Honda Phils. v. Samahan ng Malayang Manggagawa sa Honda
REITERATIONFacts
The Antecedents: Petitioner Honda Philippines, Inc. (Honda) and respondent union Samahan ng Malayang Manggagawa sa Honda (respondent union) had a Collective Bargaining Agreement (CBA) effective until the year 2000, containing provisions for 13th Month Pay, 14th Month Pay, and Financial Assistance. When CBA re-negotiations bogged down, the union filed a Notice of Strike due to bargaining deadlock, followed by Honda's Notice of Lockout. The DOLE Secretary assumed jurisdiction. Subsequently, the union filed a second Notice of Strike alleging unfair labor practice for contracting out work. The DOLE Acting Secretary again assumed jurisdiction and certified the case to the NLRC. The striking employees returned to work. On November 22, 1999, Honda issued a memorandum announcing a new computation for the 13th and 14th month pay, considering the 31-day strike as unworked days and deducting 1/12 of the basic salary from these bonuses, with a commitment to pay if the strike was declared legal. The union opposed this pro-rated computation. Procedural History: The matter was brought before the Grievance Machinery and then to Voluntary Arbitration. The Voluntary Arbitrator ruled that Honda's pro-rated computation of the 13th Month Pay, 14th Month Pay, and Financial Assistance was invalid and ordered the company to compute these provisions in full month basic pay. The Voluntary Arbitrator also affirmed the three-day suspension of twenty-one employees. Honda's Motion for Partial Reconsideration was denied. The case was elevated to the Court of Appeals, which affirmed the Voluntary Arbitrator's decision. Hence, the instant petition for review. The Petition: The Petition seeks the reversal of the Court of Appeals' decision, raising the sole issue of whether the pro-rated computation of the 13th month pay and other bonuses in question is valid and lawful.
Issue(s)
Whether the pro-rated computation of the 13th month pay, 14th month pay, and financial assistance is valid and lawful. Whether the phrase "present practice" in the CBA, concerning the 13th month pay, refers to the manner of payment or the computation thereof. Whether the established company practice of granting full benefits can be unilaterally withdrawn or modified by the employer, and the underlying principle of the 13th Month Pay Law and findings of labor officials.
Ruling
The petition is denied. The decision and resolution of the Court of Appeals affirming the Voluntary Arbitrator's decision are affirmed in toto.
Ratio Decidendi
On the validity of the pro-rated computation: The Court upheld the rulings of the Voluntary Arbitrator and the Court of Appeals, finding Honda's pro-rated computation of the 13th month pay, 14th month pay, and financial assistance to be invalid. The Court emphasized that a Collective Bargaining Agreement (CBA) is the law between the parties and its stipulations must be followed, provided they are not contrary to law, morals, good customs, public order, or public policy. In this case, the assailed CBA provisions were found to be ambiguous regarding the computation of these benefits. Article 1702 of the Civil Code mandates that ambiguities in labor contracts, including CBAs, should be resolved in favor of labor. The Court agreed with the appellate court that the computation of the 13th month pay should be based on the length of service and not on the actual wage earned by the worker, especially when there is no gap in the service of the workers during the calendar year in question, thus entitling them to the full benefit. On the interpretation of "present practice": The Court found the CBA provisions, particularly Section 3 regarding the 13th Month Pay stating the "COMPANY shall maintain the present practice in the implementation [of] the 13th month pay," to be ambiguous. Honda argued that "present practice" referred to the manner and requisites of payment (50% in May, 50% in December), while the union contended it related to the computation. The Voluntary Arbitrator resolved this ambiguity in favor of labor, a stance affirmed by the Court of Appeals and the Supreme Court. The Court noted that Honda explicitly accepted that the strike prompted the pro-rata computation, implicitly acknowledging that prior to the strike, a full month basic pay computation was the "present practice" intended to be maintained in the CBA. This implicit acceptance was further supported by the fact that Honda had not implemented any pro-rating of these benefits before the instant case, and affidavits from employees attested to receiving full benefits even during absences after exhausting leave credits. On the established company practice and unilateral withdrawal, the underlying principle of the 13th Month Pay Law and findings of labor officials: The Court affirmed that the established practice of granting full 13th month pay, 14th month pay, and financial assistance could not be unilaterally withdrawn or diminished by Honda. Citing jurisprudence, the Court reiterated that a company practice, especially one that is beneficial to employees and has been consistently followed, ripens into a vested right that cannot be peremptorily withdrawn without violating Article 100 of the Labor Code, which prohibits the employer from reducing or eliminating benefits or privileges granted to employees. The memorandum issued by Honda on November 22, 1999, was the first instance of implementing a pro-rating scheme, coinciding with the 31-day strike, which allowed them to devise a formula based on 11/12 of the annual salary. This was deemed an impermissible unilateral change to an established practice. The Court underscored that the 13th Month Pay Law (Presidential Decree No. 851) was enacted to protect the level of real wages from inflation and to alleviate the plight of workers, enabling them to properly celebrate the Christmas and New Year seasons. Allowing the pro-ration of this benefit in the present case would undermine the wisdom behind the law and the mandate that the workingman's welfare should be the primordial and paramount consideration. Furthermore, the Court noted that ruling otherwise would inevitably serve as a deterrent to workers from exercising their constitutional rights to self-organization and to strike. The Court reiterated its policy of giving great respect, if not finality, to the factual findings of labor officials, such as Voluntary Arbitrators and the National Labor Relations Commission, when supported by substantial evidence. Since both the Voluntary Arbitrator and the Court of Appeals arrived at the same conclusion, the Supreme Court found no reason to deviate from their findings.
Main Doctrine
The pro-rated computation of the 13th month pay, 14th month pay, and financial assistance, based on a strike period considered as unworked days, is invalid when the Collective Bargaining Agreement (CBA) provisions are ambiguous and the established company practice has been to grant these benefits in full. Ambiguities in CBA provisions are resolved in favor of labor, and established practices that are beneficial to employees cannot be unilaterally withdrawn.