Nippon Paint Philippines v. Nippon Paint Philippines Employees Association
REITERATIONFacts
The Antecedents: In 2007, Nippon Paint Philippines, Inc. (petitioner) and Nippon Paint Philippines Employees Association (respondent) entered into a Collective Bargaining Agreement (CBA) effective from January 1, 2007, to December 31, 2011. This CBA stipulated that petitioner would pay its employees holiday remuneration for regular holidays and grant union members premium pay equivalent to 200% of their regular daily rate for unworked regular holidays, and 300% for worked regular holidays. In 2009, Republic Act No. 9849 declared Eid'l Adha a regular holiday. Petitioner's employees received additional holiday pay for Eid'l Adha in 2010 and 2011. However, upon the execution of a new CBA in 2012, Eid'l Adha was not included, and consequently, employees did not receive the corresponding holiday pay for that year. The respondent argued that the additional holiday pay for Eid'l Adha had ripened into a company practice and could not be unilaterally withdrawn, while the petitioner contended that the payments in 2010 and 2011 were system glitches that had been corrected. Procedural History: The dispute was referred to a Voluntary Arbitrator (VA) who, on October 31, 2014, ruled that the overpayment for Eid'l Adha was a system error and not an established grant that ripened into a benefit, though no refund was required. The respondent filed a Petition for Review with the Court of Appeals (CA) under Rule 43 of the Rules of Court. The CA, in its Decision dated July 18, 2016, granted the petition, set aside the VA's decision, and ruled that the grant of additional holiday pay for Eid'l Adha constituted a company practice from which employees had a vested right. The CA denied petitioner's Motion for Reconsideration in a Resolution dated November 28, 2016. The Petition: Petitioner Nippon Paint Philippines, Inc. filed this Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the CA's Decision and Resolution. Petitioner argues that the payments in 2010 and 2011 were due to a system error and that the exclusion of Eid'l Adha from the 2012 CBA clearly indicated the parties' intent not to include it. Petitioner also contends that two years is not a sufficient period for a practice to ripen into a company practice. The respondent, in its Comment, asserts that the CA correctly ruled that the grant of additional holiday pay for Eid'l Adha had ripened into a company practice, which could not be unilaterally withdrawn, and that the law on regular holidays, including Eid'l Adha, was deemed incorporated into the contract.
Issue(s)
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT AND ITS MEMBERS ARE ENTITLED TO AN ADDITIONAL 100% PAY IN 2012 AND 2013 FOR THE EIDUL ADHA HOLIDAY. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT HEREIN PETITIONER IS ENTITLED TO REFUND FOR THE PAYMENTS MADE IN 2010 AND 2011 FOR THE EIDUL ADHA HOLIDAY WERE ONLY DUE TO SYSTEM ERROR.
Ruling
The petition is denied. The Decision dated July 18, 2016 and the Resolution dated November 28, 2016 of the Court of Appeals in CA-G.R. SP No. 138130 are affirmed.
Ratio Decidendi
On the entitlement to additional holiday pay for Eidul Adha: The Court affirmed the ruling of the Court of Appeals that the employees are entitled to the additional holiday pay for Eidul Adha. The Court reiterated that holiday pay is a legislated benefit intended to protect labor and enable workers to participate in national celebrations. Under Article 94 of the Labor Code, employees are entitled to their regular daily wage during regular holidays, and those required to work receive at least 200% of their regular daily wage. The Court found that petitioner had been granting its employees holiday pay exceeding legal mandates, specifically paying 200% for unworked regular holidays and 300% for worked regular holidays. The consistent grant of additional holiday pay for Eidul Adha for two years (2010 and 2011) was deemed to have ripened into a company practice. This practice, being voluntary and deliberate, established a vested right for the employees that could not be diminished or withdrawn by the employer without violating the principle of non-diminution of benefits under Article 100 of the Labor Code. The Court emphasized that the source of this entitlement was company practice, not the CBA, making the exclusion of Eidul Adha from the 2012 CBA immaterial to the established practice. On the claim of system error and entitlement to refund: The Court rejected petitioner's claim that the payments in 2010 and 2011 were merely system errors and that it was entitled to a refund. The Court found it improbable that a company with meticulous annual financial audits would only discover such an alleged error after two years. The Court cited the case of Sevilla Trading Co. v. Semana where a similar claim of error was dismissed for lack of substantiation and the impossibility of discovering the error only after a significant period, especially with annual audits by public accountants. Petitioner failed to provide any evidence to support its claim of a system error, relying solely on its bare assertion. Therefore, the Court concluded that the payments were not due to a mere mistake but had ripened into a company practice, precluding any claim for refund.
Main Doctrine
The grant of additional holiday pay for Eidul Adha, having been consistently given for two years, ripened into a company practice and could no longer be withdrawn by the employer without violating the principle of non-diminution of benefits, irrespective of its exclusion in the Collective Bargaining Agreement.