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The Supreme Court (SC) has declared that Central Azucarera de Tarlac (CAT), the sugar milling company owned by the family of President Benigno Aquino III, acted in bad faith when it reduced the 13th month pay of its employees, following a strike in 2004 that ended in violence and killed at least seven people.
The High Court, in affirming the 2009 decision by the Court of Appeals (CA), ordered CAT to revert to its original formula in computing the mandatory benefit for its workers in 2006.
“This act of petitioner in changing the formula at this time cannot be sanctioned, as it indicates a badge of bad faith," read the 10-page decision, penned by Associate Justice Eduardo Nachura of the SC’s Second Division.
Concurring with Nachura were Associate Justices Antonio Carpio, Diosdado Peralta and Roberto Abad.
The SC dismissed CAT’s position that the change in formula was due to an “error" in the computation of the benefit, supposedly discovered only by the management when the CAT Labor Union questioned the formula used for computing the employees’ 13th month pay for 2006.
The SC decision also noted that the CAT management had been using the same formula for 30 years, then changed it only following the labor dispute with its employees.
The High Court cited Article 100 of the Labor Code, or the Non-Diminution Rule, which provides that once benefits are given, they become part of an employment contract, whether written or unwritten, and as such cannot be taken back or reduced by the employer.
“As correctly ruled by the CA, the practice of petitioner in giving 13th month pay based on the employees’ gross annual earnings which included the basic monthly salary, premium pay for work on rest days and special holidays, night shift differential pay and holiday pay continued for almost 30 years and has ripened into a company policy or practice which cannot be unilaterally withdrawn," the Court said.
While exemptions may be secured, the Court said the CAT failed to obtain authorization from the labor secretary and hence cannot say the reduction was due to financial losses.
Records showed that before 2006, CAT granted its employees the mandatory 13th month pay since 1975, computed by dividing the total basic annual salary by 12.
The basic annual salary included the basic monthly salary, first eight hours overtime pay on Sunday and legal or special holidays, night premium pay, and vacation and sick leaves every year.
When the workers staged a strike in 2004 following the retrenchment of over 300 union leaders and members, the CAT management dropped the formula and eventually stopped its operations.
Work in the sugar mill resumed in December 2005 but was suspended again in April and May 2006. From June to September of the same year, the employees were made to work for only 15 days every month on rotation.
For 2006, CAT determined the employees’ 13th month pay based on their total earnings for the year divided by 12.
The employees questioned the computation, saying their total earning should have been divided only by eight, the number of months they actually worked for the year, and not 12.
The employees filed a complaint against CAT before the National Labor Relations Commission (NLRC) for money claims after negotiations failed.
The labor arbiter earlier ruled in favor of CAT but the NLRC later reversed the decision.
CAT’s management elevated the case to the SC after the CA upheld the NLRC’s decision.
CAT is registered with the Philippine Stock Exchange as a corporation operating a sugar mill and refinery, distillery and carbon dioxide plants in Barrio San Miguel, Tarlac City.
President Aquino said in previous interviews he owns over 300,000 shares or just one percent of the company.
Hacienda Luisita, on the other hand, is a Cojuangco family-owned plantation also in Tarlac.
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