 25, 1985, stipulating that UST would grant additional benefits totaling P35,000,000.00 over three school years (1985-1988). This included Christmas gifts of P2,000.00 for full-time faculty and P1,000.00 for part-time faculty for School Year 1985-1986, and salary increases and similar benefits for subsequent years. UST had not previously paid 13th month pay, as its faculty members earned more than P1,000.00 monthly, exempting UST under P.D. No. 851. However, Memorandum Order No. 28 (August 13, 1986) amended P.D. No. 851, requiring all employers to pay rank-and-file employees a 13th month pay. Procedural History: The controversy arose when faculty members apprehended that the 13th month pay would be reduced by deducting the Christmas gift. UST's legal counsel opined that the Christmas gift could be credited as compliance. The union disagreed, asserting the gift was part of the P35 million obligation and not a bonus. The union filed a complaint with the NLRC. The Labor Arbiter dismissed the complaint, ruling the Christmas gift was an equivalent of the 13th month pay. The NLRC affirmed this decision on appeal, and a motion for reconsideration was denied. Separately, individual faculty members filed complaints with the Grievance Adjudication Committee, which ruled that the Christmas gift was part of the P35 million settlement and not creditable to the 13th month pay. UST refused to accept this judgment. The Petition: The UST Faculty Union filed a petition for certiorari with the Supreme Court, seeking to set aside the NLRC's decision and compel UST to pay the full 13th month pay without deduction of the Christmas gift.
Issue(s)
Whether the Christmas gift provided for in the March 25, 1985 Agreement can be considered as compliance with the 13th month pay requirement under P.D. No. 851, as amended by Memorandum Order No. 28. Whether the NLRC committed grave abuse of discretion in affirming the Labor Arbiter's decision dismissing the union's complaint.
Ruling
The petition is GRANTED. The decision of the NLRC dated August 23, 1989, and its resolution dated September 29, 1989, are SET ASIDE. UST is DIRECTED to pay its faculty members 13th month pay in accordance with P.D. No. 851, as amended by Memorandum Order No. 28, and the Christmas gift under the Agreement dated March 25, 1985, for the years 1986 and 1987.
Ratio Decidendi
On whether the Christmas gift can be considered compliance with the 13th month pay: The Court held that the Christmas gift, as stipulated in the March 25, 1985 Agreement, cannot be credited as compliance with the 13th month pay requirement. The Court distinguished the Christmas gift from a bonus, emphasizing that it was part of the P35 million obligation UST undertook to pay its faculty members in settlement of their claims for a share in tuition fee increases under P.D. No. 451. The Court reiterated the principle established in National Federation of Sugar Workers (NFSW) v. Ovejera, Dole Philippines, Inc. v. Leogardo, Jr., and Brokenshire Memorial Hospital, Inc. v. NLRC, that employers are not required to pay a "double burden" if they are already providing the equivalent of a 13th month pay. However, the Court found that the Christmas gift in this case was not a bonus or additional income but a partial payment of a pre-existing obligation arising from the tuition fee increase settlement. Therefore, it did not fall under the definition of "equivalent" as contemplated by the implementing rules of P.D. No. 851, which include Christmas bonuses, mid-year bonuses, profit-sharing payments, and other cash bonuses. The Court cited United CMC Textile Workers Union v. Valenzuela to support the idea that if the purpose of a payment is different from that of the 13th month pay (which is to uniformly provide low-paid employees with additional income), then both may be required. In this instance, the Christmas gift was part of a compromise package for tuition fee increases, a purpose distinct from the additional income intended by P.D. No. 851. Consequently, UST was obligated to pay both the 13th month pay mandated by law and the Christmas gift as per their agreement. On whether the NLRC committed grave abuse of discretion: The Court found that the NLRC committed grave abuse of discretion when it affirmed the Labor Arbiter's decision dismissing the union's complaint. The NLRC's ruling that the Christmas gift was an equivalent of the 13th month pay was based on a misapplication of the law and jurisprudence to the specific facts of the case. The Court emphasized that the nature of the Christmas gift, as part of a settlement agreement for tuition fee increases and not a voluntary bonus or additional income, was not properly considered. The Grievance Adjudication Committee, composed of representatives from both UST and the union, had previously ruled that the Christmas gift was not a bonus creditable to the 13th month pay, a finding that UST refused to honor. The NLRC's affirmation of the Labor Arbiter's contrary conclusion, despite the clear distinction between the Christmas gift and a bonus, constituted a capricious and whimsical exercise of judgment amounting to grave abuse of discretion. The Court's directive to UST to pay both the 13th month pay and the Christmas gift for the specified years underscores the reversal of the NLRC's erroneous disposition.
Main Doctrine
The Christmas gift, as part of a lump sum agreed upon as settlement for tuition fee increases, is not an 'equivalent' of the 13th month pay under P.D. No. 851, as amended. Therefore, an employer must pay both the 13th month pay and the Christmas gift if the latter is not a bonus or additional income but a component of a prior obligation.