[ G.R. No. 229396, June 30, 2021 ]
NIPPON PAINT PHILIPPINES, INC., PETITIONER, VS. NIPPON PAINT PHILIPPINES EMPLOYEES ASSOCIATION [NIPPEA], RESPONDENT.
CONCURRING OPINION
LEONEN, J.:
No definite period is prescribed for when the payment of benefits is deemed a company practice. Indeed, it can be as short as two years, so long as this practice is consistent, deliberate, and customary. Once benefits have ripened into company practice, the employer cannot unilaterally withdraw it, consistent with the policy of non-diminution of benefits.
Thus, I concur in the ponencia.
The controversy here centers on whether the premium for Eid'l Adha, a regular holiday, should continue to be granted to employees of Nippon Paint Philippines, Inc. (Nippon). The Nippon Paint Philippines Employees Association (NIPPEA) maintains that the employees are so entitled, but Nippon insists that they are not.
The 2007 Collective Bargaining Agreement between Nippon and NIPPEA contained a provision for an additional premium for holidays.1 Per the agreement, Nippon will pay its employees an additional 100% premium on regular holidays. Employees will receive 200% of their regular daily rate on unworked regular holidays and 300% of their regular daily rate on worked regular holidays.2 The provision states:
Article 13. HOLIDAYS, OVERTIME AND NIGHT WORK
Section 1. The Company agrees to pay all employees without actually working their respective daily rates on regular holidays every year which is hereunder enumerated as the legal holidays:
| New Year | January 1 |
| Maundy Thursday |
| Good Friday |
| Araw ng Kagitingan | April 9 |
| Labor Day | May 1 |
| Independence Day | June 12 |
| National Heroes Day | Last Sunday of August |
| Ramadan Day |
| All Saints Days | November 1 |
| Bonifacio Day | November 30 |
| Christmas Day | December 25 |
| Rizal Day | December 303 |
This has been the company policy for the past 10 years.4
In 2009, Republic Act No. 9849 was signed into law, declaring Eid'l Adha as a regular holiday.5 In 2010 and 2011, Nippon paid its employees the premium of 100% during Eid'l Adha.6
In 2012, the Collective Bargaining Agreement was renewed. The provision on additional holiday pay was retained, enumerating the same regular holidays,7 without including Eid'l Adha. That same year, Nippon stopped paying the premium for Eid'l Adha, claiming that it did not intend to include this holiday in the coverage of the agreement. Its inclusion was allegedly a result of a glitch in the payroll system.8
On the other hand, NIPPEA claimed that the employees already had a vested right over the holiday premium for Eid'l Adha because it has ripened into a company practice. Thus, Nippon could no longer unilaterally withdraw its payment.9
The Voluntary Arbitrator ruled in favor of Nippon and held that the employees have no vested right over the premium for Eid'l Adha because it had merely been given due to a system error.10
The Court of Appeals reversed this ruling, holding that the grant of holiday premium for Eid'l Adha was a voluntary practice on the part of Nippon, which had known that this supplement is not covered by law or by the Collective Bargaining Agreement.11 It also ruled that Eid'I Adha was deemed incorporated in the agreement by force of law, and since there is doubt as to its terms and application, it should be resolved in favor of labor.12
Before this Court, petitioner Nippon reiterates that the payments of additional premium for Eid'l Adha in 2010 and 2011 resulted from a glitch in the payroll system.13 It points out that Eid'l Adha's exclusion from the subsequent 2012 Collective Bargaining Agreement shows the parties' lack of intent to apply the additional premium to Eid'l Adha.14 Thus, it says that the payments made in 2010 and 2011 "were never voluntary and intentional."15 Petitioner adds that two years cannot be deemed a long period of time for the practice to be considered as company practice.16
Petitioner adds that the Collective Bargaining Agreement is clear that the holiday premium will only be paid for the holidays listed in it, leaving no room for interpretation.17
I reject petitioner's submissions.
The characterization of the payment for holiday premiums must primarily rest on basic constitutional and labor principles. The resolution of any labor case must always be consistent with our constitutional policy of promoting the laborers' welfare.
The 1987 Constitution mandates the protection of workers' rights and the promotion of their welfare, having recognized "labor as a primary social economic force."18 The Labor Code echoes this basic policy and details the rights of workers and the conditions of employment.19 Moreover, Article 4 of the Labor Code provides that "all doubts in [its] implementation and interpretation ... shall be rendered in favor of labor."
The Labor Code regulates the employee's wage. It mandates the additional compensation for night-shift differential,20 overtime work,21 rest day, Sunday, or holiday work22 of an employee, among others. These are forms of compensation expressly granted by law and must be provided by the employers.
Aside from these basic wages, employees have a vested right over benefits and supplements voluntarily and customarily given by their employers.23 While these benefits and supplements are not provided by law, they "cannot be reduced, diminished, discontinued or eliminated by the employer."24 Article 100 of the Labor Code provides:
ARTICLE 100. Prohibition against Elimination or Diminution of Benefits. - Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.
The principle of non-diminution of benefits under this provision is anchored on the constitutional policy of protecting workers' rights, promoting their welfare, and affording full protection to labor.25
There is a diminution of benefits when: "(1) the grant or benefit is founded on a policy or has ripened into a practice over a long period of time; (2) the practice is consistent and deliberate; (3) the practice is not due to error in the construction or application of a doubtful or difficult question of law; and (4) the diminution or discontinuance is done unilaterally by the employer."26
To be regarded as company practice, the benefits and supplements must have been consistently, deliberately, and customarily given to the employees; that is, over a considerable period of time.27 There must be an "indubitable showing that the employer agreed to continue giving the benefit knowing fully well that the employees are not covered by any provision of the law or agreement requiring payment thereof."28 In University of the East v. University of the East Employees Association,29 this Court expounded:
Generally, employees have a vested right over existing benefits voluntarily granted to them by their employer, thus, said benefits cannot be reduced, diminished, discontinued or eliminated by the latter. This principle against diminution of benefits, however, is applicable only if the grant or benefit is founded on an express policy or has ripened into a practice over a long period of time which is consistent and deliberate. It does not contemplate the continuous grant of unauthorized or irregular compensation but it presupposes that a company practice, policy and tradition favourable to the employees has been clearly established; and that the payments made by the company pursuant to it have ripened into benefits enjoyed by them.30 (Citations omitted)
Jurisprudence has not laid down a definite length of time for a benefit to be deemed customary. In Vergara, Jr. v. Coca-Cola Bottlers Philippines, Inc.:31
Jurisprudence has not laid down any hard-and-fast rule as to the length of time that company practice should have been exercised in order to constitute voluntary employer practice. The common denominator in previously decided cases appears to be the regularity and deliberateness of the grant of benefits over a significant period of time. It requires an indubitable showing that the employer agreed to continue giving the benefit knowing fully well that the employees are not covered by any provision of the law or agreement requiring payment thereof. In sum, the benefit must be characterized by regularity, voluntary and deliberate intent of the employer to grant the benefit over a considerable period of time.32 (Citations omitted)
Jurisprudence illustrates what is deemed a considerable period of time for the benefit to be customary.
In Davao Fruits Corporation v. Associated Labor Unions,33 the employer's inclusion of monetized sick, vacation, and maternity leave pay, and holiday work premiums in the computation of the 13th month pay which lasted for six years was deemed a company practice. This Court held that the considerable length of time signified a unilateral and voluntary act on the employer's part.
Similarly, in Tiangco v. Leogardo, Jr.,34 this Court ruled that the employees' fixed monthly emergency allowance which had been granted for three years and three months could no longer be withdrawn. While the grant of allowance was only a matter of practice and based on a verbal agreement between the employer and the employees, it has ripened into a company practice which cannot be unilaterally discontinued.
Sevilla Trading Company v. Semana35 involves a company practice which spanned a shorter period of time. There, Sevilla Trading included non basic benefits such as unused sick and vacation leaves in the computation of its employees' 13th month pay. However, after two years, Sevilla Trading excluded the non-basic benefits in the computation, claiming that the inclusion of these benefits was an error of the person in charge of the payroll. It reasoned that the adjustment in the computation of the 13th month pay was only a correction of the mistake of its personnel.36
In ruling for the employees, this Court found that the inclusion of nonbasic pay in its computation has ripened into a customary benefit which the employer cannot unilaterally withdraw without violating the principle of nondiminution of benefits. Rejecting Sevilla Trading's argument, this Court held that it is impossible that a company will only discover the error after two years when they audit their finance and submit financial statements yearly. Moreover, Sevilla Trading's claim is not supported by any other relevant evidence. This Court remarked that placing the blame on the personnel is simply inexcusable.37
Terse and clear, jurisprudence holds that as long as there is a recurrence of the giving of benefit, the payment is deemed customary. The period can be six years, three years, or as short as two years.
Here, petitioner mainly contends that the grant of the additional holiday pay for Eid'l Adha was not consistent, deliberate, and customary. It insists that the period within which the holiday premium was granted was too short to be deemed customary.
Petitioner's contention is untenable. The grant of holiday premium for Eid'l Adha is a company practice that could no longer be unilaterally withdrawn by petitioner.
The holiday premium is founded on the Collective Bargaining Agreement, which mandates the payment of 200% of their regular daily rate as premium on unworked regular holidays and 300% of their regular daily rate on worked regular holidays.38 This has been the company policy for the past 10 years.39 Thus, there is reason to believe that the grant of holiday premium for Eid'l Adha is consistent, deliberate, and customary.
Petitioner says that the inclusion of Eid'l Adha in the payment of holiday premium was inadvertent, a mere error in the payroll system. However, without substantial evidence to support its claim, this bare excuse should not be given credence.
As in Sevilla Trading Company, mere claims of payroll system errors are not convincing especially when companies such as petitioner conduct a meticulous financial audit every year. If there really were no intent to grant the holiday premium for Eid'l Adha, it is uncertain why petitioner did not immediately withdraw the payment when this amount was readily reflected in its 2010 and 2011 financial statements. Petitioner failed to explain with substantial proof how the alleged error slipped past it for two years.
In the meantime, the employees enjoyed two years of holiday premium for Eid'l Adha. As found in jurisprudence, the period of two years suffices for a grant of benefits to be deemed company practice.40 The length of time is highly subjective and the decisive factor is whether the employer agreed to continue giving benefits despite knowing that it is not bound by law to grant it. For two years, petitioner granted the holiday premium for Eid'l Adha even if it is not explicitly included in the Collective Bargaining Agreement's list of holidays. Thus, a company practice favorable to the employees had been established, and petitioner could not unilaterally withdraw it.
Petitioner heavily relies on the 2012 Collective Bargaining Agreement which does not include Eid'l Adha in its list of holidays. However, the exclusion of Eid'l Adha from this agreement is immaterial because the employees' vested right over the premium is anchored on company practice, not the agreement. Even without the 2012 Collective Bargaining Agreement, the practice of paying premium for Eid'l Adha has already become customary.
Petitioner cannot shirk its obligation to pay the holiday premium for Eid'l Adha. As a company practice, the employees must receive it. I concur in the ponencia.
ACCORDINGLY, I vote to DENY the Petition.
Footnotes
1 Rollo, pp. 38-39.
2 Id. at 124.
3 Id.
4 Id. at 39.
5 Id.
6 Id.
7 Id. at 146.
8 Id. at 39-40.
9 Id. at 40.
10 Id.
11 Id. at 42.
12 Id. at 42-43.
13 Id. at 16-17.
14 Id. at 17.
15 Id. at 2 I.
16 Id. at 20.
17 Id. at 23.
18 CONST., art. II, sec. 18 provides:
Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare.
19 LABOR CODE, art. 3 provides:
Article 3. Declaration of Basic Policy. - The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work.
20 LABOR CODE, art. 86.
21 LABOR CODE, art. 87 and 89.
22 LABOR CODE, art. 93 and 94.
23 See Netlink Computer Inc., v. Delma, 736 Phil. 487 (2014) [Per J. Bersamin, First Division].
24 Arco Metal Products, Co., Inc. v. Samahan ng mga Manggagawa sa Arco Metal-NAFLU, 577 Phil. 1 (2008) [Per J. Tinga, Second Division].
25 Id. at 8.
26 Vergara, Jr. v. Coca-Cola Bottlers Philippines, Inc., 707 Phil. 255, 262 (2013) [Per J. Peralta, Third Division].
27 Id.
28 Id. at 263.
29 673 Phil. 273 (2011) [Per J. Mendoza, Third Division].
30 Id. at 286.
31 707 Phil. 255 (2013) [Per J. Peralta, Third Division].
32 Id. at 262-263.
33 296-A Phil. 587 (1993) [Per J. Quiason, First Division].
34 207 Phil. 235 (1983) [Per J. Concepcion, Jr., Second Division].
35 472 Phil. 220 (2004) [Per J. Puno, Second Division].
36 Id. at 226-227.
37 Id. at 235-236.
38 Rollo, p. 124.
39 Id. at 39.
40 Sevilla Trading Co. v. Semana, 472 Phil. 220 (2004) [Per J. Puno, Second Division].
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