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    Case Digest - Central Azucarera

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    BrenPeñaranda
    1) The petitioner company had a long-standing practice of including certain benefits like overtime pay and night premiums when computing employees' 13th month pay. 2) In 2006, due to temporary closures, employees only worked 8 months but the company divided total annual earnings by 12 to compute 13th month pay. 3) The labor union objected, arguing the divisor should be 8 instead of 12. The case reached the Supreme Court which ruled that the company's decades-long practice of including additional benefits in the 13th month pay computation could not be unilaterally changed and must remain.

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    Case Digest - Central Azucarera

    Uploaded by

    BrenPeñaranda
    117 views2 pages
    1) The petitioner company had a long-standing practice of including certain benefits like overtime pay and night premiums when computing employees' 13th month pay. 2) In 2006, due to temporary closures, employees only worked 8 months but the company divided total annual earnings by 12 to compute 13th month pay. 3) The labor union objected, arguing the divisor should be 8 instead of 12. The case reached the Supreme Court which ruled that the company's decades-long practice of including additional benefits in the 13th month pay computation could not be unilaterally changed and must remain.

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    1) The petitioner company had a long-standing practice of including certain benefits like overtime pay and night premiums when computing employees' 13th month pay. 2) In 2006, due to temporary closures, employees only worked 8 months but the company divided total annual earnings by 12 to compute 13th month pay. 3) The labor union objected, arguing the divisor should be 8 instead of 12. The case reached the Supreme Court which ruled that the company's decades-long practice of including additional benefits in the 13th month pay computation could not be unilaterally changed and must remain.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    117 views2 pages

    Case Digest - Central Azucarera

    Uploaded by

    BrenPeñaranda
    1) The petitioner company had a long-standing practice of including certain benefits like overtime pay and night premiums when computing employees' 13th month pay. 2) In 2006, due to temporary closures, employees only worked 8 months but the company divided total annual earnings by 12 to compute 13th month pay. 3) The labor union objected, arguing the divisor should be 8 instead of 12. The case reached the Supreme Court which ruled that the company's decades-long practice of including additional benefits in the 13th month pay computation could not be unilaterally changed and must remain.

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    © All Rights Reserved
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    of 2

    Case Digest: Central azucarerra vs.

    Central azucarerra unionnlu


    CENTRAL AZUCARERA DE TARLAC,
    vs.
    CENTRAL AZUCARERA DE TARLAC LABOR UNION-NLU,
    G.R. No. 188949, July 26, 2010
    Justice Nachura
    Labor Law; Labor Standard; 13 month pay;
    FACTS:
    The formula used by petitioner in computing the 13th-month pay was:
    Total Basic Annual Salary divided by twelve (12). Included in petitioners
    computation of the Total Basic Annual Salary were the following: basic
    monthly salary; first eight (8) hours overtime pay on Sunday and
    legal/special holiday; night premium pay; and vacation and sick leaves for
    each year. Throughout the years, petitioner used this computation until
    2006 from 1975.
    After the strike and temporary cessation of operations in 2005, all
    the striking union was allowed to return to work. Subsequently, petitioner
    declared another temporary cessation of operations for the months of April
    and May 2006. After the suspension was lifted on June 2006, the workers
    were allowed to report for work on a fifteen day-per-month rotation basis
    until September 2005. In December 2006, petitioner gave the employees
    their 13th-month pay based on the employees total earnings during the
    year divided by 12. In December 2006, petitioner gave the employees their
    13th-month pay based on the employees total earnings during the year
    divided by 12.
    Respondent objected to this computation. It claimed that the divisor
    should have been eight (8) instead of 12, because the employees worked
    for only 8 months in 2006.
    Petitioner and respondent tried to thresh out their differences in
    accordance with the grievance procedure as provided in their collective
    bargaining agreement. Despite four (4) conciliatory meetings, the parties
    still failed to settle the dispute, hence a complaint by for money claims
    based on the alleged diminution/erroneous computation of 13 th month
    pay before the Labor arbiter (LA).

    The LA dismissed the complaint. NLRC reversed. MR denied.


    Petitioner then filed a petition for certiorari under Rule 65 of the Rules of
    Court before the CA. CA dismissed the petition and affirm the NLRC.
    Hence petition before the SC (R45)
    ISSUE:
    Whether the computation of 13 th month pay by the petitioner is
    correct.
    HELD:
    YES. "Thirteenth-month pay" shall mean one twelfth (1/12) of the
    basic salary of an employee within a calendar year; the term "basic salary"
    of an employee for the purpose of computing the 13th-month pay was
    interpreted to include all remuneration or earnings paid by the employer for
    services rendered, but does not include allowances and monetary benefits
    which are not integrated as part of the regular or basic salary, such as the
    cash equivalent of unused vacation and sick leave credits, overtime,
    premium, night differential and holiday pay, and cost-of-living allowances.
    However, these salary-related benefits should be included as part of the
    basic salary in the computation of the 13th-month pay if, by individual or
    collective agreement, company practice or policy, the same are treated as
    part of the basic salary of the employees.
    As correctly ruled by the CA, the practice of petitioner in giving 13thmonth 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
    thirty (30) years and has ripened into a company policy or practice which
    cannot be unilaterally withdrawn. Article 100 of the Labor Code, otherwise
    known as the Non-Diminution Rule, mandates that benefits given to
    employees cannot be taken back or reduced unilaterally by the employer
    because the benefit has become part of the employment contract, written
    or unwritten.

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