Sunday, February 26, 2012

Honda Philippines vs. Samahan ng Malayang Manggagawa sa Honda

Facts: Honda Phils, Inc (company) and Samahan ng Malayang Manggagawa sa Honda (union) started renegotiations of their CBA. When there was a bargaining deadlock, the union filed a notice of strike. The company likewise filed a notice of lockout. SOLE assumed jurisdiction and ordered both parties to desist from their strike and lockout. 

However, the union subsequently filed a second notice of strike on the ground of unfair labor practice, alleging that the company illegally contracted out work to the detriment of the workers. The union went on strike. SOLE assumed jurisdiction and certified the case to NLRC for compulsory arbitration. The striking employees were ordered to return to work and management accepted them back. 

Honda then issued a memorandum announcing its new computation of the 13th and 14th month pay whereby the 31-day strike shall be considered unworked days for the purpose of computing said benefits. The amount equivalent to 1/12 of the employees’ basic salary shall be deducted from the bonuses (because they did not work for 1 month). Furthermore, Honda wanted a pro-rata payment of the 13th month pay. 

The union opposed said computation because it was contrary to the Sections 3 and 6 in their current CBA which mandates that “the company shall maintain the present practice in the implementation of the 13th month pay” and that the 14th month pay shall be computed in the same way as the former. 

The Bureau of Working Conditions (BWC) sided with the company. But the issue was unresolved by the grievance machinery, so it was submitted for voluntary arbitration. The Voluntary Arbiter invalidated Honda’s computation and ordered the computation of the benefits based on the full month basic pay. 

CA affirmed, hence this petition. 

(1) Whether or not there is ambiguity in the CBA provisions concerning the 13th and 14th month pay 

(2) Whether or not the proposed computation of Honda deducting 1/12 of the employee’s basic salary from the 13th and 14th month pay and its pro-rata payment are valid

(1) YES. A collective bargaining agreement refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. The parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient as long as they are not contrary to law, morals, good customs, public order or public policy. Where the CBA is clear and unambiguous, it becomes the law between the parties. 

However, there are times when the CBA provisions may become contentious. In this case, Honda wanted to implement a pro-rated computation based on the “no work, no pay” rule. Honda argues that the phrase “present practice” in the CBA refers to the manner of payment of the bonuses (50% in May and 50% in December). The union, on the other hand, insists that the CBA provisions necessarily relate to the computation of the benefits. 

As the voluntary arbitrator has correctly observed, there is ambiguity in the assailed CBA provisions because they did not categorically state whether the computation of the 13th and 14th month pay would be based on a one full month’s basic salary of the employees, or pro-rated based on the compensation actually received. 

(2) NO. The ambiguity in the CBA provisions was correctly resolved by the arbitrator by relying on Article 1702 of the Civil Code, which provides that “in case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living of the laborer.” CA is also correct in ruling 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. 

PD 851 or the 13th Month Pay Law was issued to protect the level of wages of workers from worldwide inflation. Under the IRR of said law, the minimum 13th month pay shall not be less than 1/12 of the total basic salary earned by an employee within a calendar year. The Court has interpreted “basic salary” to mean, NOT the amount actually received by an employee, but 1/12 of their standard monthly wage multiplied by their length of service within a given calendar year. 

The IRR also provide for a pro-ration of this benefit ONLY in cases of resignation or separation from work. In the present case, there being no resignation/separation, the computation of the 13th month pay should not be pro-rated but should be given in full. 

Moreover, it has not been proven that Honda has been implementing pro-rating of the 13th month pay before the present case. It is not a company practice. In fact, there was an implicit acceptance that prior to the strike, a full month basic pay computation was the “present practice” intended in the CBA. It was the second strike that prompted the company to adopt the pro-rata computation.

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